Physiocracy

First I want to apologize that my language skils are not so good that I´m able to describe this topic in spanish. So I prefere write in english and try to clarify the main characteristics of Physiocracy.


Introduccion to Physiocracy and Physiocrats

Physiocracy means rule of nature. It is an economic thought what was developed in France 1750´s and the well-known Physiocrats were french court physician Francois Quesnay (1694–1774) and his disciples Victor de Riqueti, marquis de Mirabeau (1715-1789)and Anne Robert Jacques Turgot (1727-1781). At this text mostly I´m concertrating to Quesnays thoughts.
Physiocrats wantend to reconstruct society again according to reason and they were optimistic about the progress of man and society.The main principle was that natural resources and agricultur were the source of wealth. France in the early 1750s remained an essentially landed society. Wealth derived, as Quesnay insisted, from land. The agricultural base had undergone no revolution. Physiocrats maintained that free internal circulation of grain, free export of grain, and destruction of all traditional marketing regulations would encourage maximum production and assure an adequate urban supply.

Quesnay´s and Mirabeau´s economic program explicticly requiered capitalist class. Lot of different gropups in Frence society were dissatisfied with the Ancien Regime and absolut monarchy. Taxes were high, nobles didn´t like the absolut power of throne, peasants resended low prices for the grain.
Physiocracy was also a protest against mercantinlism, which was claimed to be focused only ruler´s and aristocracy´s wealth. Mercantilist believe that wealth of nations depends of surplus econmic trade and accumulation of gold, was critcized by physiocrats. Physiocrats believed that self-interest is a motivating reason of every part of economy. They did not favor industrialism and they loathed industrial capitalists. Physiocrats contributed to the new paradigm and they shape a new world view. Physiocrasy can be seen as the first sustained attempt to integrate economics into social and political theory.
The Enlightement proudly proclaimed the values of rational individualism, and philosophes of all
lands joined in constructing a new “science of freedom.” And despite of diversity of the Enlightement, it claimed that man was made for freedom. The physiocrats shared the values, characteristics and general socioeconmic backround of the other French philosophes. They differed from the other philosophes primarly in their insitence upon determining role of economics in human life. As we know, they campaign to free trade, ecspecially grain and human labor. Despite the obective political content of many of their activities, the physiocrats did not constitute a political group by modern standards.

Quesnay´s peasant background led him to respect agriculture and those engaged in it, his residence at Versailles encouraged him to view the agricultural sector primarily as a source of royal revenues. Always fascinated with technical details, he avidly pursued the work of the agronomic movement that was slowly infiltrating the French elite and never tired of discussing crops, manures or agricultural techniques. As Quesnay turned from medicine and metaphysics to economics, he carried the legacy of his early work with him. From the start, his bias as a practical scientist led him to focus sharply upon the technical problems of agricultural production. In his hands, the fashionable preoccupation with grain became a serious investigation of state of agriculture, and ultimately a science of wealth. His metaphysics enabled him to explain the process of econmic development itself. His analysis of economic process, his diagnosis of economic illness, and his prescription for cure developed apace. Quesnay had arrived his theories of a free market and economic individualism by studying the emergece of national market in England. He always understood that in eighteenthcentury France the unfettered pursuit of individual interest might not result in the natural order he sought to establish. Men could fail to behave “economically.” He was never willing to trust spontaneuos development of the proper socio-political order. Nature required the assistance of absolute authority capable of forcing natural order upon humans.



Main characteristics of Physiocracy

In physiocratic thought private property constitutes man´s first natural social right. Man arrives in the world with the physical obligation of keeping himself alive, and his survival depends upon his right to property in himself. The original obligation to live is eating. The physiocrats resonend that man must have natural right to the fruits of earth. Society must approve human action, efforts and tools and must positively sanction property as a social good. For physiocrats individual self-interest is the most respectable motive for social action. So individuals need to have right to own property and society should preserve social harmony, so physiocratic ideology can be summed in three words; Property, Liberty and Security.


Quesnay said that no one in his right mind willingly undertakes hard labour without being assured of the absolute right to the fruits of that labour. All social institutions derive from the right of property. Personal property implies the freedom of labor. Movable property represents no more than personal property in use. Freedom to trade cannot be separated from personal and movable proberty because every individual must enjoy the right to dispose of his own. Without security, property would be a theoretical right constanly violated in practice and government should guarantee that security. The true rulers, argued the physiocrats, were the laws, which derived from nature. Formally the physiocrats followed the idea of John Locke, that the natural pursuit of self-interest by discrete member of society would result in the maximum social good. Nature, or the market, best knows its requirements.
Mirabeau summarize his though like thise: Wealth is the fruit which comes from the land for use of men; the labour of man alone possesses the capacity to increase wealth. Thus more men there are, the more labour will there be; the more labour there is, the more wealth there will be. The way to achieve prosperity is therefore: (1) To increase men; (2) through these men, to increase productive labour; (3) through this labour, to increase wealth.


