Abstract
The conventionally accepted interpretation of the Physiocratic theory of economic policy1 is that of laissez-faire. While partial dissents have been registered, the laissez-faire view has persisted substantially unchallenged. The purpose of this article is to restate the theory of economic policy to which Physiocratic doctrine can be meaningfully and operationally reduced, including a delineation of the role of laissez-faire.
Originally published in Quarterly Journal of Economics, vol. 76 (February 1962), pp. 145–62.
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Notes
Meaning thereby the ‘general body of principles of government action or inaction — the agenda or non-agenda of the state as Bentham called them — in regard to economic activity’ (Lionel Robbins, The Theory of Economic Policy in English Classical Political Economy (London: Macmillan, 1953), p. 2).
Warren J. Samuels, ‘The Physiocratic Theory of Property and State’, Quarterly Journal of Economics, vol. 75 (February 1961), pp. 96–111.
Henry Carter Adams, quoted in Introductory Essay by Joseph Dorfman (ed.), in Adams, Relation of the State to Industrial Action and Economics and Jurisprudence (New York: Columbia University Press, 1954), p. 8.
D. H. MacGregor, Economic Thought and Policy (New York: Oxford University Press, 1949), p. 66.
Auguste Oncken (ed.), Oeuvres Economiques et Philosophiques de F. Quesnay (Paris: Joseph Baer, 1888), pp. 240–1, 336; see also pp. 359–77, 747–58.
W. Walker Stephens (ed.), The Life and Writings of Turgot (New York: Longmans, Green & Co., 1895), p. 252, see also pp. 293, 235, 249, 250.
O. F. Boucke, The Development of Economics (New York: Macmillan, 1921), p. 67.
Haney, for example, calls attention to ‘the crisp, sweeping exaggerations of the Physiocratic system’ (Lewis H. Haney, History of Economic Thought 4th edn (New York: Macmillan, 1949), p. 205).
A. P. Usher argues that, ‘The more critical writers were, perhaps, not without some mental reservations, but in the highly abstract generalizations with which they were primarily concerned, the exceptions did not seem important’ (A. P. Usher, ‘Laissez Faire and the Rise of Liberalism’, in Explorations in Economics: Notes and Essays Contributed in Honor of F. W. Taussig (New York: McGraw-Hill, 1936), p. 406). See also Gide and Rist, A History of Economic Doctrines, p. 30.
Thomas P. Neill, ‘Quesnay and Physiocracy’, Journal of the History of Ideas, vol. 9 (January 1948), p. 164.
Joseph A. Schumpeter, Economic Doctrine and Method (New York: Oxford University Press, 1954), p. 46.
Ibid., p. 61; see also Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), p. 230.
Gunnar Myrdal, The Political Element in the Development of Economic Theory (Cambridge: Harvard University Press, 1955), p. 31 ‘[T]he formulation of normative rules was for them one of the central functions of theoretical analysis. This explains why they attempted no demarcation of their science from rational politics’ (p. 6).
While ‘The philosophy of the natural order presumed that the economic institutions essential to society existed from the beginning as given data or developed spontaneously without the exertion of pressure by the state’. Usher argues that this position ‘was due to concentration of attention upon the ultimate fact of economic adjustment rather than to any failure to recognize the magnitude of the obstacles encountered in the development of the institutional mechanisms of social life’. ‘Thus liberal economists made substantial contributions to state policy designed to develop or modify private institutions essential to economic activity’ (The Political Element in the Development of Economic Theory, p. 407). Hence ‘their ordre naturel was no more than a directive principle for the regulation of industry and agriculture by a supposedly all-powerful and omniscient government. Quesnay’s Maximes were intended to provide such a government with the viewpoints needed to translate into practical policy the principles of the Tableau on the basis of statistical data which he offered to have furnished periodically. The idea of a self-perpetuating system of markets had never as much as entered his mind’ (Karl Polanyi, The Great Transformation (New York: Rinehart, 1944), p. 135).
For similar interpretations of the significance of naturalism for the Physiocratic system see: Myrdal, The Political Element in the Development of Economic Theory, especially pp. 28–9, 5–6, 115; Schumpeter, Economic Doctrine and Method, pp. 47–59; MacGregor, Economic Thought and Policy, p. 66; O. H. Taylor, Economics and Liberalism (Cambridge: Harvard University Press, 1955), pp. 37–99, in particular pp. 47, 51, 85–6, 98–9;
John R. Commons, Legal Foundations of Capitalism (New York: Macmillan, 1924), pp. 241–2, and Institutional Economics (New York: Macmillan, 1934), pp. 136–7; Neill, ‘Quesnay and Physiocracy’, pp. 162, 166–73, and ‘The Physiocrats’ Concept of Economics’, Quarterly Journal of Economics, vol. 63 (Nov. 1949), in particular pp. 551–3;
James Bonar, Philosophy and Political Economy (New York: Macmillan, 1909), p. 194;
John A. Mourant, ‘Mr. Neill and Physiocracy’, Journal of the History of Ideas, vol. 10 (Jan. 1949), p. 113;
and H. W. Peck, Economic Thought and its Institutional Background (New York: Farrar and Rinehart, 1935), p. 65.
