Opposition to the Doctrine That Wealth Is Money: The Physiocrats

The reaction to the strictly shopkeeper's appraisal of wealth held by the Mercantilists came first in France where the theories of the Physiocrats became prominent. The name Physiocrats was first applied by one of this school's early members, Dupont de Nemours, and later changed by the members themselves to Economistes. Then when the latter term became a general designation for persons of all shades of thought who dealt with the subject of political economy, scholars again referred to this early school as the Physiocrats. The father of the school and the best exponent of its doctrines was Franqois Quesnay (1694-1774) a physician, who delved into the problems of economics as an avocation toward the end of his life. Wealth, he said, does not consist in the quantity of money a nation can store up but in the quantity of raw materials available for the purposes of man, or, to put it differently, the increase in wealth of a community consists in the surplus of agricultural and mineral products over their cost of production. This excess is called the produit net and upon it depends the well-being of the nation. Manufacturing gives new form to raw materials, but their increase in value is only the quantity of other materials used and consumed in the elaboration. Commerce merely transfers wealth from person to person. What the traders gain is acquired at the cost of the nation and should be as small as possible. The professions are useful but "sterile," that is, they draw income not from what they create but from the surplus created by the producers of raw materials.

The Physiocratic ideas on political economy did not develop from an appraisal of that phase of life alone, but rather as an integral part of the school's comprehensive view of the world in all its aspects. Dupont de Nemours defined Physiocracy as the science of the natural order. The system of thought assumed that there were natural laws which governed man and the universe. To attain true satisfaction in life it was but necessary to discover these laws and conform to them. Since the basis of satisfactory human existence was believed to be in nature, the Physiocrats made the logical deduction that nature was the only true source of wealth, manufacturing and trade were sterile or at best creators of artificial wealth. The presentation of these ideas was made in Quesnay's first publications on economics, two articles in the Encyclopedic, entitled respectively "Farmers" and "Grains." More detailed explanation of his thesis appeared in 1758 in the Tableau economique. The Tableau explained how wealth originated in agriculture, and how it was subsequently distributed to both the sterile and the productive classes in the population. Known as the Bible of the Physiocrats, the Tableau has aroused great controversies in the nearly two centuries since it was written as to its exact meaning and significance.

Quesnay's belief in the existence of a natural order of things which would serve man's purpose better than the existing order led to certain other ideas of a very modern hue. He believed that every individual should seek the greatest amount of pleasure for the least effort, as this would insure rather than endanger the natural order. Physiocracy gave birth to the famous doctrine of laissez-faire, laissez-passer (that is, let things proceed without interference) . The work of the legislator was to aid in the discovery of natural laws, and not to interfere with their operation by artificial control. Everyone should have the right to enjoy the fruits of his own labor—hence private property became to the Physiocrats a cornerstone of the natural state. Trade should be free. As Quesnay took great pains to show, the arguments for a favorable balance of trade were logically and practically unsound. But although all trade was essentially unproductive, it was necessary to keep it free in order that the natural forces of competition might exert themselves and control the economic activity of the nations. The followers of Quesnay were numerous; their ideas follow closely Quesnay's pattern. We have already mentioned Dupont de Nemours. A. R. J. Turgot will be considered in later chapters. The Abbe Baudeau also contributed to the abundant literature describing Physiocracy. Of these three men, De Nemours was the most ardent disciple; Turgot, the most philosophically inclined; Abbe Baudeau, the keenest mind.