Quesnay had always retained a lively interest in agricultural problems, in spite his medical preoccupations. He knew that French agriculture suffered under the political weight of feudal property rights and under the material weight of an essentially local and fragmentary market system hampered by a severe lack of transportation facilities. He was always considered the wealth of farmers and the method of cultivation and tryed to modernize agriculture. Also Quesnay´s medical writing had often had important philosophical overtones.
Physiocrats main aim was to illuminate the operation of the basic causes which determined the general level of economic activity. For this purpose, they believed that it was useful to conceive economic activity as taking the form of a sort of “circle”, or circular flow as we would call it today. In this circle of economic activity, production and consumption appeared as mutually interdependent variables, whose action and interaction in any economic period, proceeding according to certain socially-determined laws, laid the basis for repetition of the process in the same general form in the next economic period. Within this circle, the Physiocrats then endeavoured to discover some key variable, movements in which could be regarded as the basic factor causing an expansion or contraction in the “dimensions” of the circle, in the general level of economic activity. The variable which they hit upon was the capacity of agriculture to yield a “net product”, disposable surplus over necessary cost. Anything which increased this net product would cause an expansion in economic activity, and anything which reduced it would cause a contraction in economic activity. So physiocracy can be summed up in one point, an increase in the net product. And all damage done to society is determined by this fact, a reduction in the net product. Government should distort the whole economy with monopolistic charters, controls and protective tariffs and should be geared to maximizing the value and output of the agricultural sector.

The leading assumption of the Physiocrats´ theoretical system was that this net product was yielded by agriculture, and by agriculture alone. Agriculture was the supreme to others, not only beacause its was morally and politically superior to others, not only because its produce was primary in the scale of wants and always in demand, but also because it alone yielded a disposable surplus over necessary cost. It was upon this latter aspect of agriculture that the Physiocrats concentrated in their theoretical system, and in particular in their theoretical system, and in particular in their definition of the “productive”. “Productive” to them meant, essentially, productive of a net product. Manufacture and commerce, they contended, were by contrast “unproductive” or “sterile”. Not only were these occupations more precarious than agriculture, not only were they “secondary” in the sense that they were depent upon the supply of food and raw materials, but they were also incapable, at any rate in the absence of monopoly, of yielding a disposable surplus over necessary cost. “Sterile” to the Physiocrats meant, essentially, incapable of yielding a net product.
The classiffication of basic social groups in the Physiocratic model was made with primary refence to the relation in which each group stood in the net product. The main distinction which they emphasized was that between the”productive class”(those who engaged in agricultural activities) an the “sterile class”( those who engaged in non-agricultural activities). In the no-man´s-land between these two classes, partaking to some extent of the character of each but belonging definitely to neither, lay the “ class of proprietors”. This class consisted of the landowners, the king, and the clergy, who were assumed to receive, in the form of rent, taxes, and tithes respectively, the value of the net product which agriculture annually yielded.
The general level of economic activity, according to the Physiocrats, is largely determined by the level of agricultural output, and the latter is determined in its turn by the magnitude of the net product. If the net product is increasing from year to year, the level of agricultural output, and therefore the general level of economic activity, will rise.


Decline of Physiocracy

Physiocracy has not survived as an economics and have passed from the mainstream of our intellegtual tradition. Physiocracy never proclaimed itself as a doctrine directed solely to the modernization of France. Success of Adam Smith´s alternative science of the “ wealth of nations” and failure of physiocratic policy in France in the mid-1770s, simultaneously discredited the physiocrats claims to having practical and theoretical blueprint for a new socio-economic order.

By the middle of the 1760s the Physiocratic school had become a real intellectual power in the land; by the end of the 1760s its influence was already beginning to wane. After 1770 there were still Physiocrats, but they were soon to become isolated. There was still Physiocratic doctrine, but it was tending towards dissolution. There was at any rate no Physiocratic movement. They attempt to synthesize econmics, politics and philosophy which were accompanied by the invention of the name “Physiocracy”- a name which dates only from 1767- to embrace all the elements of wider doctrine. These were indeed days of fame and hope. The influence of the Physiocrats was slowly making itself felt on certain Societies of Agriculture, and certain Parliaments. In the sphere of government policy, too, it seemed as if Physiocratic propaganda was beginning to have some effect. It was not only a revolution in the policy of nations which was changing at this time but also strong and organized opposition of Physiocratic doctrine. The trouble about Physiocracy was that there was something in it for almost everybody to object to, because Physiocrats went very much against the interests of the nobility and the landed gentry. Whatever the case, the influence the Physiocrats had on French economic policy was not very remarkable.

-Janne Posti-