Physiocracy 重农学派

1. Physiocracy重农学派 张世赫 杨冬 杨欧雯 郁霄 6/9/2012

2. Outline • The Background of Physiocracy’s Emergence • The General Description of Physiocracy • Quesnay • Turgot • Some critique about Physiocracy

3. The Background of Physiocracy’s Emergence

4. Louis XIV • Making France the most powerful country in the European • The only power in the realm • the Versailles • Wasteful and War

5. Mercantilism and France • Government control of foreign trade. • Mercantilism dominated Western European economic policy and discourse from the 16th to late-18th centuries. • Mercantilism encouraged the many intra-European wars of the period.

6. Mercantilism and France • Mercantilists failed to understand the notions of absolute advantage and comparative advantage (although this idea was only fully fleshed out in 1817 by David Ricardo) and the benefits of trade. • Impossibility of the mercantilists' goal of a constant positive balance of trade • Bullion was just the same as any other commodity, and there was no reason to give it special treatment

7. Mercantilism and France • Mercantilism arose in France in the early 16th century • The height of French mercantilism is closely associated with Jean-Baptiste Colbert, finance minister for 22 years in the 17th century, to the extent that French mercantilism is sometimes called Colbertism. • Deeply involved in the economy in order to increase exports.

8. Mercantilism and France • To encourage industry, foreign artisans and craftsmen were imported. • Colbert also worked to decrease internal barriers to trade, reducing internal tariffs and building an extensive network of roads and canals. • Policy was successful, but cannot turn France into a major trading power, and Britain and the Netherlands remained supreme in this field.

9. Connection Between France and China • A large number of ancient Chinese cultural classics through the missionaries into Europe. • “China hot “. • Influence France enlightenment thinkers, such as Volt in Altay, Rousseau, Montesquieu, Diderot, Holbach, Quesnay etc. • Chinese culture.

10. Connection Between France and China • The study of Chinese policy also influence the Physiocrats, especially François Quesnay . He really respected Confucius and he also referred plenty of Chinese laws and documents to build his own theory of Physiocracy.

11. Summary • Economy: There are development of capitalism, but the feudal remains the dominant. • Politic: Is in France of the bourgeois revolution preparatory period, class conflict sharply. Mercantilist economic policy at that time still ruled France, relying primarily on circulation policy cannot resolve France economic and fiscal issues. • Philosophy: Natural order of enlightenment thinkers thinking has important implications to physiocracy.

12. The General Description of Physiocracy

13. Physiocracy • Physiocracy (from the Greek for "Government of Nature") is an economic theory developed by the Physiocrats, a group of economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development." Their theories originated in France and were most popular during the second half of the 18th century. Physiocracy is perhaps the first well-developed theory of economics. • The movement was particularly dominated by François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781). It immediately preceded the first modern school, classical economics, which began with the publication of Adam Smith's The Wealth of Nations in 1776.

14. Natural Order • The Physiocrats thought there was a "Natural order" that allowed human beings to live together. • we have to discover the laws of the natural order that will allow individuals to live in society without losing significant freedoms. • Human society there are objective laws. • Tradition of classical political economy, created as a socio-economic concept of a measurement system. • The natural order of Physiocracy, in fact, is idealized capitalist society.

15. Produitcnet(pure products theory) • Produitcnet is central to physiocracy theory. • Physiocracycampaigners believe that wealth is a material product, a source of wealth is not circulation but production. • Theory of produitcnet is surplus value theory of the Physiocrats. • Produitcnet on the basis of agriculture proposed the abolition of other taxes only a single rent tax claims.

16. Francois Quesnay June 4, 1694 – December 16, 1774

17. Life • Born Méré near Versailles in 1694 • Physician of Louis XV • Started to devote himself to economic studies when he was 60 • Founder of the Physiocrats and published the first work to describe economy in an analytical way (Tableau économique)

18. Works • Fermiers (1756) • Grains (1757) • Maximesgénérales de gouvernementeconomique d'un royaumeagricole (1758) • Tableau économique avec son explication (1758) • Le Despotisme de la Chine (1767) • Other minor pieces

19. Theories • Produitcnet theory • Social class structure theory • Capital theory • Tableau économique

20. Produitcnet theory • Under trade, goods with equal value can be traded and no wealth will be generated • Emphasis on productive work as the source of national wealth

21. Produitcnet theory • Wealth of nations was derived solely from the value of “land agriculture” or “land development” • Apart from agriculture, other department do not have the nature power involved and no surplus will be generated • Produitcnet is the agricultural surplus

22. Social class structure theory • Proprietary class • only landowners • Productive class • all agricultural laborers • Sterile class • artisans and merchants

23. Capital Theory • Advance • Similar to the definition of assets in today’s words, advance is something that can generate profit • According to the idea of produitcnet, only advance in the agriculture is productive

24. Capital Theory • Original advance and Annual advance • Advance in agriculture is divided into two categories • Original advance can last for ten years and annual advance should be invested annually • For the first time, long-term assets and short-term assets is distinguished

25. Economic Table • One of the three great inventions which have contributed most to the stability of political societies, the other two being those of writing and of money • This was the first work to attempt to describe the workings of the economy in an analytical way, and as such can be viewed as one of the first important contributions to economic thought

26. Economic Table • Assumption • No small-peasant economy and only large-scale peasant economy instead • Three classes exist in the economy and currency circulate among these three classes • Consider simple reproduction • Price is unchanged • Ignore international trade

28. Economic Table

29. Economic table • Five steps • Proprietary class use 1 to buy industrial goods sterile class • Proprietary class use another 1 to buy food from productive class • Sterile class use 1 to buy raw material from productive class • Productive class use 1 to buy productive material from sterile class • Sterile class use 1 to buy food from productive class

