Physiocrats

Physiocrats

Physiocracy (from the Greek for "Government of Nature") is an economic theory developed by the Physiocrats, a group of economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development." Their theories originated in France and were most popular during the second half of the 18th century. Physiocracy is perhaps the first well-developed theory of economics.

The movement was particularly dominated by François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781). It immediately preceded the first modern school, classical economics, which began with the publication of Adam Smith's The Wealth of Nations in 1776.

The most significant contribution of the Physiocrats was their emphasis on productive work as the source of national wealth. This is in contrast to earlier schools, in particular mercantilism, which often focused on the ruler's wealth, accumulation of gold, or the balance of trade. At the time the Physiocrats were formulating their ideas, economies were almost entirely agrarian. That is presumably why the theory considered only agricultural labor to be valuable. Physiocrats viewed the production of goods and services as consumption of the agricultural surplus, since the main source of power was from human or animal muscle and all energy was derived from the surplus from agricultural production.

The perceptiveness of the Physiocrats' recognition of the key significance of land was reinforced in the following half-century, when fossil fuels had been harnessed through the use of steam power. Productivity increased manyfold. Railways, and steam-powered water supply and sanitation systems, made possible cities of several millions, with land values many times greater than agricultural land. Thus, whilst modern economists also recognize manufacturing and services as productive and wealth-creating, the underlying principles laid down by the Physiocrats remain valid. Physiocracy also has an important contemporary relevance in that all life remains dependent on the productivity of the raw soil and the ability of the natural environment to renew itself.

Historian David B. Danbom explains, "The Physiocrats damned cities for their artificiality and praised more natural styles of living. They celebrated farmers." They called themselves économistes, but are generally referred to as physiocrats to distinguish them from the many schools of economic thought that followed them.