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Albert Gates

Books in Review

A Contribution to Economic Literature

(March 1953)

From The New International, Vol. XIX, No. 2, March–April 1953, pp. 104–108.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Physiocrats, Six Lectures on the French Economists of the 18th Century
by Henry Higgs
The Langland Press, N.Y., 158 pages and index, $3.25.

The Langland Press, which only recently published Marx’s A History of Economic Theories, an English version of the Theorien über den Mehrwert, edited by Karl Kautsky, has now issued this little book.

The reader may be surprised to learn that with the issuance of this work, Langland Press has made available the only book in the English language devoted exclusively to the Physiocratic school of economic theory. Another work by Max Beer is not obtainable. If it were, together with Higgs’ book, they would still be the only two treating wholly with the famous French founders of Physiocracy. Considering the importance of the Physiocrats, as the first “school” of economic theory, the English speaking economists and economic historians have treated them quite shabbily.

Most of the writings of the Physiocrats are available only in the French. Yet their contributions have had a far more fundamental importance and lasting significance than the writings of literally dozens of other economists in the past two or three hundred years.

The book by Higgs is the compilation of lectures given more than fifty years ago. Its original publication occurred in 1896. But it has genuine historical value and is exceedingly informative as to the individuals who made up the group, their internal relations and the common struggle they carried on in behalf of their doctrines against the old aristocratic order in France.

The reader will find it quite useful, in fact, almost indispensable, to read this book together with A History of Economic Theories. McCarthy quite rightly points out that

“... Marx’s analyses of the Tableau Economique and his subsequent examination and criticism of national income flow as conceived by Quesnay (the author of the TableauA.G.), is the most searching examination of Physiocracy that has yet appeared in English.”

Higgs dates the Physiocratic school of economists from the meeting of Francois Quesnay and the elder Marquis of Mirabeau in July 1757. He advises that they were undoubtedly influenced in their thinking by the economist Cantillon. At least the latter’s ideas were faithfully represented in Mirabeau’s L’Ami des Hommes, in which Physiocratic economic ideas were presented publicly.

To understand the Physiocrats, it is necessary to bear in mind that their doctrine arose in a predominantly agricultural country, ruled over by a king with a large parasitic aristocratic class. The sovereign and the aristocracy lived off their share of the wealth produced by agriculture. Industry and commerce were yet but a segment of the national production. Restrictions to economic growth were many. The ruling classes siphoned off an enormous share of the productive wealth of the country – an almost complete loss to the economy – internal trade suffered many bars, and foreign trade was likewise largely prohibited. Under the conditions that prevailed, there was little possibility for a free development of the economy, such as was experienced by the Industrial Revolution in England.

Higgs effectively describes the conditions of life under the rule of the sovereign, and explains why the rise of the Physiocratic school appeared as an inevitable response to the terrible poverty of the population, the waste of land, and the economic decay of the times.

These were the decades immediately preceding the French Revolution. In retrospect, one can see the gathering forces of the Revolution. The Physiocrats, whether they were aware of it or not, and many certainly were aware of it, were fighting for liberation of the economy from the stranglehold of reactionary feudalism. Higgs quite rightly called them “not merely a school of economic thought; they were a school of political action.” Despite their “feudal appearances” the Physiocrats worked closely with the Encyclopaedists, and Minister Turgot helped to prepare the ground for the French Revolution.

In looking back at the Physiocrats, we can see the evolution of economic thought from their great beginnings to modern times, especially to Marx’s economic doctrines. One is reminded again, how each successive school or individual economist broadened the knowledge of mankind on the basis of the work of their predecessors.

Before Quesnay, Cantillon had written:

“Land is the source or material from which wealth is extracted ... human labor is the form which produces it, and wealth in itself is no other than the sustenance, the conveniences and the comforts of life.”

The Physiocrats regarded agriculture and commerce as the two sources of wealth in France. But commerce and industry were, in their minds, mere branches of agriculture, the latter being the primary and indispensable source of them. According to them, manufacture yields nothing: it is a sterile endeavor! Higgs summarizes the Tableau Economique, in the following way:

(1) Labor expended in industry (les travaux d’industrie), as opposed to agriculture, does not multiply wealth, though (2) it contributes to population and the increase of wealth, unless (3) it occupies men to the prejudice of agriculture, in which case it has the contrary effect. (4) The wealth of the agriculturist begets agricultural wealth. (5) Industrial labor tends to increase the revenue from the land, and this again supports industry. (6) A nation having a large trade in its raw products can always keep up a relatively large trade in manufactures; but (7) if it has little of the first and is reduced to the second for subsistence, it is in a dangerous and insecure condition. (8) A large internal trade in manufactured articles can only be maintained by the revenue from the land. (9) A nation with a large territory which depreciates its raw products to favor manufacturers, destroys itself in all directions. (10) The advantages of external trade do not consist in the increase of money. (11) The balance of trade does not indicate the advantage of trade or the state of wealth of each nation, which is (12) to be judged by both internal and external trade and especially by the first. (13) A nation which extracts from its soil, its men, and its navigation the best possible result needs to grudge the trade of its neighbors, and (14) in reciprocal commerce nations which sell the most useful or necessary commodities have the advantage over those which sell luxuries.

Quesnay then proposes that, to quote from Higgs again, the government should make possible “freedom in the production and circulation of goods; the abolition or diminution of tolls on transport; the extinction of local or personal privileges in dues of the same character; the repair of roads and of river communication; the suppression of the arbitrary discretion of private persons in subordinate administrations, so far as the national revenue was concerned.”

