Why Nations Fail: The Origins of Power, Prosperity, and Poverty

monarch’s power. For this reason, Louis XIV ruled without convening the Assembly. Under his reign, France achieved some economic growth—for example, via participation in Atlantic and colonial trade. Louis’s able minister of finance, Jean-Baptiste Colbert, also oversaw the development of government-sponsored andgovernment-controlled industry, a type of extractive growth. This limited amount of growth benefited almost exclusively the First and Second Estates. Louis XIV also wanted to rationalize the French tax system, because the state often had problems financing its frequent wars, its large standing army, and the King’s own luxurious retinue, consumption, and palaces. Its inability to tax even the minor nobility put severe limits on its revenues.
    Though there had been little economic growth, by the time Louis XVI came to power in 1774, there had nevertheless been large changes in society. Moreover, the earlier fiscal problems had turned into a fiscal crisis, and the Seven Years’ War with the British between 1756 and 1763, in which France lost Canada, had been particularly costly. A number of significant figures attempted to balance the royal budget by restructuring the debt and increasing taxes; among them were Anne-Robert-Jacques Turgot, one of the most famous economists of the time; Jacques Necker, who would also play an important role after the revolution; and Charles Alexandre de Calonne. But none succeeded. Calonne, as part of his strategy, persuaded Louis XVI to summon the Assembly of Notables. The king and his advisers expected the Assembly to endorse his reforms much in the same way as Charles I expected the English Parliament to simply agree to pay for an army to fight the Scottish when he called it in 1640. The Assembly took an unexpected step and decreed that only a representative body, the Estates-General, could endorse such reforms.
    The Estates-General was a very different body from the Assembly of Notables. While the latter consisted of the nobility and was largely handpicked by the Crown from among major aristocrats, the former included representatives from all three estates. It had last been convened in 1614. When the Estates-General gathered in 1789 in Versailles, it became immediately clear that no agreement could be reached. There were irreconcilable differences, as the Third Estate saw this as its chance to increase its political power and wanted to have more votes in the Estates-General, which the nobility and the clergy steadfastly opposed. The meeting ended on May 5, 1789, without any resolution, except the decision to convene a more powerfulbody, the National Assembly, deepening the political crisis. The Third Estate, particularly the merchants, businessmen, professionals, and artisans, who all had demands for greater power, saw these developments as evidence of their increasing clout. In the National Assembly, they therefore demanded even more say in the proceedings and greater rights in general. Their support in the streets all over the country by citizens emboldened by these developments led to the reconstitution of the Assembly as the National Constituent Assembly on July 9.
    Meanwhile, the mood in the country, and especially in Paris, was becoming more radical. In reaction, the conservative circles around Louis XVI persuaded him to sack Necker, the reformist finance minister. This led to further radicalization in the streets. The outcome was the famous storming of the Bastille on July 14, 1789. From this point onward, the revolution started in earnest. Necker was reinstated, and the revolutionary Marquis de Lafayette was put in charge of the National Guard of Paris.
    Even more remarkable than the storming of the Bastille were the dynamics of the National Constituent Assembly, which on August 4, 1789, with its newfound confidence, passed the new constitution, abolishing feudalism and the special privileges of the First and Second Estates. But this radicalization led to fractionalization within the Assembly, since there were many conflicting views about the shape that society should take. The first step was the formation of local clubs, most notably the radical Jacobin Club, which would later take control of the revolution. At the same time, the nobles were fleeing the country in great numbers—the so-called émigrés. Many were also encouraging the king to break with the Assembly and take action, either by himself or with the help of foreign powers, such as Austria, the native