This document discusses Quesnay and the analysis of surplus in an agrarian capitalist economy. It provides historical context on Quesnay and the Physiocrats, explaining that Quesnay's system described a truly capitalist agrarian economy in France. It analyzes the Physiocratic division of society into three classes and argues that Quesnay was a pioneer in analyzing the physical surplus of grains as the basis for distribution of income and relative prices, establishing him within the classical political economy tradition.
This document provides an overview of the concept of neoclassical equilibrium according to early neoclassical economists like Walras, Pareto, Jevons, and others. It discusses two interpretations of neoclassical equilibrium - the instantaneous equilibrium notion adopted by the Lausanne School which views equilibrium as a series of changing states over time, and the stationary equilibrium notion adopted by other economists which views equilibrium as an unchanging state. It also examines Walras's views on theoretical versus empirical solutions to equilibrium and the evolution of his thinking on whether the theoretical models could be solved analytically.
Kant viewed pre-enlightened people as living in a self-imposed "minority" due to a lack of courage to think independently. He argued humans were domesticated by authority figures who discouraged independent thought. Further, humans found comfort in their passive role and feared daring to think freely. Kant proposed solutions, such as developing public reason through open debate, to help people emerge from this self-imposed minority and progress toward an enlightened society.
This document summarizes major historical periods and events related to Western civilization from the 4th century CE to the modern era. It discusses the conversion of the Roman Empire to Christianity under Constantine in the 4th century CE, the Renaissance from the 15th to 16th centuries, the Protestant Reformation in the 16th century, the Scientific Revolution of the 16th to 18th centuries, and the Enlightenment of the 18th century. It also mentions the Congress of Vienna in 1815 and the six major ruling families in Europe at that time. The document then discusses various influences on art and thought over time, including Pre-Socratic Greeks, indigenous Australians, Eastern thought, Romanticism, and modern movements.
Kant argues that enlightenment involves humans emerging from self-imposed immaturity through courageously using their own understanding rather than relying on external guidance. He claims most people remain willingly immature due to laziness and find it easier to let others think for them through books, pastors, physicians, etc. Guardians have ensured the public sees maturity as dangerous by making them dependent on authority. True enlightenment only requires freedom of public reason and debate on all matters, which advances progress, while private reason may be restricted to maintain order. The 18th century represents an age of enlightenment, not complete enlightenment, as obstacles to independent thought are gradually diminishing.
The Enlightenment was an 18th century intellectual movement that promoted reason and science over tradition. Enlightenment thinkers like Voltaire and Locke sought progress through reason and natural law. They influenced fields like economics, crime and punishment, and advocated for religious tolerance and women's rights. Enlightened monarchs attempted to rule based on Enlightenment principles, though with mixed success due to resistance from nobility. This period saw developments in philosophy, politics, science and the arts.
1) Marx's theory of historical materialism holds that the mode of production, or how people produce what they need to live, determines other aspects of society like legal and political structures.
2) Marx rejected theories that saw ideas or psychology as primary, arguing instead that economic conditions shape people's thinking.
3) Historical materialism is not a psychological theory about human motivation but a method for analyzing how economic conditions structure society and human development over time.
François Quesnay (1694-1774) foi um médico e economista francês que fundou a escola de pensamento econômico conhecida como Fisiocracia. Sua principal obra, "Tableau Économique" (1758), apresentou um dos primeiros modelos de circulação econômica e defendeu que apenas a agricultura era produtiva. A Fisiocracia pregava a liberdade econômica e um sistema tributário focado nos proprietários de terras.
Adam Smith was an 18th century Scottish economist considered the father of modern economics. He developed the theory of value which states that the value of a good is determined by the amount of labor required to produce it. However, this only applies to primitive societies. In modern capitalist societies, the value or price of a good is made up of the costs of production including labor costs, profit, and rent for land usage. Smith's theory of value helped establish the basis for modern economic thought, though it is not fully applicable in complex market economies.
This document provides an overview of the concept of neoclassical equilibrium according to early neoclassical economists like Walras, Pareto, Jevons, and others. It discusses two interpretations of neoclassical equilibrium - the instantaneous equilibrium notion adopted by the Lausanne School which views equilibrium as a series of changing states over time, and the stationary equilibrium notion adopted by other economists which views equilibrium as an unchanging state. It also examines Walras's views on theoretical versus empirical solutions to equilibrium and the evolution of his thinking on whether the theoretical models could be solved analytically.
Kant viewed pre-enlightened people as living in a self-imposed "minority" due to a lack of courage to think independently. He argued humans were domesticated by authority figures who discouraged independent thought. Further, humans found comfort in their passive role and feared daring to think freely. Kant proposed solutions, such as developing public reason through open debate, to help people emerge from this self-imposed minority and progress toward an enlightened society.
This document summarizes major historical periods and events related to Western civilization from the 4th century CE to the modern era. It discusses the conversion of the Roman Empire to Christianity under Constantine in the 4th century CE, the Renaissance from the 15th to 16th centuries, the Protestant Reformation in the 16th century, the Scientific Revolution of the 16th to 18th centuries, and the Enlightenment of the 18th century. It also mentions the Congress of Vienna in 1815 and the six major ruling families in Europe at that time. The document then discusses various influences on art and thought over time, including Pre-Socratic Greeks, indigenous Australians, Eastern thought, Romanticism, and modern movements.
Kant argues that enlightenment involves humans emerging from self-imposed immaturity through courageously using their own understanding rather than relying on external guidance. He claims most people remain willingly immature due to laziness and find it easier to let others think for them through books, pastors, physicians, etc. Guardians have ensured the public sees maturity as dangerous by making them dependent on authority. True enlightenment only requires freedom of public reason and debate on all matters, which advances progress, while private reason may be restricted to maintain order. The 18th century represents an age of enlightenment, not complete enlightenment, as obstacles to independent thought are gradually diminishing.
The Enlightenment was an 18th century intellectual movement that promoted reason and science over tradition. Enlightenment thinkers like Voltaire and Locke sought progress through reason and natural law. They influenced fields like economics, crime and punishment, and advocated for religious tolerance and women's rights. Enlightened monarchs attempted to rule based on Enlightenment principles, though with mixed success due to resistance from nobility. This period saw developments in philosophy, politics, science and the arts.
1) Marx's theory of historical materialism holds that the mode of production, or how people produce what they need to live, determines other aspects of society like legal and political structures.
2) Marx rejected theories that saw ideas or psychology as primary, arguing instead that economic conditions shape people's thinking.
3) Historical materialism is not a psychological theory about human motivation but a method for analyzing how economic conditions structure society and human development over time.
François Quesnay (1694-1774) foi um médico e economista francês que fundou a escola de pensamento econômico conhecida como Fisiocracia. Sua principal obra, "Tableau Économique" (1758), apresentou um dos primeiros modelos de circulação econômica e defendeu que apenas a agricultura era produtiva. A Fisiocracia pregava a liberdade econômica e um sistema tributário focado nos proprietários de terras.
Adam Smith was an 18th century Scottish economist considered the father of modern economics. He developed the theory of value which states that the value of a good is determined by the amount of labor required to produce it. However, this only applies to primitive societies. In modern capitalist societies, the value or price of a good is made up of the costs of production including labor costs, profit, and rent for land usage. Smith's theory of value helped establish the basis for modern economic thought, though it is not fully applicable in complex market economies.
Thomas Malthus was an 18th century British scholar who developed the theory of population arguing that population grows geometrically while food production grows arithmetically, inevitably leading to food scarcity. He believed preventive checks like moral restraint were needed to slow population growth, otherwise population would be kept in check by "positive checks" like famine, disease and war imposed by nature. Malthus also developed the "iron law of wages" which stated that in the long run, wages cannot rise above the subsistence level and will be pushed back down by population growth outstripping food supply.
Adam Smith foi um economista escocês considerado o pai da economia moderna. David Ricardo e John Stuart Mill foram economistas clássicos ingleses que contribuíram para a teoria econômica. Joseph Schumpeter foi um importante economista do século XX conhecido por suas teorias sobre desenvolvimento econômico.
Adam Smith was an 18th century Scottish economist who made important contributions to economic theory. He taught moral philosophy and economics, and is most famous for his book "The Wealth of Nations" published in 1776, in which he argued that free market capitalism and the invisible hand of self-interest would lead to economic prosperity through free trade, limited government intervention, and the division of labor.
David Ricardo (1772-1823) was a British economist who developed theories such as the labor theory of value, comparative advantage, and rent. Some key points about Ricardo's theories include:
- He believed labor determines the long-run price of goods and that international trade benefits both countries based on their comparative advantages in production.
- Ricardo's theory of rent argued that landlords receive economic rent determined by crop prices rather than influencing prices themselves.
- He incorporated Malthus' theory of population growth relative to food supply into his "Iron Law of Wages," which stated wages long-run remain at subsistence level.
Adam Smith is considered the Father of Economics. In his seminal book, The Wealth of Nations, he argued that a country's wealth comes from the total value of goods and services produced, not just gold or agriculture. Smith identified two key drivers of economic growth: the division of labor and capital accumulation. The division of labor leads to specialization and higher productivity, while capital accumulation raises productivity by increasing capital per worker. This starts a virtuous cycle of growth, but eventually diminishing returns set in and growth slows, reaching a stationary state.
This document summarizes David Ricardo's theory of economics development known as Ricardian theory. It discusses Ricardo's background and key contributions, including the law of comparative advantage. It then outlines the assumptions of Ricardian theory, including diminishing returns to land and inelastic demand for corn. Ricardo's theory explains how total output is distributed as rent, profits, and wages. It also discusses how capital accumulation, wages, international trade, and criticisms of the theory relate to Ricardian economics.
Ricardo developed the Ricardian theory of rent, which states that rent arises due to differences in the fertility of land used for agriculture. Land is assumed to have original and indestructible powers of fertility bestowed by nature. Rent is the surplus earned from more fertile land over the least fertile 'marginal' land that marks the extensive limit of cultivation. Rent is determined by the law of diminishing returns in agriculture under both extensive and intensive cultivation. The theory explains the origin of differential rent but makes unrealistic assumptions about land.
