Cover of Why Nations Fail by Daron Acemoglu, James A. Robinson - Business and Economics Book

From "Why Nations Fail"

Author: Daron Acemoglu, James A. Robinson
Publisher: Profile Books
Year: 2012
Category: Business & Economics

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Chapter 10: The Diffusion of Prosperity
Key Insight 2 from this chapter

The French Revolution's Internal Reforms

Key Insight

Pre-1789 France operated under an absolutist monarchy with a rigid three-estate system. The First Estate (nobility) and Second Estate (clergy) enjoyed extensive privileges, including tax exemptions, and controlled vast landholdings while imposing their own levies. In sharp contrast, the Third Estate, comprising the vast majority of the population, faced severe poverty and bore the burden of multiple taxes. Economic activity was further stifled by powerful guilds that restricted entry into trades and new businesses, alongside feudal dues and mobility restrictions that heavily impacted peasants, perpetuating pervasive social and economic inequalities.

The French Revolution initiated a radical societal overhaul, beginning with the National Constituent Assembly on August 4, 1789. This assembly fundamentally dismantled the feudal system, abolishing all associated obligations and dues without indemnification. Crucially, it eliminated tax exemptions for the nobility and clergy, mandating proportional taxation for all citizens and property. The Eleventh Article profoundly declared that all citizens, 'without distinction of birth,' were eligible for any public office—ecclesiastical, civil, or military—thereby establishing equality before the law as a core principle and removing critical economic barriers through the abolition of guilds and occupational restrictions.

The path to these reforms was fraught with instability, triggered by a profound fiscal crisis exacerbated by costly wars, like the Seven Years' War. Louis XVI's attempt to resolve this by convening the Assembly of Notables backfired when it demanded the Estates-General. Irreconcilable differences over the Third Estate's representation led to the formation of the National Constituent Assembly and the symbolic storming of the Bastille on July 14, 1789. Though the initial radicalization resulted in the violent period known as the Terror, Napoleon Bonaparte's subsequent reign (1799-1815) solidified many revolutionary changes, particularly the Code Napoleon, which codified Roman law and the principle of equality before the law, setting an irreversible course for inclusive political and economic institutions in France and enabling its participation in 19th-century industrialization.

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