It was a school of thought century XVIII, founded by François Quesnay, an economist at the time, in Europe, France. This school of thought said that there is a natural law, which ensured the proper functioning of the economy without state intervention.
This school was characterized by its focus on agriculture, as main source of income of a nation. This model grows as a response to the prevailing mercantilism of its time. So, based on this, they made a lot of publicity to increase the popularity of the physiocracy.
This laid the foundation for the later rise of economic liberalism. The etymology of that word comes from the greek which means “government of nature”.
This system was applied in the century XVIIIin the old French regime. Anne Robert Jacques Turgot, who was part of the court of Louis XVI, wrote pamphlets on the relationship of the countryside and markets with the flow of money.
Physiocracy gained popularity during the seven years war. Various newspapers appeared, spreading the new economic ideas to the growing audience in France.
Concept and definition of physiocracy
The term physiocracy comes from the Greek ‘physis’ (nature) and ‘kratos’ (power), which demonstrates the importance given to nature as a nation’s primary source of income.
Followers of this line of thought argued that agriculture was the sole economic activity with the ability to generate a net product.
That is, a surplus over production costs, unlike mercantilism, which focused on trade and the accumulation of precious metals. It is for all this that the Physiocracy defended the idea that agriculture was the true source of wealth of a nation.
What are the causes of physiocracy?
Among the causes of the emergence of physiocracy, is the criticism of mercantilism and state intervention policies. Therefore, during mercantilism, governments strictly controlled tradefinance and promoted the accumulation of precious metals.
It is for all this that the proposal was for an economic structure based on freedom and the phrase laissez faire, laissez passer or “Let do, let pass.”
The Physiocrats proposed a single land tax and they rejected the intervention of the State, since they considered that it interfered with the natural order of things.
They thought progress economic and social They were closely related, so they argued that by having greater prosperity, rivalries would decrease.
In short, the physiocracy challenged the state intervention in the economy and advocated free trade. They believed in natural, economic laws and sought to promote financial and social progress.
What are the characteristics of physiocracy?
The main characteristics of Physiocracy focus on the importance of agriculture and the belief in existence of natural laws that govern the economy.
According to the Physiocrats, agriculture was the only activity that generated a real net productwhile other activities such as trade and manufacturing do not.
This vision differed from mercantilism, which considered trade and accumulation of precious metals as the main source of wealth. Among the main characteristics of Physiocracy are the following:
- Importance of agriculture: It considers that it is the main economic activity and the base of the wealth of a nation. Those who support this line of thought argue that only through agricultural production is there a real production surplus.
- natural laws: Physiocrats believe in the existence that natural laws regulate the economy. According to this vision, the economic order is governed by natural laws similar to the physical ones and the role of the government would be to respect and allow these laws to act without excessive intervention.
- Liberation of the agricultural economy: Since it supports eliminating the restrictions that are imposed on this sector, in order to allow a greater boom.
- Criticism of mercantilism: It is generated as a criticism of mercantilism, which was the popular and dominant ideology at the time. He sought to criticize ideas such as protectionism and the accumulation of precious metals. He also argued that these measures limited economic development and the generation of wealth in the country.
What is the net product in physiocracy?
For the physiocrats, the net product represented the part of agricultural production that remained as surplus once all the expenses necessary to carry out the agricultural activity had been covered.
This included the costs of inputs used in production, maintenance of the land, wages of farm workers and any other expenses directly related to agriculture.
The net product was considered the true Richness’ fountain of a nation, since all this results from the application of the natural laws that govern agricultural production. According to the followers of this school, agriculture was the only economic activity capable of generating a real surplus of production.
The agricultural surplus, or net product, was seen as the economic engine for drive growth and the development of other activities. The physiocrats said that we should use the surplus well to invest in productive sectors and thus boost economic progress in general.
In addition, the sympathizers of the physiocracy maintained that the net product should not be subject to excessive taxes and charges. Instead, they advocated policies that promoted free movement of goods and the removal of trade barriers to allow net proceeds to flow efficiently through the economy.
What is work for physiocracy?
In the physiocracy, work was considered a fundamental factor of production for the generation of wealth, especially in the agricultural field. The physiocrats recognized the importance of human labor in the productive process.
For the physiocrats, work was closely linked to the agrarian branch, since they considered that it was the primary productive activity and generator of real surplus production. They saw the farmer as the true producer and wealth creator.
The physiocrats valued agricultural work because they considered it in harmony with natural laws and nature itself. They argued that the land, being a natural resource, required human effort to be cultivated and productive. Through agricultural work, the land was transformed into a means for the production of food and raw materials.
In addition, the physiocrats emphasized that work in agriculture not only generated material wealth, but also had a positive impact on society and the social order. They believed that dedication to agricultural work encouraged virtue and social stability, and contributed to the harmony and prosperity of the community.
What are the consequences of physiocracy?
Although physiocracy had important contributions to economic and political thought, some negative consequences are also attributed to it:
- Exclusion of other economic sectors: The physiocracy focused its attention on agriculture as the only source of real wealth, leaving aside the importance of other economic sectors, such as industry and commerce.
- Neglect of labor and salaried work: Although the importance of labor in agricultural production was recognized, the physiocracy tended to overlook the role of labor and wage labor in other economic sectors.
- Simplistic view of the economy: Physiocracy presented a simplistic view of the economy by reducing its analysis to the exclusive role of agriculture and natural laws. It did not take into account the complexity of economic systems, the interactions between different sectors and the influence of non-agricultural factors such as technology and innovation.
- It did not adapt to economic and social changes: he defended a rigid and dogmatic approach based on agriculture and non-state intervention.