The Encyclopedia of Libertarianism

Physiocracy

Physiocracy has reference to a school of economic thought that flourished in France during the second half of the 18th century. The physiocrats did not call themselves by this label, but referred to themselves simply as les économistes. However, as the term economist acquired a broader meaning in the 18th century, it became customary to distinguish these economists from others by dubbing them physiocrats.

The word physiocracy, coined in 1767 by Pierre Samuel du Pont de Nemours, means “the rule of nature.” This meaning suggests that economic phenomena are governed by natural laws that operate independently of human will and intention, including the decrees of legislators. “The most important idea of the Physiocrats,” notes the historian Scott Gordon, “was that economic processes are governed by laws of nature in such a way that the economic world, like the natural world, is, or can be, a system of spontaneous order.”

Most historians agree with the assessment of Henry Higgs, who wrote at the end of the 19th century that “the Physiocrats were the first scientific school of political thought.” This is not to say that they were the first true economists because this appellation can be applied to many of their predecessors. Rather, in referring to physiocracy as the first school of economic thought, we mean that the physiocrats were a loosely organized group of individuals who shared a common theoretical perspective and worked together to bring about economic and political reforms.

These reforms focused on liberating agriculture, manufacturing, and commerce from onerous mercantilist regulations and restrictions that had crippled the French economy. The physiocrats generally advocated a policy of free trade in both domestic and foreign commerce—a view that was reflected in the physiocratic motto, Laissez-faire, laissez-passer. Although the physiocrats were not the first to use the expression laissez-faire to refer to free trade—previous writers, among them two French economists, Pierre Le Pesant, Sieur de Boisguillebert and Marc-Pierre de Voyer de Paulmy, Comte d’Argenson, had used it as well—they were largely responsible for popularizing it.

The founder of physiocracy was François Quesnay, physician to Madame de Pompadour and Louis XV. Having gained an international reputation in medicine with the publication of five books, Quesnay acquired his interest in economic theory late in life, publishing his first articles on the subject in Diderot’s Encyclopedia at age 62. The publication, in 1758, of Quesnay’s Tableau Économique signaled the beginning of the physiocratic movement.

The Tableau traces the circular flow of wealth among three economic classes. It focuses on the produit net, which refers to the surplus value created by the “productive class” of agricultural workers—among them not only tenant farmers, but also workers in other primary industries, such as mining, fishing, and forestry. According to Quesnay, only this productive class is capable of producing new wealth (i.e., a “net product” that exceeds the expense of maintaining workers and other costs of production).

The two other classes in Quesnay’s schema are proprietors (i.e., landowners) and the “sterile class” of artisans, merchants, manufacturers, professionals, servants, and so on. Quesnay’s use of the word sterile was destined to become one of the most controversial aspects of physiocratic theory. Adam Smith writes in the Wealth of Nations that the physiocratic notion of a “barren or unproductive class” was an attempt to “degrade” merchants, manufacturers, and other nonagricultural workers with a “humiliating appellation.”

Some commentators disagree with Smith’s assessment. They maintain that Quesnay and his disciples worked from a purely physical conception of productivity, and that in using the word sterile they did not mean to deny that members of this class provided goods and services that possessed economic utility. Rather, they meant only that its members did not create new wealth per se, but could only transform or exchange preexisting wealth produced from the bounty of nature.

Despite the exaggerated rhetoric of one of Quesnay’s enthusiastic admirers, according to whom the Tableau ranks with the invention of writing and the introduction of money as one of the three most beneficial social inventions in the history of mankind, the particulars of the Tableau are of little value or interest today except to historians of ideas.

The theoretical significance of the Tableau lies not in its details, but in what it represents. It is widely regarded as the first explicit theoretical model of an economic system operating under a condition of perfect competition—a self-regulating market that, in Quesnay’s words, is “as constant in its principles and as susceptible of demonstration as the most certain physical sciences.” The Tableau depicts a law-governed economic system in which, as du Pont de Nemours put it, nothing stands alone and all things hang together. This organic conception of an interdependent market order—the physician Quesnay may have been influenced by William Harvey’s writings on the circulation of blood—would become a mainstay of later economic thinking.

 

Further Readings

Chinard, Gilbert. The Correspondence of Jefferson and Du Pont de Nemours. With an Introduction on Jefferson and the Physiocrats. Baltimore: Johns Hopkins University Press, 1931.

du Pont de Nemours, Pierre Samuel. “On the Origin and Progress of a New Science.” Commerce, Culture, and Liberty: Readings in Capitalism before Adam Smith. Henry C. Clarke, ed. Indianapolis, IN: Liberty Fund, 2003.

Gordon, Scott. The History and Philosophy of Social Science. New York: Routledge, 1991.

Higgs, Henry. The Physiocrats: Six Lectures on the French Economistes of the 18th Century. New York: Macmillan, 1897.

Mirabeau, Victor Riquetti, Marquis de. François Quesnay: The Economic Tables (Tableau Economique). New York: Gordon Press, 1973.

Originally published .