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), pp. 650–1.
Henry Higgs, The Physiocrats (New York: Langland Press, 1952), pp. 143–4.
Luigi Einaudi, ‘The Physiocratic Theory of Taxation’, in Economic Essays in Honor of Gustave Cassel (London: Allen and Unwin, 1933), pp. 129–42; discussed in Samuels, ‘The Physiocratic Theory of Property and State’, pp. 106–7.
R. P. Shepherd, Turgot and the Six Edicts (New York: Columbia University, Series in History, Economics and Public Law, Vol. XVIII, No. 2, 1903), pp. 103, 61; see also pp. 138, 37–42, and Stephens, The Life and Writings of Turgot, pp. 267–8, 245–6, 240–1.
Physiocratic political theory incorporated several checks, or ‘guarantees’, upon the sovereign power; see Mario Einaudi, The Physiocratic Doctrine of Judicial Control (Cambridge: Harvard University Press, 1938).
C. Northcote Parkinson, The Evolution of Political Thought (Boston: Houghton Mifflin, 1958).
See also Alexis de Tocqueville, The Old Regime and the French Revolution (Garden City: Doubleday Anchor, 1955), pp. 164–5.
Henry Woog, The Tableau Economique of François Quesnay (Bern: A. Francke, 1950), p. 28; see also p. 86.
J. J. Spengler, ‘The Physiocrats and Say’s Law of Markets’, I–II, Journal of Political Economy, vol. 53 (Sept. and Dec. 1945), pp. 204, 205.
Harold G. Vatter, ‘The Physiocrats and the Growth of Underdeveloped Economies’, Current Economic Comment, vol. 18 (Nov. 1956), p. 40.
Oncken, Oeuvres Economiques, pp. 333, 335; see also Vatter, ‘The Physiocrats and Underdeveloped Economics’, pp. 39–40; Woog, The Tableau Economique, pp. 84 ff.; Spengler, ‘The Physiocrats and Say’s Law of Markets’, pp. 208 ff.; and Leo Rogin, The Meaning and Validity of Economic Theory (New York: Harper, 1956), p. 32.
Alfred Marshall, Industry and Trade 3rd edn (London: Macmillan, 1932), p. 742; see also his Principles of Economics 8th edn (New York: Macmillan, 1953) p. 757.
See Nicolas Baudeau, Première Introduction à la Philosophie Economique (Paris: Librairie Paul Geuthner, 1910), p. 77.
Spengler, ibid.; see also Woog, The Tableau Economique, p. 83 ff., and Ronald L. Meek, ‘The Interpretation of the Tableau Economique’; Economica, n.s. XXVII (Nov. 1960), pp. 336–47.
George J. Malanos, ‘The Evolution of the General Theory’, unpublished Ph.D. thesis, Harvard University, 1946, p. 43; see also p. 77. See also n. 17 above.
Alfred North Whitehead, The Foundation of Reason (Boston: Beacon Press, 1958), p. 13.
Thus if one defines laissez-faire ‘to embrace the arguments of those who accepted government as a necessity but nevertheless wished to see its functions reduced to the narrowest possible limits’, and of those who ‘recognized that government must protect life and property and must provide a few common services, such as education, but essentially ... viewed the state in negative terms and were loath to have it assume positive duties in the interest of the general welfare’, then the Physiocrats would appear to belong more properly among ‘The theorists of the general-welfare state ... [who] believed that the state could benefit society by a positive exertion of its powers and that it should therefore act whenever its interposition seemed likely to promote the common well-being’ (Sidney Fine, Laissez Faire and the General-Welfare State (Ann Arbor: The University of Michigan Press, 1956), p. vii).
J. H. Randall, Jr, The Making of the Modern Mind (Boston: Houghton Mifflin, 1926), p. 322.
J. M. Clark, Social Control of Business (New York: McGraw-Hill, 1939), p. 12.
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Samuels, W.J. (1992). The Physiocratic Theory of Economic Policy. In: Essays in the History of Mainstream Political Economy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12266-0_3
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