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Notes on Economic History (6)

The Physiocratic School

No examination of the ideas of Physiocracy would be complete without a reference to those who took up and developed Quesnay's teachings. They called themselves "economites". This school acquired great influence in France. Turgot, one of the members of this group and author of an important work on the subject of Physiocracy (Reflections on the Formation and Distribution of Wealth) was appointed Controller-General of the Finances in 1774. Another of Quesnay's pupils who became political chief of the Physiocratic school, was Marquis Victor de Mirabeau, generally known as Mirabeau the elder. Others were quick to espouse Physiocracy in the land of its birth.

The Physiocratic doctrine soon spread from France to other countries, but mage little impression in England. It had immense in Germany, where Karl Friedrich Margrave of Baden, aided by Schlettween, the most distinguished among the German Physiocrats, made an unsuccessful attempt to put in practice the Physiocratic principles of taxation. Leopold I, Grand Duke of Tuscany, endeavoured to introduce a "land tax" in his duchy. Joseph II, Catherine, and most of the other monarchs of the period, were affected and influenced by Physiocratic ideas. The doctrine found adherents also in Italy, Poland, Sweden and elsewhere.

After Quesnay's death in 1774, dissensions broke out among the French Physiocrats, chiefly because of Condillac, who insisted that commerce and industry were "fruitful" as well as agriculture, which was unorthodox to other Physiocrats. The disputes that followed paved the way for the collapse of the movement. The dismissal of Turgot from office as a result of the poor condition of the State treasury, the bad harvest of 1775, the rise in the price of bread, and the bread riots all over the country, all helped this collapse.

Finally, the French revolution, bringing the birth of Modern Capitalism to France, relegated the idea of Physiocracy to the realm of the past.

The ideas of the Physiocrats did not escape criticism, even in the country of its origin. Of particular interest are the works of Linquet, (Legislation on Trade, 1769) and Necker, (Grain Legislation and Trade, 1775 and the Administration of the Finances of France, 1785).

Linquet, who wrote ironically about conditions of the period, appears to defend chattel slavery against wage slavery, and ridicules all the Physiocratic ideas of property. The following quotes from his writing of 1767 illustrate this. The first quotation is the answer to the Physiocrats.

    "It is the impossibility of gaining a livelihood in any other way which forces our day labourers to till the soil whose fruits they will never eat, and our masons to raise buildings in which they will never dwell. It is poverty which drives them to market to dance attendance upon the masters who might wish to buy them. It is this which compels them to kneel before the rich, and to beg of them permission to enrich them."

And on freedom—a boast of the Physiocrats:

    "What is this apparent liberty with which you have invested them? They can live only by renting their hands. They must find someone to rent them or die."

To the economists of his time he said this about the workers.

    "Do you not see that the obedience, the abjection—let us say it—of this numerous flock, is the wealth of the shepherds? If the sheep who comprise it were ever to lower their heads to the dog who herds them, would they not be dispersed and destroyed, and their masters ruined? Believe me, for his interest, and for your own, and even for theirs, leave them in the persuasion where they now are, that this cur which bays at them has more power itself alone than all they together. Let them flee at the mere sight of his shadow. Every one will be the gainer. You will find them easier to round up for the fleecing. They are more easily kept from being devoured by the wolves. It is true that this is only so they can be eaten by men. But then, that is their lot from the first moment they enter the fold. Before talking of releasing them, overturn their fold, society."

Necker in his work shows that the development of the productive forces if the workers merely permits the worker to devote less time to the reproduction of his own wages and more to the enrichment of his employer. The importance of this is that Necker derives profit and rent, the wealth of the capitalist class, from surplus labour. But he sees it only as relative surplus value, produced not by the prolongation of the working day but by a reduction of the necessary labour time. The following quote from his Administration of French Finances shows the class position of his time.

    "That class in society whose fate seems as though fixed by social laws is composed of all those who, living by the labour of their hands, receive the imperious law of the proprietors and are forced to content themselves with the simplest necessities of life. Their mutual competition and the urgency of their wants constitutes their dependency; and these circumstances can in no way change."

In assessing the value and place of Physiocracy in any history of political economy, we must take into account the economic development of France and other countries where the doctrine was accepted. Physiocracy is first and foremost the ideas of an agricultural economy; it is the philosophy of Feudalism gradually transforming into Capitalism. Its importance fades with the French Revolution.

For us today, Physiocracy can be seen as a link in the chain that leads up to, and influences, later economists. Adam Smith was influenced by it, as were several others after him. The Henry George School of modern times is also a reflection of the old Physiocrats. The liberal ideas of laissez-faire, freedom of competition, likewise flow from this source.

Finally, its weakness has been shown by Marx in Volume 2 of Capital, as already mentioned in these notes.

Bob Ambridge