This document provides background information on Karl Marx and summaries of some of his major theories. It notes that Marx was a German philosopher, economist, and revolutionary socialist who lived from 1818 to 1883 and was one of the founders of sociology and social science. Some of Marx's key theories discussed include historical materialism, alienation of workers under capitalism, the labor theory of value, surplus value, and class struggle between the bourgeoisie and proletariat. The document also discusses Marx's influence and criticism of some of his ideas.
Karl Marx was a German philosopher, economist, and revolutionary socialist who developed the theories of communism, class conflict, and surplus value. Some of his most influential works include The Communist Manifesto, co-authored with Friedrich Engels, and Das Kapital. Marx proposed that capitalism relies on the exploitation of labor and that the profits of employers come from the unpaid work of their employees. He believed this dynamic would inevitably lead to conflict between the proletariat and bourgeoisie classes.
Thomas Malthus theorized that population grows exponentially while food production increases arithmetically, meaning population will eventually outpace food supply. He argued population is kept in check by positive factors like famine, disease that raise death rates, and negative factors like delayed marriage that lower birth rates. While Malthus' ideas highlighted overpopulation concerns, they ignored unequal resource distribution. Modern relevance of Malthus' theory continues to be debated.
Karl Marx was a German philosopher, economist, and revolutionary socialist who is considered the father of communism. He developed a detailed explanation of human history and events. Some of his most notable works included the Communist Manifesto published in 1848. Marx believed that the middle and working classes were unfairly treated by the bourgeoisie, facing horrible working conditions and low pay while the bourgeoisie profited. He proposed moving from a socialist system where people controlled businesses to a communist system with government control to achieve equality among all people.
Marxism consists of three components: a political doctrine, a philosophy of history, and an analysis of the economy. Marx believed that the economic base of society, or how wealth is produced, determines the social and political superstructure. As productive technologies change, new class relations emerge between workers and owners. Capitalism relies on wage labor and private control of production, creating an inherent conflict of interests between workers and owners. This leads to capitalism's inevitable collapse due to falling profits, overproduction, and unemployment as workers cannot afford the goods they produce.
Karl Marx was a 19th century philosopher, economist, and socialist revolutionary. He developed the theory of historical materialism which argues that economic and material forces drive historical change and development. Marx believed that capitalism would inevitably create contradictions and class conflict between the bourgeoisie and proletariat, leading to revolution and establishment of a communist, classless society. Neo-Marxism emerged in the 20th century and expanded on Marx's theories to include analysis of culture, ideology, and other social factors rather than just economics. Marxist ideas and concepts like alienation, exploitation, and historical materialism continue to influence the study of society, economics, history and conflict.
This document summarizes Ricardo's theory of economic growth. It states that growth occurs through capital accumulation fueled by profits. However, as growth proceeds, wages and rents increase which squeeze profits. Eventually profits fall to zero, halting further investment and growth, reaching a stationary state. The stationary state can be avoided through international trade that imports corn, preventing rising domestic corn prices from cutting into profits.
Brief review of Adam Smith's main concepts of growth.Prabha Panth
Adam Smith considered wealth of a nation to be its total output rather than just gold or agriculture. He believed economic growth increased total output, income, and standard of living. Smith argued growth occurs through increasing the division of labor, which raises productivity, and accumulating capital, which raises labor productivity by increasing the capital-labor ratio. This virtuous cycle of growth could eventually lead to a stationary state with zero growth.
The document discusses Karl Marx's labor theory of value and the concept of surplus value. It explains that necessary labor refers to the labor used to produce goods for workers' subsistence, while surplus labor produces a social surplus product appropriated by the ruling class. Surplus value is the monetary form of this surplus product and represents uncompensated labor extracted by capitalists. The labor theory of value asserts that the exchange value of a commodity is determined by the labor time required to produce it. The document then discusses how stagnation in productive sectors led to the growth of financialization as a way for surplus capital to accumulate.
1) Thomas Paine raised the issue of agrarian justice in the late 18th century, arguing that the poor deserved compensation for land taken through enclosures, but his ideas focused only on land distribution and lacked theoretical rigor.
2) In the 19th century, the concept of justice in economics focused on Pareto optimality and efficiency rather than separate notions of justice. Agrarian justice was seen as a subset of overall economic justice.
3) Recent literature proposes alternative concepts
Thomas Malthus was an 18th century British scholar who developed the theory of population arguing that population grows geometrically while food production grows arithmetically, inevitably leading to food scarcity. He believed preventive checks like moral restraint were needed to slow population growth, otherwise population would be kept in check by "positive checks" like famine, disease and war imposed by nature. Malthus also developed the "iron law of wages" which stated that in the long run, wages cannot rise above the subsistence level and will be pushed back down by population growth outstripping food supply.
Adam Smith foi um economista escocês considerado o pai da economia moderna. David Ricardo e John Stuart Mill foram economistas clássicos ingleses que contribuíram para a teoria econômica. Joseph Schumpeter foi um importante economista do século XX conhecido por suas teorias sobre desenvolvimento econômico.
Adam Smith was an 18th century Scottish economist who made important contributions to economic theory. He taught moral philosophy and economics, and is most famous for his book "The Wealth of Nations" published in 1776, in which he argued that free market capitalism and the invisible hand of self-interest would lead to economic prosperity through free trade, limited government intervention, and the division of labor.
David Ricardo (1772-1823) was a British economist who developed theories such as the labor theory of value, comparative advantage, and rent. Some key points about Ricardo's theories include:
- He believed labor determines the long-run price of goods and that international trade benefits both countries based on their comparative advantages in production.
- Ricardo's theory of rent argued that landlords receive economic rent determined by crop prices rather than influencing prices themselves.
- He incorporated Malthus' theory of population growth relative to food supply into his "Iron Law of Wages," which stated wages long-run remain at subsistence level.
Adam Smith is considered the Father of Economics. In his seminal book, The Wealth of Nations, he argued that a country's wealth comes from the total value of goods and services produced, not just gold or agriculture. Smith identified two key drivers of economic growth: the division of labor and capital accumulation. The division of labor leads to specialization and higher productivity, while capital accumulation raises productivity by increasing capital per worker. This starts a virtuous cycle of growth, but eventually diminishing returns set in and growth slows, reaching a stationary state.
This document summarizes David Ricardo's theory of economics development known as Ricardian theory. It discusses Ricardo's background and key contributions, including the law of comparative advantage. It then outlines the assumptions of Ricardian theory, including diminishing returns to land and inelastic demand for corn. Ricardo's theory explains how total output is distributed as rent, profits, and wages. It also discusses how capital accumulation, wages, international trade, and criticisms of the theory relate to Ricardian economics.
Ricardo developed the Ricardian theory of rent, which states that rent arises due to differences in the fertility of land used for agriculture. Land is assumed to have original and indestructible powers of fertility bestowed by nature. Rent is the surplus earned from more fertile land over the least fertile 'marginal' land that marks the extensive limit of cultivation. Rent is determined by the law of diminishing returns in agriculture under both extensive and intensive cultivation. The theory explains the origin of differential rent but makes unrealistic assumptions about land.
This document provides background information on Karl Marx and summaries of some of his major theories. It notes that Marx was a German philosopher, economist, and revolutionary socialist who lived from 1818 to 1883 and was one of the founders of sociology and social science. Some of Marx's key theories discussed include historical materialism, alienation of workers under capitalism, the labor theory of value, surplus value, and class struggle between the bourgeoisie and proletariat. The document also discusses Marx's influence and criticism of some of his ideas.
Karl Marx was a German philosopher, economist, and revolutionary socialist who developed the theories of communism, class conflict, and surplus value. Some of his most influential works include The Communist Manifesto, co-authored with Friedrich Engels, and Das Kapital. Marx proposed that capitalism relies on the exploitation of labor and that the profits of employers come from the unpaid work of their employees. He believed this dynamic would inevitably lead to conflict between the proletariat and bourgeoisie classes.
Thomas Malthus theorized that population grows exponentially while food production increases arithmetically, meaning population will eventually outpace food supply. He argued population is kept in check by positive factors like famine, disease that raise death rates, and negative factors like delayed marriage that lower birth rates. While Malthus' ideas highlighted overpopulation concerns, they ignored unequal resource distribution. Modern relevance of Malthus' theory continues to be debated.
Karl Marx was a German philosopher, economist, and revolutionary socialist who is considered the father of communism. He developed a detailed explanation of human history and events. Some of his most notable works included the Communist Manifesto published in 1848. Marx believed that the middle and working classes were unfairly treated by the bourgeoisie, facing horrible working conditions and low pay while the bourgeoisie profited. He proposed moving from a socialist system where people controlled businesses to a communist system with government control to achieve equality among all people.
Marxism consists of three components: a political doctrine, a philosophy of history, and an analysis of the economy. Marx believed that the economic base of society, or how wealth is produced, determines the social and political superstructure. As productive technologies change, new class relations emerge between workers and owners. Capitalism relies on wage labor and private control of production, creating an inherent conflict of interests between workers and owners. This leads to capitalism's inevitable collapse due to falling profits, overproduction, and unemployment as workers cannot afford the goods they produce.
Karl Marx was a 19th century philosopher, economist, and socialist revolutionary. He developed the theory of historical materialism which argues that economic and material forces drive historical change and development. Marx believed that capitalism would inevitably create contradictions and class conflict between the bourgeoisie and proletariat, leading to revolution and establishment of a communist, classless society. Neo-Marxism emerged in the 20th century and expanded on Marx's theories to include analysis of culture, ideology, and other social factors rather than just economics. Marxist ideas and concepts like alienation, exploitation, and historical materialism continue to influence the study of society, economics, history and conflict.
This document summarizes Ricardo's theory of economic growth. It states that growth occurs through capital accumulation fueled by profits. However, as growth proceeds, wages and rents increase which squeeze profits. Eventually profits fall to zero, halting further investment and growth, reaching a stationary state. The stationary state can be avoided through international trade that imports corn, preventing rising domestic corn prices from cutting into profits.
