1911 Encyclopædia Britannica/Physiocratic School
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PHYSIOCRATIC SCHOOL, the name given to a group of French economists and philosophers. The heads of the school were François Quesnay (q.v.) and Jean Claude Marie Vincent, sieur de Gournay (1712-1759). The principles of the school had been put forward in 1755 by R. Cantillon, a French merchant of Irish extraction (Essai sur la nature du commerce en général). whose biography W. S. Jevons has elucidated, and whom he regards as the true founder of political economy; but it was in the hands of Quesnay and Gournay that they acquired a systematic form, and became the creed of a united group of thinkers and practical men, bent on carrying them into action. The members of the group called themselves les economises, but it is more convenient, because unambiguous, to designate them by the name physiocrats (Gr. φύσις, nature, and κρατεῖν, to rule), invented by P. S. Dupont de Nemours (1730-1817), who was one of their number. In this name, intended to express the fundamental idea of the school, much more is implied than the subjection of the phenomena of the social, and in particular the economic, world to fixed relations of coexistence and succession. This is the positive doctrine which lies at the bottom of all true science. But the law of nature referred to in the title of the sect was something quite different. The theological dogma which represented all the movements of the universe as directed by divine wisdom and benevolence to the production of the greatest possible sum of happiness had been transformed in the hands of the metaphysicians into the conception of a jus naturae, a harmonious and beneficial code established by the favourite entity of these thinkers, nature, antecedent to human institu- tions, and furnishing the model to which they should be made to conform.
The general political doctrine is as follows: Society is composed of a number of individuals, all having the same natural rights. If all do not possess (as some members of the negative school maintained) equal capacities, each can at least best understand his own interest, and is led by nature to follow it. The social union is really a contract between these individuals, the object of which is the limitation of the natural freedom of each just so far as it is inconsistent with the rights of the others. Government, though necessary, is a necessary evil; and the governing power appointed by consent should be limited to the amount of interference absolutely required to secure the fulfilment of the contract. In the economic sphere this implies the right of the individual to such natural enjoyments as he can acquire by his labour. That labour, therefore, should be undisturbed and unfettered, and its fruits should be guaranteed to the possessor; in other words, property should be sacred. Each citizen must be allowed to make the most of his labour; and therefore freedom of exchange should be ensured, and competition in the market should be unrestricted, no monopolies or privileges being permitted to exist.
The physiocrats then proceed with the economic analysis as follows: Only those labours are truly “productive” which add to the quantity of raw materials available for the purposes of man; and the real annual addition to the wealth of the community consists of the excess of the mass of agricultural products (including, of course, metals) over their cost of production. On the amount of this produit net depends the well-being of the community and the possibility of its advance in civilization. The manufacturer merely gives a new form to the materials extracted from the earth; the higher value of the object, after it has passed through his hands, only represents the quantity of provisions and other materials used and consumed in its elaboration. Commerce does nothing more than transfer the wealth already existing from one hand to another; what the trading classes gain thereby is acquired at the cost of the nation, and it is desirable that its amount should be as small as possible. The occupations of the manufacturer and merchant, as well as the liberal professions, and every kind of personal service, are “useful” indeed, but they are “sterile,” drawing their income, not from any fund which they themselves create, but from the superfluous earnings of the agriculturist. The revenue of the state, which must be derived altogether from this net product, ought to be raised in the most direct and simplest way — namely, by a single impost of the nature of a land tax.