Given their basic conceptions, it is easily understandable why the Physiocrats should demand that taxes to support the state and the aristocracy be collected at their source, i.e., a single, simple, direct tax (impot unique) levied upon the land and not to exceed one-third of the ground rent (produit net). In this every consumer would pay a proportionate share of the tax because the landlord and farmer would adjust prices of raw materials to meet them.

The Physiocrats believed the best political system to be the single hereditary sovereign with a “fee-simple” interest in the nation. To Quesnay, the right to liberty meant the right to property which the state ought to defend. The sole function of the state was to guarantee security and to extend the powers of the state would be to encroach upon individual liberty. For the specific purpose he had in mind, the state could not be too strong, and constitutional checks and balances would weaken this central authority to uphold the right to property and guarantee security. What of the despotism of the state? That would be tempered by enlightened public opinion.

Most important of all, however, is the fact that it was the Physiocrats “to whom credit is due for having first analyzed capital (Marx).” Given the agricultural character of the country they could hardly be blamed for having in the mid-years of the 18th century thought that bourgeois forms of production “necessarily resembled natural forms.” They understood the meaning of value and labor power, and were among the first to seek the origin of surplus value.

Marx points out that:

“In their researches into the origin of surplus value, the Physiocrats shifted the emphasis from the sphere of circulation into that of immediate production. They thus posed the fundamentals of the analysis of capitalist production.”

Marx points out that they did understand the meaning of surplus value but not in its purely capitalist form. They had not reduced value “to its bare substance, the quantity of labor or labor time,” but they did understand that “labor alone is productive which creates surplus value, whose product contains greater value than the sum of values consumed in the production of this product.” But, as we have already indicated, it was in agriculture that the Physiocrats discovered the difference between the value of labor power and the “value it can yield, i.e., the surplus value which the purchase of labor power yields to the employer.”

They believed only agricultural labor to be productive labor, because, in the conditions of the French economy, they saw it as the only labor producing surplus value and “knew no other form of surplus value than ground rent.”

As we have already pointed out the Physiocrats thought the industrial laborer added nothing to matter, but only modified its form. And agriculture supplied him with his materials. Everything pointed back to the land, and as agricultural labor is the only productive labor, ground rent, “the form of surplus value which differentiates agricultural from industrial labor, seemed to them the unique form of surplus value.”

Living in our age, it is easy to see why the “true profit of capital, of which ground rent is only a derivative, did not exist for the Physiocrats.” In one brilliant paragraph, Marx summarizes his analysis of the Physiocrats:

Physiocracy was truly the first systematic analysis of capitalist production and the first to present as natural and eternal laws of production the conditions under which capital produces and is produced. On the other hand, it bore no slight resemblance to a bourgeois reproduction of the feudal system and of the regime of the landed gentry; and the industrial sphere, where capital begins its autonomous evolution, seemed to it, unproductive branches of labor, merely parasitic complements to agriculture. As the first condition of its development, capital requires separation of labor from the soil, primordial instrument of labor become an independent power in the hands of a particular class. In this conception, the landowner appears to be the true capitalist, to be the one who appropriates the surplus labor. The feudal system thus finds itself reproduced and explained sub specie of bourgeois production. Agriculture seems the only branch where capitalist production – that is to say the production of surplus value – is realized. While feudalism embourgeoises itself, bourgeois society takes on a feudal demeanor.

These appearances deceived the aristocratic followers of Dr. Quesnay, among others the quaint, patriarchal Mirabeau the elder. In the works of the other leaders of Physiocracy, particularly in Turgot, this appearance completely vanishes, and the Physiocratic system presents itself as the new capitalist society taking shape within the framework of feudalism. It therefore corresponds to bourgeois society at the period of its birth from out the feudal system. It is for this reason that its birthplace was France, a predominantly agricultural country, and not England, where commerce, industry and maritime navigation predominate.

It is true that the Physiocrats made many errors, but they were the first to seek a fundamental economic explanation for the phenomena they observed. Though they regarded use value as mere matter, and surplus value as a simple gift of nature, they did seek the explanation for surplus value in the appropriation of the labor of others, and to “base this appropriation upon the exchange of commodities ...”

Because the Physiocrats, in their glorification of land ownership, demanded that all taxes be charged to ground rent alone, they sought to free industry, the “sterile” portion of the economy. It is to the Physiocrats therefore that we are indebted, if not for the origin of the term, then at least the popularization of laissez faire, laissez aller, characteristic of an earlier capitalism.

The Physiocrats, Higgs reminds us, did form “the first and most compact school to be encountered in the history of economics.” His book describes their enthusiasm, their unity, and their daring and original thinking in the field of economics, since they endeavored to treat the subject as an organized science.

Although the “school” did not long survive, expiring even before the French Revolution, its ideas influenced many, most notably Adam Smith. In retrospect, however, it is easy to see why advancing industrial capitalism would push the doctrines of the Physiocrats into the background, though many of their fundamental ideas were to influence economic thought of the future decades.

It is a pity then, that so little written material exists in the English language devoted solely to the Physiocrats. True, Eric Roll treated the Physiocrats handsomely in his A History of Economic Thought, as others have done. But on the whole, no great amount of works appears on this historically important group of thinkers. In issuing the Higgs book, as well as the Marx volume, Langland Press has made a considerable contribution to English economic literature.

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