Brief review of Adam Smith's main concepts of growth.Prabha Panth
Adam Smith considered wealth of a nation to be its total output rather than just gold or agriculture. He believed economic growth increased total output, income, and standard of living. Smith argued growth occurs through increasing the division of labor, which raises productivity, and accumulating capital, which raises labor productivity by increasing the capital-labor ratio. This virtuous cycle of growth could eventually lead to a stationary state with zero growth.
The document discusses Karl Marx's labor theory of value and the concept of surplus value. It explains that necessary labor refers to the labor used to produce goods for workers' subsistence, while surplus labor produces a social surplus product appropriated by the ruling class. Surplus value is the monetary form of this surplus product and represents uncompensated labor extracted by capitalists. The labor theory of value asserts that the exchange value of a commodity is determined by the labor time required to produce it. The document then discusses how stagnation in productive sectors led to the growth of financialization as a way for surplus capital to accumulate.
1) Thomas Paine raised the issue of agrarian justice in the late 18th century, arguing that the poor deserved compensation for land taken through enclosures, but his ideas focused only on land distribution and lacked theoretical rigor.
2) In the 19th century, the concept of justice in economics focused on Pareto optimality and efficiency rather than separate notions of justice. Agrarian justice was seen as a subset of overall economic justice.
3) Recent literature proposes alternative concepts
The document provides an overview of key concepts and theories in microeconomics and the history of economic thought, including:
- Definitions of labor force, unemployment, and types of unemployment.
- Classical economic theories from the 18th-19th centuries that emphasized free markets and limited government.
- Contributions of early economists like Adam Smith, Thomas Malthus, David Ricardo, and John Stuart Mill.
- Emergence of neoclassical economics in the late 19th century focusing on market efficiencies.
- John Maynard Keynes' development of Keynesian economics in the 1930s advocating active government intervention to ensure stability and growth.
This document provides a summary of different economic theories from Physiocrat to Institutional Economics. It discusses the key ideas and contributors of each theory over time including Physiocrat, Mercantilism, Classical Economics, Keynesian Economics, Neo-Classical Economics, New Classical Economics, New Keynesian Economics, Structural Economics, and Institutional Economics. The document is a group assignment report submitted by 5 students at the Sri Lanka Institute of Information Technology for their Fundamentals of Economics course. It includes an introduction, discussion on each theory in turn, and references section.
Chapter 7 – 11 Review Power Point by Emma HernandezRidhima Gurnani
1) The document provides a historical overview of major developments from the Scientific Revolution through the early 19th century, including the rise of scientific thought, Enlightenment philosophy, the American and French Revolutions, and the Industrial Revolution.
2) Key figures discussed include Copernicus, Galileo, Descartes, Locke, Voltaire, Rousseau, and leaders of Enlightened Despotism such as Catherine the Great and Joseph II.
3) By the late 18th century, the French and British governments faced debt and unrest over taxation, contributing to the American and French Revolutions.
This document provides an introduction and overview of the economic ideas of Mahatma Gandhi and J.C. Kumarappa, two Indian thinkers from the early 20th century. It argues that their model constitutes a fundamentally non-modern critique of economics, which remains a thoroughly modernist enterprise. Specifically, it explores how Gandhi and Kumarappa challenged the dominant Western conception of the fact-value dichotomy, a key concept in the development of modern science and economics. They rejected the separation of descriptive positive economics from normative ethical concerns. Instead, they viewed facts and values as inherently interconnected. The document aims to situate Gandhi and Kumarappa's response in the ongoing debate between objectivist and subjectivist views of science and knowledge
The document discusses Auguste Comte's theory of the three stages of social evolution: the theological stage, the metaphysical stage, and the positivist stage. It explains each stage in detail, from fetishism and polytheism in the theological stage to the emphasis on scientific observation and industry in the positivist stage. The document also discusses how Comte's philosophy of positivism influenced thinkers in Latin America and Brazil in particular in the 19th century.
Laissez-faire is an economic environment in which transactions between private parties are free from government restrictions,tariffs, and subsidies, with only enough regulations to protect property rights.[1] The phrase laissez-faire is French and literally means "let [them] do," but it broadly implies "let it be," "let them do as they will," or "leave it alone.
According to historical legend, the phrase stems from a meeting in about 1681 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a certain M. Le Gendre. When the eager mercantilistminister asked how the French state could be of service to the merchants and help promote their commerce, Le Gendre replied simply "Laissez-nous faire" ("Let us be," literally "Let us do")
he anecdote on the Colbert-Le Gendre meeting was related in a 1751 article in theJournal Oeconomique by the French minister and champion of free trade, René de Voyer, Marquis d'Argenson – which happens to also be the phrase's first known appearance in print.[3] Argenson himself had used the phrase earlier (1736) in his own diaries, in a famous outburst:
(Trans: Let it be, that should be the motto of all public powers, since the world was civilized ... That we cannot grow except by lowering our neighbors is a detestable notion! Only malice and malignity of heart is satisfied with such a principle and our (national) interest is opposed to it. Let it be, for heaven's sake! Let it be!)
This document provides an overview of several influential early economists from the pre-classical era, including:
- Richard Cantillon, considered the father of enterprise economics and author of one of the first treatises on economic theory. His work isolated economic phenomena and influenced later economists.
- John Locke, who developed the labor theory of property and argued that property rights derive from labor.
- François Quesnay and the Physiocrats, who believed that agricultural production was the sole source of wealth and advocated for reducing taxes on farmers. Quesnay's "Economic Table" was influential.
- Jacques Turgot, a French economist who recognized the law of diminishing marginal returns and advocated for economic liberal
1) Many Enlightenment philosophers believed that enlightened monarchs could best reform society from above, as they distrusted allowing changes from the masses.
2) Frederick the Great of Prussia and Catherine the Great of Russia promoted aspects of the Enlightenment like education and legal reform while maintaining absolute rule.
3) Monarchs like Maria Theresa of Austria and Joseph II of Austria introduced limited reforms to reduce the power of the nobility and church, but faced opposition that prevented lasting changes.
The document provides information about several topics related to European history between the 14th-18th centuries, including the Black Death, the Renaissance, the Protestant Reformation, the Scientific Revolution, and the Enlightenment. It tests knowledge through multiple choice questions about events, people, developments, and differences between groups and time periods. The questions cover a wide range of subjects across several centuries of European history.
The document discusses the origins and development of sociology. It describes how the Age of Enlightenment, French Revolution, and Industrial Revolution led thinkers to develop sociology as a way to understand and address problems in modern society. Auguste Comte is identified as the founder of sociology. He coined the term and advocated for a positivist, scientific approach to studying society. Comte's work was influenced by the social upheaval of his time and aimed to establish sociology as a way to reveal laws of human behavior and social order.
The document summarizes the early critics of neoclassical economics, specifically the German historical school that emerged in the 1840s. It outlines four key principles of the historical school: 1) an evolutionary approach, 2) an emphasis on the positive role of government, 3) an inductive/historical approach, and 4) advocacy of conservative reform. It then discusses the older and younger historical schools in more detail and their criticisms of classical economics. Finally, it introduces the American institutionalist school led by Thorstein Veblen and seven of its key ideas.
This chapter discusses the relevance, definition, and methodology of Islamic economics. It is divided into four sections. Section one examines the relevance of Islamic economics from religious, contemporary knowledge, and individual/societal perspectives. It discusses how religion provides behavioral norms for all aspects of life, including economics. Section two surveys definitions of Islamic economics and concludes with a selected definition. Section three analyzes the methodology of economics and how it compares/contrasts with Islamic economics. Section four focuses on the relationship between Islamic economics and other fields like fiqh, hadith, and Islamic history.
Historical Development of State Activities Cameralism.pptxHabiburShohag1
Cameralism was an influential German administrative science from the 18th-19th centuries that aimed to strengthen state control over the economy. It emphasized self-sufficiency, economic regulation, and exploitation of natural resources. Cameralism was taught in universities and aimed to train bureaucrats to efficiently manage state finances, resources, and economic policy. It influenced the development of modern public administration and accounting systems. While primarily focused on serving state interests, Cameralism also sought to improve population welfare and integrate social classes. It was an important school of thought in Prussia and Sweden during the early modern period.
Due April 16, 2020The final research paper for this class is.docxastonrenna
Due April 16, 2020
The final research paper for this class is your opportunity to tie together you years here at FIU as an international relations student with what has been covered in this course. The topic is up to you to decide. A good topic will engage the course literature and lectures. A good method for devising a research topic will be to reflect on areas of knowledge you have built up while at FIU and begin to re-examine those topics through the fundamental literature we have covered in this course. In order to avoid restricting your creativity, the final paper will not have a page limit. You will be expected to fully engage your topic, research question, and address all the issues in that area of international relations. You can choose your own topic about an historical or current event or person as seen from the perspective of a philosopher. For example, what would Plato have said about the election of President Trump? How would Arendt have understood the popular hysteria leading to the Rwandan Genocide?
This paper and the final should be formatted to be double-spaced, 1 inch margin, and 12 font.
You will locate 4-6 sources that are important for understanding your topic and following the citation of your chosen source there will be 1-3 sentences explaining how/why this source will support your topic. Only peer reviewed journals and/or university press books are acceptable. Some popular journals like Newsweek or the Economist could be used. You must also include one class reading in your annotated bibliography.
ASIAN POLITICAL THOUGHT
TIMOTHY J. LOMPERIS
Saint Louis University
S cholars of Westem political thought have .not dis-puted the fact that there is a rich body of political thought in Asia. They lmve just not bothered to
incorporate it into their corpus. This chapter seeks to pro-
vide long-overdue recognition to this body of thought by
calling attention to the fact that despite its heavy religious
content (until modern times), the encounter with political
ideas in Asia is just as profound as it is in the West. In fact,
since these ideas in Asia are heavily fertilized by their
Western colonial legacy, the West has much to learn about
itself from these Asian borders to the West's material and
intellectual reach.