The special doctrine relating to the exclusive productiveness of agriculture arose out of a confusion between “value” on the one hand and “matter and energy” on the other. A. Smith and others have shown that the attempt to fix the character of “sterility” on manufactures and commerce was founded in error. And the proposal of a single impdt territorial falls to the ground with the doctrine on which it was based. But such influence as the school exerted depended little, if at all, on these peculiar tenets, which indeed some of its members did not hold. The effective result of its teaching was mainly destructive. It continued in a more systematic form the efforts in favour of the freedom of industry already begun in England and France. It was to be expected that the reformers should, in the spirit of the negative philosophy, exaggerate the vices of established systems; and there can be no doubt that they condemned too absolutely the economic action of the state, both in principle and in its historic manifestations, and pushed the laissez-faire doctrine beyond its just limits. But this was a necessary incident of their connexion with the revolutionary movement, of which they really formed one wing. In the course of that movement, the primitive social contract, the sovereignty of the people and other dogmas now seen to be untenable, were habitually invoked in the region of politics proper, and had a transitory utility as ready and effective instruments of warfare. And so also in the economic sphere the doctrines of natural rights of buying and selling, of the sufficiency of enlightened selfishness as a guide in mutual dealings, of the certainty that each member of the society will understand and follow his true interests, and of the coincidence of those interests with the public welfare, though they will not bear a dispassionate examination, were temporarily useful as convenient and serviceable weapons for the overthrow of the established order.
These conclusions as to the revolutionary tendencies of the school are not at all affected by the fact that the form of government preferred by Quesnay and some of his chief followers was what they called a legal despotism, which should embrace within itself both the legislative and the executive function. The reason for this preference was that an enlightened central power could more promptly and efficaciously introduce the policy they advocated than an assembly representing divergent opinions and fettered by constitutional checks and limitations. Turgot used the absolute power of the Crown to carry into effect some of his measures for the liberation of industry, though he ultimately failed because unsustained by the requisite force of character in Louis XVI. But what the physiocratic idea with respect to the normal method of government was appears from Quesnay's advice to the dauphin, that when he became king he should “do nothing, but let the laws rule,” the laws having been, of course, first brought into conformity with the jus naturae. The partiality of the school for agriculture was in harmony with the sentiment in favour of “nature” and primitive simplicity which then showed itself in so many forms in France, especially in combination with the revolutionary spirit, and of which Rousseau was the most eloquent exponent. The members of the physiocratic group were undoubtedly men of thorough uprightness, and inspired with a sincere desire for the public good, especially for the material and moral elevation of the working classes. Quesnay was physician to Louis XV., and resided in the palace at Versailles; but in the midst of that corrupt court he maintained his integrity, and spoke with manly frankness what he believed to be the truth. And never did any statesman devote himself with greater singleness of purpose or more earnest endeavour to the service of his country than Turgot, who was the principal practical representative of the school.
The physiocratic school never obtained much direct popular influence, even in its native country, though it strongly attracted many of the more gifted and earnest minds. Its members, writing on dry subjects in an austere and often heavy style, did not find acceptance with a public which demanded before all things charm of manner in those who addressed it. The physiocratic tenets, which were in fact partly erroneous, were regarded by many as chimerical, and were ridiculed in the contemporary literature; as, for example, the impôt unique by Voltaire in his L'Homme aux quarante écus, which was directed in particular against P. P. Mercier-Larivière (1720-1794). It was justly objected to the group that they were too absolute in their view of things; they supposed, as Smith remarks in speaking of Quesnay, that the body politic could thrive only under one precise régime — that, namely, which they recommended — and thought their doctrines universally and immediately applicable in practice. They did not, as theorists, sufficiently take into account national diversities or different stages in social development; nor did they, as politicians, adequately estimate the impediments which ignorance, prejudice and interested opposition present to enlightened statesmanship.
The physiocratic system, after guiding in some degree the policy of the Constituent Assembly, and awakening a few echoes here and there in foreign countries, soon ceased to exist as a living power; but the good elements it comprised were not lost to mankind, being incorporated into the more complete construction of Adam Smith.
See the article on Quesnay, with bibliography appended thereto, also the articles on Mirabeau and Turgot. Most French histories contain an account of the school; see especially Tocqueville, L'Ancien régime et la révolution, ch. iii.; Taine, Les Origines de la France contemporaine, vol. i.; R. Stourm, Les Finances de l'ancien régime et de la révolution (1885); Droz, Histoire du règne de Louis XVI.; also L. de Lavergne, Économistes français du XVIIIe siècle; H. Higgs, The Physiocrats (London, 1897, with authorities).