Episode #2 of the course “Brief History of Economic Thought”
During the European Enlightenment of the mid-18th century, a group of new economic theorists shifted focus and redefined the value of a nation. Becoming known as the “Physiocrats,” the two leaders of this new approach and understanding were the French economists Anne-Robert-Jacques Turgot and Francois Quesnay. They based their assessment of a nation’s wealth not on the value of gold in the king’s treasury, but on the value of what can be produced from the nation’s land.
Physiocrats were the first to look at labor as a measurement and contributor to wealth, although their lens is now considered agrarian and provincial. Physiocratic economists viewed industrial labor and other inorganic products of a country as “unproductive,” because the best demonstrated economies that they could observe and analyze were those with an agricultural base.
In general, the physiocratic approach to economics placed a high value on private property, and classified social members into three groups: the “proprietary” class of landowners, the “productive” class of laborers, and the “sterile” class of merchants and craftspeople. Quesnay’s 1759 text Economic Table lays the foundation for analyzing and understanding these social classes and their functions in the economic system. The book became essential to physiocratic thought, and it remained one of the most popular economic theory books for the following 30 years.
The most stable and profitable economic system, according to the physiocrats, is based on trade between a network of free individuals who all have needs and desires, and who can work for others to achieve the products that they want. Therefore, minimizing barriers to trade helps the physiocratic system work fluidly. They also promoted a national “flat tax” on property and trade, and physiocrats are often still cited by modern politicians and economic theorists who promote contemporary national flat taxes.
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