In this presentation of Asian political thought, what will
emerge is that the such central ideas as democracy,ji-eedom,
and equality were forn1ed in a historical context different
from the West. In the West, these ideas were expressed and
then refined through a prism of small city-states in Greece,
the universal empire of Rome, the subsequent collapse of this
imperium politically but its persistence intellectually in the
Thomist medieval synthesis, the smashing fem1ent (both
intellectually and institutionally) of the Renaissance and the
Reformation, and the birth of the modern nation-state in
the twin crucibles of the Thirty Years' War (1618-1648) and
the French Revolution (1789-1795). ...
Due April 16, 2020The final research paper for this class is.docxmadlynplamondon
Due April 16, 2020
The final research paper for this class is your opportunity to tie together you years here at FIU as an international relations student with what has been covered in this course. The topic is up to you to decide. A good topic will engage the course literature and lectures. A good method for devising a research topic will be to reflect on areas of knowledge you have built up while at FIU and begin to re-examine those topics through the fundamental literature we have covered in this course. In order to avoid restricting your creativity, the final paper will not have a page limit. You will be expected to fully engage your topic, research question, and address all the issues in that area of international relations. You can choose your own topic about an historical or current event or person as seen from the perspective of a philosopher. For example, what would Plato have said about the election of President Trump? How would Arendt have understood the popular hysteria leading to the Rwandan Genocide?
This paper and the final should be formatted to be double-spaced, 1 inch margin, and 12 font.
You will locate 4-6 sources that are important for understanding your topic and following the citation of your chosen source there will be 1-3 sentences explaining how/why this source will support your topic. Only peer reviewed journals and/or university press books are acceptable. Some popular journals like Newsweek or the Economist could be used. You must also include one class reading in your annotated bibliography.
ASIAN POLITICAL THOUGHT
TIMOTHY J. LOMPERIS
Saint Louis University
S cholars of Westem political thought have .not dis-puted the fact that there is a rich body of political thought in Asia. They lmve just not bothered to
incorporate it into their corpus. This chapter seeks to pro-
vide long-overdue recognition to this body of thought by
calling attention to the fact that despite its heavy religious
content (until modern times), the encounter with political
ideas in Asia is just as profound as it is in the West. In fact,
since these ideas in Asia are heavily fertilized by their
Western colonial legacy, the West has much to learn about
itself from these Asian borders to the West's material and
intellectual reach.
In this presentation of Asian political thought, what will
emerge is that the such central ideas as democracy,ji-eedom,
and equality were forn1ed in a historical context different
from the West. In the West, these ideas were expressed and
then refined through a prism of small city-states in Greece,
the universal empire of Rome, the subsequent collapse of this
imperium politically but its persistence intellectually in the
Thomist medieval synthesis, the smashing fem1ent (both
intellectually and institutionally) of the Renaissance and the
Reformation, and the birth of the modern nation-state in
the twin crucibles of the Thirty Years' War (1618-1648) and
the French Revolution (1789-1795). ...
The Physiocrats were the first school of economic thought to emerge in France in the 18th century. Led by François Quesnay, they believed that agriculture was the sole source of wealth and that taxing land rents was the most efficient form of taxation. They advocated for laissez-faire policies and viewed the economy as consisting of productive agricultural workers and unproductive merchants and artisans. Their theories influenced later economists but were criticized for their dogmatism and mysticism regarding natural order.
This document provides an introduction to the author's book which aims to identify and defend capitalism on moral and philosophical grounds. It argues that previous defenses of capitalism were insufficient because they failed to argue for it based on fundamental principles of ethics and human nature. The author contends that capitalism is the only system aligned with the requirements of a rational being and aims to make this philosophical case through a collection of essays. The introduction outlines the author's view that political systems must be grounded in ethics and explains the purpose and structure of the book.
Similar to Quesnay and the Analysis of the Surplus in an Agrarian Capitalist Economy (20)
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Quesnay and the Analysis of the Surplus in an Agrarian Capitalist Economy
1. Quesnay and the Analysis of the Surplus in an Agrarian Capitalist
Economy
Numa Mazat
Doutorando em Economia Política Internacional – PEPI/UFRJ
Franklin Serrano
Professor Adjunto - IE/UFRJ
Abstract
In order to discuss the “rational foundation” of some aspects of Quesnay´s theory we use a
simple formalization of the necessary connections between assumptions about the techniques
in use, the distribution of income between the classes and sectors the system of relative prices.
We argue that Quesnay´s system was a truly capitalist agrarian economy and that he was
indeed a pioneer of the classical political economy/surplus approach to economics as
identified first by Marx, Sraffa and Garegnani, the physical surplus of grains being the
necessary basis for his analysis of the distribution and relative prices.
Key Words: Physiocracy, Capitalist Agrarian Economy, Surplus Approach, Classical
Political Economy.
Resumo
Usamos uma formalização simples das conexões necessárias entre as hipóteses sobre as
técnicas em uso, a distribuição da renda entre as classes e os setores assim como o sistema de
preços relativos para discutir os “fundamentos racionais” de alguns aspectos da teoria de
Quesnay. Afirmamos que o sistema de Quesnay era uma verdadeira economia capitalista
agrícola e que ele era na verdade um pioneiro da abordagem da economia política classíca e
do excedente como Marx, Sraffa e Garegnani o haviam já identificado, sendo que o excedente
físico era a base necessária para sua análise da distribuição e dos preços relativos.
Palavras-chave: Fisiocracia, Economia Capitalista Agrícola, Abordagem do Excedente,
Economia Política Classica.
Área 1 – Escolas do Pensamento Econômico, Metodologia e Economia Política.
JEL: B11; B12.
2. Quesnay and the Analysis of the Surplus in an Agrarian Capitalist Economy.
I.Introduction.
The interpretation of Quesnay´s contributions to economics have always been and
remains highly controversial. On a more general plane they range from one extreme, where
Quesnay and the Physiocrats are seen as defenders of feudalism and the Ancien Regime to the
other extreme were they are depicted as promoters of unbridled economic liberalism under
capitalism. Between these extremes there are also all sorts of intermediate positions and also
those who point out that the physiocratic system of ideas is fundamentally contradictory.1
Matters are not made any easier by the fact that the scope of what one means by
Physiocracy can be and is defined in at least five different levels, often not made explicit by
commentators. Here we have at one extreme the Physiocratic movement being very broadly
defined to include a set of economists that may range from Cantillon, who preceded Quesnay,
to Turgot, who came much after Quesnay and his contemporaries. A second definition goes
from Quesnay and his contemporaries, who presented themselves as Physiocrats all the way
to Turgot. A third would be more narrow and include in the proper Physiocrats only Quesnay
and his contemporaries. A fourth one would deal strictly with Quesnay´s own writings. And at
the other extreme there is a fifth view that discusses the issues only in terms of what can be
found in the various versions of Quesnay´s famous Tableau Économique. Marx appears at
times to follow the first of these views and we are more inclined towards defining
Physiocracy according to the second. But all of them can be useful in a particular context, as
long as it is used consistently and stated explicitly. In this work are concerned strictly with
Quesnay´s own writings but not exclusively with the Tableaux (the fourth option above). This
paper is an attempt, necessarily modest due to the intrinsic difficulty of the topic and the vast
and controversial literature, to shed some light on the “rational foundation” of some aspects
of Quesnay´s theory. As a tool, we make use of a simple formalization of the necessary
connections between assumptions about the techniques in use, the distribution of income
between the classes and sectors and the system of relative prices. We argue that Quesnay´s
system depicted a truly capitalist agrarian economy with nothing feudal about it. And we try
to show that he was indeed a pioneer of the classical political economy/surplus approach to
economics as identified first by Marx, Sraffa and Garegnani, the physical surplus of grains
being the necessary basis for his analysis of distribution of income and relative prices. The
rest of the paper is organized as follows. Section II deals briefly with the historical
background of Quesnay´s work. Section III recalls the main ideas of the Physiocratic system.
Section IV discusses the analytical role of the physical surplus of grain. Section V deals with
relative prices. Section VI examines the distributive variables in the context of a vertically
integrated grain sector. Section VII discusses the role of profits and capital accumulation.
Section VIII offers brief final remarks.
II. Historical Background.
Quesnay´s economic writings were written between 1756 and 1774 during the reign of
Louis XV. At that time France is increasingly lagging behind England from both the
economic and political point of view. Indeed, France´s 1763 defeat against England in the
Seven Years War was a clear demonstration of the decline of French power. Economically,
France at the time was relatively underdeveloped economically, going through endemic food
scarcity and periodic famines. Quesnay himself estimated that the population of the country
1 For a critical survey of these disparate views see Mcnally(1990).
3. had fallen from 24 to 16 million people from 1650 and 1750. Though the reliability of his
exact figures may be open to question, there seems to have been a declining trend.
Quesnay and the Physiocrats were concerned with the issue of good governance that
would allow France to regain its supremacy in Europe from political, military or economic
point of view. In the conception of the Physiocrats, wealth was the basis of the power of a
nation. In their view, the only way for France to compete with its powerful English neighbor
was, then, to increase the country's wealth. Quesnay saw wealth as being the result of
production, not of trade. For him the main purpose of the French government should be the
implementation of reforms that could increase the size of the surplus product of the economy,
which he called produit net (net product). In this sense Quesnay is clearly following the
tradition that started much earlier in England with William Petty 2.
Quesnay and the Physiocrats consider that Political Economy is the study of the
functioning of society, according to the principles of the Ordre Naturel (natural order), a
principle seen as having a permanent intrinsic logic and optimal nature. The name of
Physiocrat3, which they attributed to themselves, clearly indicates that natural laws should
prevail. So there are immutable natural laws that should be studied and taught. It is only by
respecting these rules that the economic system of a country can reach its full potential. The
diversity of human institutions would only be a reflection of the lack of knowledge of the
natural order by both the people and the rulers. In the physiocratic approach, the social order
is immutable, natural and physical. For the Physiocrats, Political Economy should study this
"social physical order" as guided by natural laws. They define Political Economy as "a
physical science, accurate, clear and complete, the science of law, order, and natural
government" (Dupont de Nemours in Kuntz, 1982, p. 106 – our translation). Quesnay and the
Physiocrats had a materialist and scientific conception of society. In their mind, material
production determines both the structure and the mode of functioning of societies.
