LESSON 4

1. Who were the Physiocrats and their contribution?

Francois Quesnay was the leader of the economists and his Tableau Economique.
His idea became the founding document of the Physiocratic system. Vincent de Gournay,
another Physiocrat who railed against the internal and external restrictions on commerce in
France. He was also called the father of French economics. Richard Cantillon acknowledge as the
first great economist theorist, developed a two-sector general equilibrium system from which
he obtained a theory of price and a theory of output. He also gave importance to labor and land
thereby enabling to reduce labor to the amount of necessities. Last known Physiocrat is Anne-
Robert-Jacques Turgot and the leading economist of the 18 th century in France. His contributions
were quite distinct and advanced compared to physiocratic theories.
2. How were the Physiocrats different from the mercantilists?
While Physiocrats contended that labor and commerce should be freed from all
restraint, mercantilists held that each nation must regulate trade and manufacture to increase
its wealth and power. Physiocrats opposed mercantilist ideas of what to do during a period of
food scarcity; for example, after a bad harvest. Received wisdom suggested that during a period
of scarcity, a government should step in and forcibly lower the price of grain, so that people
could afford to buy it.
3. What are the tenets of Physiocracy?
Physiocrats predicted a society in which natural economic and moral laws would
have full play and in which positive law would be in harmony with natural law. The idea of
physiocracy implied that government policy should not interfere with the operation of natural
economic laws and that land is the source of all wealth. They believe that what they did was to
rationalize medieval economic ideals, employing to that end the more modern philosophical and
scientific methods.
4. What is Physiocracy in economics?
Physiocracy etymologically denoted the “rule of nature,” and the physiocrats
envisaged a society in which natural economic and moral laws would have full play and in which
positive law would be in harmony with natural law. They also pictured a predominantly
agricultural society and therefore attacked mercantilism not only for its mass of economic
regulations but also for its emphasis on manufactures and foreign trade. The physiocrats made
a significant contribution in their emphasis on productive work as the source of national wealth.
This contrasted with earlier schools, in particular mercantilism, which often focused on the
ruler's wealth, accumulation of gold, or the balance of trade.
5. What is the difference between mercantilism and Physiocracy?
Mercantilist school of economics held that value in the products of society was
created at the point of sale, by the seller exchanging his products for more money than the
products had "previously" been worth, the physiocratic school of economics was the first to see
labor as the sole source of value. However, for the physiocrats, only agricultural labor created
this value in the products of society. All "industrial" and non-agricultural labors were
"unproductive appendages" to agricultural labor.
6. Who is considered as the father of Physiocracy? Why?
 Francois Quesnay is considered the father of physiocracy because he founded the
first school of economics. His idea became the founding document of Physiocracy. The
Physiocrats or les économistes maintained that wealth only comes from the gifts of nature, from
the fact that one plants one seed in the spring and obtains two in the fall.