30. Economic table • Now, productive class have 2 and give them to proprietary class as rent • Productive class have 1 productive material and 2 good which were not sold • Those will be reinvest next year as annual advance(2) and original advance(1)

31. Economic table • Ignore unnecessary factors and focus on essential questions with abstract analysis • Consider the end of the last harvest as the beginning of next circle, recognize the reproduction in a proper way • Take the movements between classes as the factors of reproduction, conclude the process of reproduction thoroughly

32. Standpoint • All taxes should be put on the proprietary class who produce nothing but posses net production in the form of rent • All the regulation should be annulled to increase competition • Free the international trade so that the industrial production can be matched with agriculture

33. Anne-Robert-Jacques Turgot(baron de l’Aulne) May 10,1727 - March 18,1781

34. Physiocrats Turgot Born 10 May 1727 Paris Died 18 March 1781 (age 53) Paris Nationality French Field Political economics Alma master Sorbonne

35. Life • Born in 1727: the youngest son of Michel-Étienne Turgot. • 1747-1751: educated for the Church at Sorbonne • 1751: decided not to take holy orders “He could not bear to wear a mask all his life.” • 1761-1774: Intendant (tax collector) of the genéralité of Limoges

36. Life • 1774 (Louis XVI):minister of the navy （1774.7.20-1774.8.24） controller-general （1774.8.24-1776.5.12） • Establish free trade in grain • Impose taxation instead of feudal service • Force the privilege class to pay tax • Abolition the privileges of the craft guilds • Force to resign on May 12,1776.Unfortunate in his official career, he concentratedon academic career and died on 18 March 1781

37. PART I: ECONOMICS [13] 1. Reflections on the Formation and Distribution of Wealth 2. Letter on Paper-Money 3. Fairs and Markets ⁞PART II: PHILOSOPHY  [2]14. A Philosophical Review of the Successive Advances of the Human Mind  ⁞PART III: SOCIAL QUESTIONS [5] 16. On Some Social Questions, Including the Education of the Young17. Local Government and National Education  ⁞ PART IV: CORRESPONDENCE [8]To Voltaire To Condorcet  ⁞  <The Turgot Collection>

38. “What should be done to make the State prosperous and happy?” “You simply obey the laws of nature.”

39. <Reflections on the Formation and Distribution of Wealth>

40. Land(变迁) 工资

41. wage Land（交换） Reward for labor Net product With the Process of society 耕种劳动 The labor of cultivation All lands have an owner Inequality in the division of land 土地所有权 Proprietor of land Proprietor (disposable classes) The artisans (stipendiary) Cultivator (Productive ) Sterile Class 工人 workman 农人 husbandman 纯产品=收入

42. Land（阶级分工和土地制度） 1.工资制 Cultivation by wage labors How the proprietors draw revenue from land? 2.奴隶制 Cultivation by slaves 3.让渡土地 Alienation of an estate in return for a fixed due 4.对分佃耕制 Share cropping Poor countries Most common 5.土地包租或出租 Renting, or the letting-out-of land Richer countries 工资理论 纯产品的来源

43. Money 1.Price = Current price to all the buyers and sellers conform in their exchange. By nature 2. Average value Money and Universal money Gold Sliver Pecus Pecunia Caurits 3.The use of gold and sliver as money has augmented their value as substances. The value of gold and of sliver, compared with the other commodities, and with one another, is susceptible to change. 主观价值论

44. Money Movable wealth: • 1.not a gift of nature but the working man draws from his labor. • 2.store accumulation of money • 3.an indispensable prerequisite for all lucrative work Quesnay: In agrarian country, thrift is the mother of poverty. Turgot: The spirit of thrift in a nation continually increases the amount of capitals, to increase the number of lenders, and to diminish that of borrowers. The habit of luxury has the opposite effect. 消费观

45. Capitals Invest profitably as advances Use of the advance of capitals Advance only their daily labor Capitalist Entrepreneurs Simple Workmen 工人 workman 农人 husbandman Cultivator Entrepreneurs Farmers Proprietor Use of advance capitals 社会结构

46. Capital Advance and continual return ---The true idea of the circulation of money 1.Buy land 2. Industry enterprises Equilibrium 3.Agricultural enterprises 4.Commercial enterprise Purchase to sell again Interest as thermometer 5.Lending at interest Money as physical substance Property right 预付

47. The total wealth of a nation 1.Net revenue of all landed estates X the rate at land sold 2.Sum of all moveable wealth existing, exclude loan. No truly disposable revenue in a state except the net product of land. The interest of money lent is taken from the revenue of lands, or from the profits of agricultural, industrial and commercial enterprises. But we have already show that these profits themselves were only a part of the produce of lands. 重农主义根本论点

48. The total wealth of a nation • Taxation direct tax / indirect tax equal tariff / equal tax • Turgot: abolish all regulations • Physiocrats: abolish the regulations on agricultural products

49. Other opinions • 1）Advanced the theory of diminishing returns • 他在1767年的一本书中说：很难想象在农业上的两倍投入会产生两倍的产出 • “土地的肥力很像一个被连续添加重量而下压的弹簧。如果重量很小而弹簧不是很有弹性，这样的尝试将会没有结果。但是当重量超过阻力，弹簧将会被压下。当承受一定的压力之后，他又会开始阻止加于其上的额外力量，以前加载它上边能够产生一英寸或更多的下压的力量将几乎不能将它压下一毫。所以不断添加重量的效果是逐渐递减的。”

50. Some critique about Physiocracy