The ambition of the Physiocrats was always to influence the course of French history,
in terms of the adoption by its rulers of "good policies" that can secure a prosperous and
powerful future to their country. Even if the work of Quesnay and the Physiocrats was the
object of strong criticism and even some sarcasm4, that did not stop its wide diffusion at the
time. Turgot, for example, became Controller-General of Finances (the minister in charge of
finances in France during the Ancien Régime) of Louis XVI in 1774 and tried to implement a
program largely inspired by physiocratic theses, which will be repealed later5.
Besides, wanting to discover and expose the laws of natural order, the Physiocrats had
the political ambition to implement these rules in the economy and in the society when they
were not respected. They defended the idea of adopting a despotisme légal (legal despotism),
where the absolutist king should know and follow the laws of natural order and disseminate it
in his kingdom, through education and the creation of a suitable legislative framework. The
despotisme légal of the Physiocrats, a notion that led to a lot of confusion among analysts of
their work, must be understood as a translation and dissemination of the laws of nature in the
society so that it reaches a higher level of development. In the natural order, for example,
2 It is interesting to note that, when Petty wrote his major works, in the mid-seventeenth century, he was also
concerned with the means to ensure the prosperity of England and a prominent place for his country at the
European level. England at the time, which had not even been invited to the peace negotiations of Westphalia in
1648, was clearly behind economically and militarily if compared with Holland and France, the two great
powers in this period. The major concern of Petty was the threat for British sovereignty that represented the
constant development of French power. When Quesnay writes a century later, the situation is radically different.
3 The name Physiocrat is formed from the Greek words fùsis (nature) and cratéin (dominate).
4 Voltaire said, speaking of the work of the Physiocrats, that "many useful things were written about agriculture,
but, everybody read them, unless the farmers" (Rioux, 1989, p. 38 – our translation).
5 The book of Edgar Faure, “La Disgrâce de Turgot” (the disgrace of Turgot) offers an extremely detailed
description of the experience as a statesman of Turgot and the aborted attempts to implement policies of
physiocratic inspiration (FAURE, 1961).
4. private property is an essential droit naturel (natural right) because Quesnay was convinced
that without private property the lands would not be cultivated, for example.
Quesnay dreams of an “Agricultural Kingdom”, where compliance with the laws of
natural order and a prosperous agriculture, using the most efficient techniques and
organization, would ensure France a prominent place in the concert of nations. Given the
scientific conception of the natural order, this "government of nature" was actually "a
government of science", where “le flambeau de la raison [...]éclaire ele gouvernement, toutes
les lois positives nuisibles à la société et au souverain, disparaîtront”6 (QUESNAY, 1958, p.
741). He believes that absolutism is the best political system, but it must respect the rules of
natural economic order, which was not the case in the France of Louis XV. Therefore, the
absolutist government must be submitted to the rules of capitalist accumulation. It is
interesting to note that the Physiocrats themselves set the rules of the game, i.e., “discovered”
the natural laws. In this sense, despotism serves the purpose of Physiocrats because it ensures
that these natural laws are respected and that the mechanisms of the “machine of prosperity”
designed by the Physiocrats can function correctly. Unlike Petty, Quesnay established a clear
distinction between the tasks of the state and the role of civil society, even if Petty probably
gave more emphasis to the role of the State. In fact, Petty often spoke indiscriminately of the
State and the economy, not always being clear to distinguish the role of each one (Milgate &
Stimson, 2004).
The accusation made against Quesnay of wanting to keep the feudal order, then, was
unjustified. Quesnay is clearly part of the movement of the Enlightenment in the sense that he
realizes the need for a reform of social and economic structures. Indeed, he wrote several
articles for the Encyclopédie (Encyclopedia) of Diderot and d'Alembert7.
Quesnay and the Physiocrats thus had a radical but reformist agenda, they wanted a
“revolution from above”, in which the legal despot would stimulate the full development of
capitalism in agriculture in order to increase the wealth and military power of the French
state. As pointed out by Mcnally(1990) the point was not that the physiocrats represented the
interests of the existing agrarian bourgeoisie, since at that time this class did not really exist
yet in France as a true political force. Quesnay´s point was that a massive expansion of
capitalism in agriculture would be in the interests of the State and ultimately also of the
landowners .8
III . The Physiocratic System.
Notwithstanding the limited diffusion of modern capitalism in French agriculture at
the time, Quesnay´s theoretical system clearly describes a capitalist agrarian economy.
Quesnay divides society into classes to explain the functioning of the economic system. The
division into classes operated by Quesnay does not reflect the economic or social hierarchy as
it is usually presented. In the physiocratic scheme, each class takes a particular role in the
process of production and consumption. There are thus three classes, which interact with each
other in a way that make the economic system work. The class Quesnay called "productive",
composed of the peasants, the agricultural workers and the capitalist farmers is in charge of
agricultural production. The "sterile" class refers to the artisans, merchants, firm owners and
workers in manufacturing. It is responsible for all non-agricultural production, as well as
6 "the flame of reason [...] illuminates the government, all positive laws detrimental to society and to the king,
will disappear" (our translation).
7 The entries "Evidence" (evidence), "Fermiers" (farmers), "Grains" (grain), "Hommes" (men) and "Impôts"
(taxes) were written to be inserted in the Encyclopédie, anonymously, because Quesnay feared reprisals by the
real power that he served as court doctor.
8 Perhaps it is the political failure of the physiocratic reforms before the revolution that had more to do with the
weakness of agrarian capitalist interests at the time.
5. trade. Finally, the class of "landowners" brings together the owners of land, the “decimators”
(the Church, which collects the tithe) and the king. These landlords make up a class that does
not participate directly in production, but plays an important role in the economic system.
The farmers are part of the same "productive" class as the agricultural workers, but
they do not share the same interests. The antagonism between these two groups has been well
illustrated by the early phase of the French Revolution.
According to Quesnay and the Physiocrats, agriculture was the only sector where a
physical surplus is produced. They claimed that in the other sectors products were only
transformed but not created. Throughout his economic works, Quesnay demonstrated, then, a
strong interest in the issues related to agricultural production. This is not surprising because
France was still a fundamentally rural country9.
Quesnay's originality was to identify the various methods of production that co-existed
in French agriculture of the time to show that each corresponds to a very different level of
productivity. In the entry Fermiers (farmers) written for the Encyclopédie (Encyclopedia),
Quesnay insists on the importance of the methods used in agriculture to determine the level of
output that can be achieved:
“Les différentes manières de traiter les terres que l’on cultive, et les causes qui y
contribuent, décident des produits de l’agriculture; ce sont les différentes sortes de
cultures, qu’il faut bien connaître pour juger de l’état actuel de l’agriculture dans le
royaume10” (QUESNAY, 1958, p. 427-428).
The three types of cultivation identified by Quesnay were subsistence agriculture, the
Petite culture (small-scale cultivation) and the Grande culture (large-scale cultivation).
Quesnay believes that subsistence agriculture is still present in many isolated regions of the
kingdom (in mountains, for instance). This agriculture does not produce a surplus and only
allows the survival in miserable conditions for those who practice it. It is not integrated in the
market and Quesnay quickly eliminates it from his analysis because it is unrepresentative of
French agricultural reality. Thus, Quesnay's theory of agricultural production is based on the
fundamental distinction made between the Petite culture and the Grande culture. The
difference between these two modes of cultivation is linked to both the scale and the type of
relationship between the landlords and the agricultural producers.
In the model of Grande Culture, present mainly in the northern regions of France, the
farms are extensive and the leasehold is the dominant mode of production. The leasehold is a
method of agricultural production where the landlord entrusts the operation of the farm to a
farmer who organizes the production as he wants and pays a fixed rent, regardless of the level
of production. Modern techniques such as crop rotation for the land to rest are generally used.
In the model of Petite Culture, however, the farms are small and the dominant mode
of production is métayage (sharecropping), where the métayer (sharecropper) cultivates the
land and delivers generally half of the product to the landlord. In this system there is strong
pressure from the landlord to use ancient techniques that deplete the land.
But the big difference between the two types of cultivation, according to Quesnay, is
in the respective levels of productivity. In fact, the Grande culture is much more productive
than the Petite Culture because it uses more capital, produced means of production which
Quesnay called “advances”.
Quesnay notes that the cycle of agricultural production takes time, one year for
example, in the case of cultivation in France. But, before getting the product, i.e., the harvest,
there is a need to pay for many expenses, necessary for the production process to happen.
9 The most widespread estimates show that about 80% of the French population of the second half of the
eighteenth century was rural (Furet, 1989, p. 57).
10 « The different ways to treat the land we cultivate and the causes that contribute to it, decide the products of
agriculture. You must thoroughly know the different types of cultivations to judge the current situation of
agriculture of the kingdom” (our translation).
6. These expenses constitute what Quesnay calls advances. Quesnay then shows that the
advances are essential to the production process. The advances are the wages of agricultural
workers for their livelihood, expenses to improve the quality of the land, the tools and the
animals used for cultivation ,as well as the food given to these animals.11 It is interesting to
note that advances also exist in manufacturing and in the production of handicrafts, according
to the same principle (wages, tools, machines, factories, etc.).
Aspromourgos (1996, p. 121) states that Quesnay “develops in his writings a definite
conception of capital employed in the production system as ‘advances’ prior to the resulting
output, both in agriculture and manufacture; though given the special role assigned to
agriculture as the only surplus-producing sector, it is natural that he concentrates on the
significance of capital advances in that sector”.
In the physiocratic typology, the advances are of various types, with the avances
annuelles (annual advances) the avances primitives (primitive advances) and the avances
foncières (land advances). “Les avances annuelles consistent dans les dépenses qui se font
annuellement pour le travail de la culture12 » (QUESNAY, 1958, p. 795). They consist of
Wages set at a subsistence level and the raw materials, what we now call circulating capital.
The avances primitives are the durable means of production, such as horses, tools, what we
now call the fixed capital, use to prepare the soil and improve production. The avances
foncières are used for the improvement of the land. The avances foncières are considered
permanent and the deterioration of this capital is usually neglected.
In the physiocratic system, the basis of efficiency and high productivity are the
advances. The more intensive use of these advances in the economy is the fundamental key to
its growth. This is why Marx considers that Quesnay and the Physiocrats were the first to
have a satisfactory definition of capital and argued that the Physiocrats can be considered
pioneers in the study of capitalism.
In the Grande Culture, the farmer, who is “rich”, finances the annual and primitive
advances, for a value far greater than in the Petite Culture. Only the avances foncières are
financed by the landlord. The farmer is the organizer of production. He uses wage workers to
cultivate the land. In the Petite Culture, which corresponds to a quasi-feudal mode of
production, the advances are financed by the landlord, usually an aristocrat, who is not
concerned with the introduction of new techniques. The consequence of the low capital
intensity resulting from this attitude is a low productivity.
The Grande Culture use of horses, much more efficient, whereas the Petite Culture
only uses oxen. This is representative of the difference in capital intensity between the two
types of cultivation. In the words of Quesnay (1958, p. 671):
“Dans la grande culture, un homme seul conduit une charrue tirée par des chevaux,
qui fait autant de travail que trois charrues tirées par des boeufs, et conduite par six
hommes : dans ce dernier cas, faute d’avances pour l’établissement d’une grande
culture, la dépense annuelle est excessive, et ne rend presque point de produit net ».13
The Grande Culture should then replace the Petite Culture for the country increase its
prosperity and be able to compete with England which has a more productive agriculture in
spite of much less favorable natural conditions than in France.
The produit net is a key concept in physiocratic theory. In the words of Quesnay
(1958, p. 928), the produit net is defined as follows:
11 The article of Trabucchi (2008) highlights the importance of animal food as part of the circulating capital of
the farmers in Quesnay theory (but not in the Tableau).
12 “The avances annuelles "are the expenses made every year with the work of cultivation" (our translation).
13 “In the Grande Culture, a single man leads a horse-drawn ploughshares which do the same work as three
ploughshares pulled by oxen and driven by six men: in the latter case, for lack of advances in order to establish a
large-scale cultivation, the annual expenditure is excessive and almost does not give any net income” (our
translation).
7. “produit [...] qui excède les dépenses du travail de la culture, et les dépenses des
autres avances nécessaires pour l’exploitation de cette culture. Toutes ces dépenses
étant restituées par le produit qu’elles font naître, le surplus est produit net, qui forme
le revenu public et le revenu des propriétaires14 ».
The produit net is what an economic system produces beyond the level necessary for
its reproduction. This definition corresponds to the concept of surplus, present in all the
classical tradition15. Unlike the surplus in Petty, the produit net is not a just a physical surplus,
since it is measured in monetary terms, as the difference between the value of production and
the value of the necessary expenses. We then have the following identity:
Produit Net = Total production - advances
Quesnay argues that only the agricultural sector is able to create a produit net. He
estimates that, in the scheme of Grande Culture, the produit net is always equal to 100% of
annual advances. Obviously, the produit net is much larger in the Grande Culture than in the
Petite Culture. This surplus goes to the landlord class in the form of land rent and taxes and to
the farmers in the form of profit.
The advances, which are essential to agricultural production, are partly manufactured
products. Similarly, manufacturing production requires advances in the form of agricultural
products and raw materials for the production process. So there is a total interdependence
between the city and the countryside, between manufacturing industry and agriculture. The
recognition of this interdependence was a great improvement on Richard Cantillon’s theory,
who is generally (and correctly, in our view) considered as being the main predecessor of
Quesnay’s (Gilibert, 1979, Aspromourgos, 1996).
Like Quesnay and the Physiocrats, Cantillon believed that the surplus is produced only
by agriculture, in the countryside. But, in the theory of Cantillon, cities could only survive
with the production of food from the countryside, while the countryside was basically self-sufficient.
Because of that, Cantillon argued that for the city (and manufacturing) to prosper,
it was necessary to for the landowners to develop a strong taste for luxury goods. Only this
would make the countryside want to increase output and produce more food than their own
needs and use that extra output to buy luxuries made in the cities.
The Physiocrats are much more sophisticated in their analysis because they show the
linkage effects between agriculture and other sectors, which are concentrated in the cities.
They are aware of the necessity of permanent interdependence between the sectors to
implement an economic system of high productivity in the countryside, like the Grande
Culture. The high productivity in agriculture is only possible with the incorporation of
equipment and tools produced by the artisans and manufacturers. Likewise, artisan and
manufacturing sector can only grow with the increase of agricultural production.
Therefore the real key to Quesnay´s system is neither land nor agriculture as such but
the Grande culture. The crucial point is the perceived vast technical superiority of capitalist
agriculture. Capitalist in both the social and the technical sense. Socially, in that production
should be organized by farmers that advance the capital and hire free labor for wages. And
technically, in that methods of production that used more produced means of production per
worker are seen as being much more efficient.
IV. The Social Surplus as a physical quantity of grains.
14 « product that exceeds the expenses of the work of cultivation, and the expenses of the other advances
necessary for the operation of that cultivation. All these expenses are refunded by the product that they generate,
the surplus is net product, which forms the public revenue and the income of landlords” (our translation).
15 We adopt the classical conception of the economy developed by Marx and deepened by Sraffa and his
followers.
8. With this historical and theoretical background in mind, we shall make use of a very
simple and simplified analytical scheme to help us discuss some important aspects of Quesnay
´s work. Let us assume that we are studying an economy that produces four goods: grains and
wine in the agriculture sector and iron and carriage in the manufacturing (and trade) urban
sector. Production of each of the four goods is made using a single method of production that
uses only circulating capital , with wages also included in the circulating capital advanced
(avances annuelles).
In agriculture, grains are produced using grains as seed and iron (for ploughshares and
horseshoes) as an input. Wine is produced using the same inputs but in different
proportions. In the urban sector both the method that produces iron and the one that produces
perfume are produced use only iron as a direct input.
Real wages are given at subsistence level and consist only of grains. Real profits per
unit of output are also given exogenously, for simplicity as a traditional “capitalist
subsistence” amount of corn, presumably a much higher amount of corn than that of the
subsistence of the workers (after all Quesnay spoke of “rich” farmers. The amount of real
wages per worker and real profits per unit of output is assumed to be the same in agriculture
(grains and wine). But they could be different in the manufacturing and possibly “Colbertist”
urban sector. The important thing is that there is no capital mobility between agriculture and
manufacturing, while there is full capital mobility within the agriculture sector, i.e., between
the production of wine and grains. There is no capital mobility between iron and carriage.
We shall assume that landowners receive the surplus as rents paid in grains in the agricultural
sector both in the production of wine and or grains (we shall assume all taxes and church
tithes are later paid out in grains from rents).
In this economy the technical conditions of production can be described as the
following four methods of production:
grains a11 ,a31 1
wine a12 ,a32 1
iron a33 1
carriage a34 1
in which both wine and carriage are luxury non basic consumption goods since they are not
used as inputs. We shall assume that only the production of grain is “productive” in the literal
physiocratic sense and thus:
(1) a11+a12< 1
Note that although Quesnay considered the whole agricultural (and mining and
fishing) sectors as “productive” some products in this sector, like our “wine”, may be only a
transformation of matter (grains into wine) and thus cannot produce a physical surplus of
itself.
Accordingly, we shall assume that the production of iron , even though it is a basic
input for grains and hence an indispensable input for (Grande Culture) agriculture is
technically viable but nevertheless still “sterile” in the sense of not producing a physical
surplus of itself Therefore16:
(2) a31+a32+a33+a34= 1
16 In Vaggi(1985) formalization there is only two goods are produced and thus he is forced to assume a surplus
of manufactured goods in order to meet the final demand for manufactured luxuries. This simplifies the model
but is not compatible with the physiocratic idea of the sterile character of manufacturing.
9. In order to economize on mathematical notation we shall bundle together in the
augmented technical coefficients of grain a*1j all the grain per unit of output need not only as
inputs(a11 and a12) but also the subsistence wages of the workers and the subsistence profits of
the capitalists. We then get the following augmented set of production coefficients:
corn: a*11 ,a31 1
wine: a*12 ,a32 1
iron: a*13,a33 1
carriage: a*14, a34 1
This economy with its given technique and social norms of subsistence for the
productive classes can only produce a physical surplus above that and thus pay rent if we
further assume that the technology for producing grain is capable of a surplus big enough so
that :
(3) a*11+a*12+a*13+a*14< 1
Given all these social and technical conditions grain and iron are basics in the Sraffa
sense of being both necessary, directly or indirectly, as inputs or “subsistence” goods, for the
production of all the four goods in both sectors.
In our view, conditions (2) and (3) are the best way to reconstruct Quesnay´s argument
that the method that produces grain is the only one that produces a physical surplus.
Marx(1861-3, p.234) found this great quote from Paoletti a late Italian follower of the
Physiocrats “Give the cook a measure of peas, with which he is to prepare your dinner; he
will put them on the table for you well cooked and well dished up, but in the same quantity as
he was given, but on the other band give the same quantity to the gardener for him to put into
the ground; he will return to you, when the right time has come, at least fourfold the quantity
that he had been given. This is the true and only production”
This physical surplus of grains, appears most palpably as a higher quantity of the
same use values used as inputs.17 Note that is precisely because of the physical nature of the
surplus of grains that some Physiocrats could, when necessary, rationalize the produit net
(that is usually measured in terms of value) for politico-ideological purposes as a “gift of
nature”.18 Note that this does not mean that agriculture produces a single homogeneous good
(it does not because here we have both wine and grains). It does not mean that capital is
17 Marx (1861-3, p. 224) writes “The difference between the value of labour-power and the value created by it —
that is, the surplus-value which the purchase of labour-power secures for the user of labour-power — appears
most palpably, most incontrovertibly, of all branches of production, in agriculture, the primary branch of
production. The sum total of the means of subsistence which the labourer consumes from one year to another,
or the mass of material substance which he consumes, is smaller than the sum total of the means of subsistence
which he produces. In manufacture the workman is not generally seen directly producing either his means of
subsistence or the surplus in excess of his means of subsistence. The process is mediated through purchase and
sale, through the various acts of circulation, and the analysis of value in general is necessary for it to be
understood. In agriculture it shows itself directly in the surplus of use-values produced over use-values
consumed by the labourer, and can therefore be grasped without an analysis of value in general, without a clear
understanding of the nature of value. Therefore also when value is reduced to use-value, and the latter to
material substance in general. Hence for the Physiocrats agricultural labour is the only productive labour,
because it is the only labour that produces a surplus-value, and rent is the only form of surplus-value which they
know. The workman in industry does not increase the material substance; he only alters its form.”
18 As it seems to have been the case of Mirabeau, the elder.
10. homogeneous in the production of grains (it is not because grains also uses iron as an input)
either.
V. Prices of Production, Bon prix and Prix Fondamental.
We have specified the physical technical conditions of production. But in order to get
to the value of the produit net we must know something about relative prices.
Let us then write down the system of price of production equations for this economy:
grain p1=(a*11.p1+a31.p3)(1+ra)+t1.f.p1
wine p2=(a*12.p1+ a32p3)(1+ra)+ t2.f.p1
iron p3=(a*13.p1+ a33p3)(1+r3)
carriage p4=(a*14.p1+ a34p3)(1+r4)
where ti is the land coefficient (hectares per unit of output) and f the rate of rent per hectare.
Note that we made the rent rate equal in both wine and grain production, which means that we
are assuming free competition inside agriculture and that both products could be cultivated by
farmers who rent the land from landowners in the same type of homogeneous land.
We also assume that there is free competition within agriculture (ra) but not within
manufacture. The rate of profits has to be uniform between grains and wine but not between
iron and carriage because we assume a colbertiste urban sector with many institutional
barriers to free competition. Profits are also not equalized across agriculture and manufacture.
Therefore, r3 can be different from r4 and both could be different from ra . Note that , since the
subsistence consumption of capitalists is already included in the augmented technical
coefficients our two rates of profits are a sort of “extra” or “surplus” rate of profits over and
above the minimum that would just pay the usual “subsistence” profits of capitalists (that
Marx calls a sort of necessary wage for the capitalists). Thus, capitalists and capitalism can
survive even if all rates of profit happened to become equal to zero.
The price system written above has 4 equations and 8 unknowns, namely the rate of
rent (f) the three rates of “surplus” profits (ra and r3 and r4) and the four prices of the four
goods (p1, p2, p3 and p4). If we take grain as the numeraire( p1=1 ) we reduce this to 7
unknowns. If we further get rid of the non-basics, whose prices can be easily calculated after
we sorted out the relative price between grain and iron we are reduced to 2 equations and 4
unknowns, namely, the relative price of iron, rent per hectare, and the two rates of profit:
(4) 1=(a*11+a31.p3)(1+ra)+t1.f
(5) p3=(a*13 + a33p3)(1+r3)
Equations (4) and (5) tell us that, given the real wage and the technology, there is a
potential conflict between rents, the profits in agriculture (grain), and profits in iron. The
higher is the relative price of grain (i.e. the lower is p3 ) the higher can be the rents and/or the
farmers profit. This seems to be the idea behind the doctrine of the “Bon Prix”. The doctrine
of the “Bon prix” is the argument that potential free foreign competition and actual lowering
of domestic barriers to trade (toll roads, local trade monopolies, etc.) would lower the surplus
profits rate r3 and thus allow more of the physical surplus of grain to be appropriated by the
productive (ra) and/or proprietary classes (f).
There seems to be a consensus, that the doctrine of the “bon prix” for grains meant to
reduce the relative price of manufactures in general to its “prix fondamental”, which here
means the price of iron p3 calculated with r3 equal to zero. So when there is no surplus profits
11. in manufacturing iron, iron is sold at its fundamental price and grain is sold at a “bon
prix”(proper price).
On the other hand, there is a debate about what to call the relative price of grain when
both the rates of surplus profits ra and r3 are set to zero and then all the surplus of grain is
appropriated by rent and f reaches its maximum.19
Many authors (Higgs; Salleron20, Meek21, Cartelier, Gilibert) say that in this case the
relative price of grains is much higher than its prix fondamental because it is paying a lot of
rent. These authors defend the idea that the fundamental price includes only the technical and
subsistence necessary cost of production of commodities and cannot include rents. It must
then be a bon prix.
On the other hand Vaggi (1983, 1987 see also Cartelier review, 1991) has argued that
we should call the grain price with zero surplus profits in all sectors and maximum rent
included as the prix fundamental for grain.
Quesnay himself gives the following definition of the prix fondamental:
“Le prix fondamental des marchandises est établi par les dépenses, ou les frais qu’il
faut faire, pour leurs productions, ou pour leur préparation. Si elles se vendent moins
qu’elles n’ont coûté, leur prix dégénère en perte22» (QUESNAY, 1958, p. 529)
Vaggi considers that if rents are not paid, there will be a loss and, therefore, rents
should be a part of the prix fondamental. In this view the bon prix would always include
positive profits for the farmers. There are a few problems with Vaggi´s interpretation. The
first is that if rents are not paid it is the landowners that incur losses whilst if price sinks
below the necessary costs of production it is the farmers that lose and they are the ones who
organize production. Thus the loss alluded to by Quesnay in the passage quoted above seems
to be that of the farmer, not of the landowner. Losses are “incurred in their production and
preparation” of commodities and landowners do neither. The second difficulty is that Quesnay
mentions in the same passage that the bon prix is necessary to favor not only the expansion
but also the “maintenance” of production. But this logically implies that if the price is below
the bon prix as the prix fondamental is there will be a contraction of production. Thus a
stationary economy needs the bon prix, not the prix fondamental. Given these problems we
prefer to stick to the tradition of considering that rents are not a part of the prix fondamental
and that the price of grain that includes both costs and rents (whether or not grain surplus
profits are positive) is the bon prix. This may be seen as a purely terminological issue but in
fact it appears to be an attempt by Vaggi to argue that positive surplus profit in agriculture
appears in Physiocratic theory even when the economy is in a stationary state (as in the
Tableau Économique) and there is no net accumulation of capital, a view that we do not
subscribe (see section VII below).
VI. The Vertically Integrated Grain Sector.
This potential conflict becomes much more clear if we if we replace (5) into (4). This
makes us calculate what would be the vertically integrated grain sector of the economy in
which the requirements of iron and the profits in the manufacturing sector are being also
measured or expressed directly in terms of shares of the physical gross product of grain :
19 Note that perfume is non basic and r4 does not affect the distribution of the surplus of grain.
20 The fundamental price is defined by Salleron as « expression habituelle pour signifier le prix de revient, le
coût de production » (SALLERON, 1958, p. 529).
21 « in the case of agricultural produce, the ‘market value’ was higher than the ‘fundamental price’ by an
amount equal (roughly) to rent” (MEEK, 1962, p. 390).
22 « The fundamental price of commodities is determined by the expenses or costs which have to be incurred in
their production or preparation. If they are sold for less than they habe cost, their price sinks to a level at which
a loss is made” (our translation).
12. (6) 1=(a*11+a31.(a*13/(1-a33.(1+r3))(1+r3))(1+ra)+t1.f
Here it becomes clear that while in general the rate of rent f depends both on the
technology and relative prices, if the technique and the rules of distributing the sectoral value
surplus ra and r3 are known then the rent f can be ascertained in terms of grain as the
difference between the gross product and the “produit net” in grain production.
Moreover, if we happen to be in the particular situation depicted by Quesnay in the
Tableau where surplus profits are assumed to have been driven down to zero in both iron
manufacture and grain agriculture then we can write instead:
(7) 1=(a*11+a31.(a*13/(1-a33))+t1.f
This concept of a sort of vertically integrated grain sector, where the physical surplus
of grain is distributed as rent is probably what Sraffa(1960) meant when he spoke as a “point
of contact” between Quesnay doctrine of the “produit net” and Ricardo´s “material rate of
produce” in his the Essay of Profits.23 Note that this point of contact, although evident, is not
exact because according to Sraffa the “rational foundation” of Ricardo´s theory of profits is
that corn (here grain) is the only basic good, while here we have two basics (grain and iron).24
On the other hand, Marx in some occasions explicitly states that the Physiocrats
thought agriculture did not need inputs from other sectors, but here it is important to
remember that he is probably talking of the Physiocrats in general, of Turgot (and perhaps
also Cantillon )25 and not necessarily of Quesnay, which as we saw above clearly emphasizes
the importance of “iron” in the Grande Culture of grains (and wine) and certainly not of his
Tableau Économique.
In fact, Quesnay´s arguments about the passage from Petite Culture to Grande
Culture can be shown as follows. The Petite Culture does not use iron (a31=0 ) but has a very
high a*11 and a small surplus of grain. On the other hand, the Grande Culture uses a lot of
iron (a31>0) but even taking into account how much the iron costs in terms of grain the total
grain costs are much lower such that the following condition is assumed to hold :
Petite Culture a11 < 1 but > > a*11+a31.(a*13/(1-a33.(1+r3))(1+r3) < < 1 Grande Culture
Note that a high rate of profits in “iron” manufacturing is the only thing that could
wipe out the advantages of Grande Culture. No wonder then that the Physiocrats worried
about the bon prix in agriculture depending on reducing the manufactured prices to its prix
fondamental.
Marx mentions how contradictory is Quesnay´s objective materialist analysis of the
higher yield of the Grande Culture being connected with methods that use more produced
23 Quotation of Sraffa (1960, p. 93) : “Ricardo’s view of the dominant role of the farmer’s profits thus appears to
have a point of contact with the Physiocratic doctrine of the ‘produit net’ in so far as the latter is based, as Marx
has pointed out, on the ‘physical nature’ of the surplus in agriculture which takes the form of an excess of food
produced over the food advanced for production ; whereas in manufacturing, where food and raw materials
must be bought from agriculture, a surplus can only appear as a result of the sale of the product”.
24 Incidentally, if we as Ricardo assume that we are in the “worst” land that pays no rent, subsistence profits are
zero and there is “perfect liberty” and the rate of profits is uniform between grain/corn and iron sectors we get
1=(a*11.+a31.(a*13/(1-a33))(1+r))(1+r). This has a single unknown r and is exactly the well-known Bortkiewicz –
“simultaneist” solution for the classical problem of determining the rate of profits when there is more than one
basic good.
25 See KURZ & GHERKE (1998)
13. inputs (horses with metal plough instead of cows with wooden ones for instance) and the
doctrine of the surplus as a “gift of nature” that he attributes to Mirabeau, the Elder.
Note that it would be very odd for Marx to praise Quesnay so much for introducing
the analogous of his concept of constant capital and to perceive the revolutionary importance
of the used of produced manufactured inputs in agriculture and then ignore that modern
agriculture and manufacture were interdependent. In any case equation (7) is valid whether
we assume sectorial interdependence or assume instead the absolute strategic predominance
of agriculture (a31=0), as Cantillon and (sometimes at least) Turgot appear to have done
(something that would contradict Quesnay definition of Grande Culture).
In any case, the popular argument according to which Marx (or Sraffa for that matter)
thought that the doctrine of the produit net meant that Physiocrats ignored or had nothing to
say about relative prices and only thought in physical terms is totally without foundations.26
Marx was obviously talking about technical and social conditions (1) and (3) above when he
talked about the physical surplus of use values. On the other hand, even if we adopt the
extreme version in which the only basic good is grain (if a31=0) there are still the relative
prices of the non basic goods both inside and outside agriculture (iron, wine and carriage).
The vertically integrated grain sector, with or without interdependencies, is strictly necessary
to determine the rate of rent without which we cannot possibly know the price of grain nor
any of the other relative prices. On the other hand, the authors who insist that the Physiocratic
theory of the produit net is all based on money and market prices are of course incapable of
explaining why the physical productivity of agriculture is so important for the Physiocrats
because they have no way of relating the physical surplus and the social rules for distributing
it between rent and profits and the price system. If these interpreters are right the Physiocrats
were either mercantilists who explained the surplus in value in terms of buying cheap and
selling dear or worse , what Marx called “Vulgar economists” which did nothing apart from
trying to “explain prices with prices”. Moreover, if the physical surplus was irrelevant for the
physiocrats, why they insisted on saying that agriculture was productive and manufacturing
sterile? It is clear that the physical surplus is necessary for the produit net in value to be
positive. It is extremely doubtful that the Physiocrats did not understand that if the value of
the necessary consumption were enough to buy the whole physical amount of products then
there could be no value surplus. 27
In another curious attempt to disconnect the notion of physical from the notion of
value surplus in the theories of the old classical economists Brewer (2008) has argued that
“Although a physical notion of surplus ….must clearly underlie Quesnay´s system , it is not at
all clear that he understood the relationships involved. if he had could surely not have claimed
as he did that an increase in agricultural prices would increase the surplus.in his own
framework this does not make sense . if non agricultural prices cover costs , they must rise in
line with any increase in agricultural prices , so that the produit net is unchanged in real
terms” p.20 . There are two alternatives . Either Quesnay really does not understand his own
notion of produit net or perhaps Brewer has not noticed that when Quesnay argues that high
relative prices of grain increase profits he is talking about a situation in which the price of
26 Some authors in the Marxist tradition seem to actually interpret the Physiocrats in this way. For instance
Napoleoni (1983, p.27) writes that "the problem of evaluation is present in the Physiocrats in its most primitive
form, ie not as a measure of the difference between two magnitudes of value, but rather, as a measure of the
difference between two physical quantities ". He adds: "When the Physiocrats presents the problem of measuring
the "produit net"(surplus) with the aim of building your outline quantitative, this problem is solved empirically,
taking as given the market prices” (NAPOLEONI, 1983, p. 26). Neither of the two statements can be sustained.
The first would mean that capital is homogenous in agriculture (and it is not in Grande Culture). the second
would mean that physiocrats had no theoretical notion of prices and of course they had the prix fondamental and
the bon prix.
27 It seems that unfortunately Santos (1996) and Coutinho (1993) fell into that interpretative trap.
14. manufactures is above the prix fondamental and there are surplus profits in “iron” (r3 > in
equation (7) above) that could be reduced to increase profits. In other words , Quesnay
doctrine of the bon prix for grains may be based precisely on the fact that non agricultural
prices do not just cover costs , instead.
VII. Capital accumulation, Profits and the Tableau Economique.
It is important to note the connection between the question of the distribution of the
surplus between profits and rents and the analysis of the process of capital accumulation.
Quesnay appeared to think in terms of a process of capital accumulation with the diffusion of
the Grande Culture technique in the production of both grain and wine until it reaches the
limits given by the total amount of arable land in the agricultural kingdom. In fact he seems to
think of a limit such as:
t1.X1<=T
where X1 is the gross output of grain and T is the amount of land that can be cultivated to
produce corn. The maximum level of grain gross output and hence of the absolute amount of
produit net is given by:
(8) X1=T/t1
Note that Quesnay does not say but this limit could in principle be increased either by
further technical change that allowed a higher grain output per hectare or by a reduction of the
land use for cultivating luxury crops such as wine, if we assume (as we did in our
formalization) that such lands could be use to cultivate corn instead. In that (admittedly
strong) case, a reduction of 1 unit of gross output of wine would liberate t2 units of
homogeneous land for grain production. In any case, the limit given by (8) would determine
the maximum attainable level of luxury consumption, under the given circumstances.
In the specific situation depicted in the Tableau Économique this process of diffusion
has been completed and the land constraint (8) has been reached and thus the economy
reaches a final stationary state with a zero net accumulation of capital.
Of course, in that final Tableau stationary state, surplus profits are zero because
capitalists only consume and there is no need for further accumulation and we get:
(4´) grain 1=a*11+a31.p3+t1.f
(5´) iron p3=a*13 + a33.p3
(9) wine p2=(a*12+ a32p2)+ t2.f
(10) carriage p4=(a*14+ a34p2)
In this situation there is complete symmetry between the physical surplus of grain and
the distribution of the surplus by the price system because in this case, and only in this case,
the physical surplus is created in agriculture and is wholly appropriated by the landlords.
Note that if the rate of profits in iron manufacturing were to be positive the surplus, in
spite of being physically created in the production of grains would be in part appropriated by
15. producers or wine and perfume. On the other hand if the rate of profits in agriculture is
positive part of the surplus of grain is appropriated not only by the grain farmers but also by
the wine growers. In all these cases the symmetry between the conditions of production of the
surplus and its appropriation would break down.
Moreover, outside the stationary state this system of prices of production does not
seem adequate. For on the route to the final stationary state, the demand for all goods will be
increasing and the advances of both corn and iron must grow period after period for the
production of all four commodities. If the production of these commodities is to catch up with
the growing demand for them, there must be net investment. But if we assume that the
landlords themselves do not invest and that workers live on subsistence wages we then must
have positive surplus profits during the process of capital accumulation, not as temporary
effect of an imbalance between effectual demand and the quantity brought to market that
would cause an equally temporary deviation of current or market prices from the prices of
production, but as permanent component of the prices of production of all commodities.
Note that this conclusion does not depend on who finances those investments in each
branch of the economy. Even if landlords lent part of their surplus to capitalists in general the
prices of production would have to incorporate a rate of profits high enough to pay back the
interest on those loans plus some minimum risk premia. But that is not what Quesnay
assumes. Since we have also assumed that there is no capital mobility across agriculture and
manufacturing we know the three rates of profit do not have to be same. If there is grow and
accumulation we know these rates must be positive. But we have no way of ascertaining their
level. It could be tempting to argue that the surplus profit rates in the production of each
commodity should be equal to the rate of growth of the demand for each of them, but there
is no way that competition could ensure that, since we are assuming there is free entry and
exit in grain and wine production . Perhaps if we assume instead that there is no capital
mobility at all between products of the same sector, one could try to argue that each of the
four profit rates will be equal to the growth rate of the demand of each product.28 This
however is a bit farfetched because there seems to be textual evidence that, in agriculture,
Quesnay thought capitalists would quickly switch crops based solely on profitability.
Thus, the only reasonable conclusion is that, outside the final stationary state, we
know that the rates of profit will be positive and uniform in agriculture and positive in
manufacturing. But we have no clear criteria in the original texts of Quesnay on what should
be their exact levels.
VIII.Final Remarks.
The upshot of the whole discussion is that Quesnay was clearly dealing with a
capitalist economy or at very least that there was capitalism in the agricultural sector (in both
grain and wine production). Marx was completely wrong when said that capitalists in
agriculture were paid functionaries of the landowners.29 They were not. They just rented the
land exactly as Ricardo´s farmers did. He also made the classical intimate connection between
profits and the accumulation of capital, with being the key investors of the system. But this
has been lost for in the particular conditions of the Tableau Économique, net accumulation of
capital has come to an end and profits are down to their minimum “subsistence” level.
28 In this case the economy would look a lot like Pasinetti´s(1991) normative natural price system without
technical change, which he admits will not rule under capitalist competition.
29 “the Physiocrats…regarded rent as the only surplus, and capitalists and labourers together merely as the paid
employees of the landlord” (Marx em KURZ e GEHRKE, 1998).
16. Quesnay had not developed yet the notion of the general (uniform) rate of profits, nor
separated clearly within profits the wages and salaries of management from the pure income
from advancing capital. That was left for Smith and Turgot. He also did not have a complete
theory of how the surplus would be divided between rent and sectorial profits outside the final
stationary state depicted in the Tableau. That had to wait until Ricardo´s notion of differential
rent. But in our view it is a serious mistake to argue that there was anything “feudal” about his
system30. The fact that Quesnay thought of profits as part of necessary consumption whilst
rents are part of the surplus and the implied conclusion that all taxes should fall on rents may
easily show that his main concern was to guarantee the profitability of modern capitalist
agriculture, which he argued that was the key to French prosperity.
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30 Most of Marx´s passages in the Theory of Surplus Value on the feudal aspect of Physiocracy are quite
explictly ironic but a few give the impression of being serious and therefore inadequate. Matters are not helped
by some apologetic remarks by other Physiocrats such as Mirabeau, the elder.