Physiocrats and Mercantilism

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Physiocrats and Mercantilism

• Ali Farrell
• Kyle Tornow
• Matt Steinman
• Alex Shepard

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Table of Contents

• What is Mercantilism?
• What is Physiocracy?
• History and political atmosphere of the time
• The founders and major contributors to each

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Mercantilism 1500-1750

• From Philipp Wilhelm von Hornick, in his Austria
  Over All, If She Only Will of 1684
• 1. That every inch of a country's soil be
  utilized for agriculture, mining or
  manufacturing.
• 2. That all raw materials found in a country be
  used in domestic manufacture, since finished
  goods have a higher value than raw materials.
• 3. That a large, working population be
  encouraged.
• 4. That all export of gold and silver be
  prohibited and all domestic money be kept in
  circulation.
• 5. That all imports of foreign goods be
  discouraged as much as possible.

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Mercantilism

• 6. That where certain imports are indispensable
  they be obtained at first hand, in exchange for
  other domestic goods instead of gold and silver.
• 7. That as much as possible, imports be confined
  to raw materials that can be finished in the home
  country.
• 8. That opportunities be constantly sought for
  selling a country's surplus manufactures to
  foreigners, so far as necessary, for gold and
  silver.
• 9. That no importation be allowed if such goods
  are sufficiently and suitably supplied at home.

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More on the Theory

• Mercantilists viewed the economic system as a
  zero-sum game
• This makes it impossible to maximize the common
  good
• Believed that world trade was fixed and that the
  only way to increase it was to take from another
  country
• They also believed that farmers should live on
  "margins of subsistence"

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Criticisms of Mercantilism

• Mercantilists did not believe that the value of
  money was relative
• Believed that the amount of gold and silver
  contained within a countries borders were the
  only measure of wealth
• Adam Smith was considered to be the father of
  anti-Mercantilist thought

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Physiocracy

• Greek for Government of Nature
• Originated in France in late 18th century
• Source of national wealth is from productive work
  through land and land development

Anne-Robert Jaques Turgot
Francois Quesnay
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Physiocratic Beliefs

• Free trade is best
• Property rights are necessary
• Investment capital establishes growth
• Wealth is not infinite
• Diminishing returns exist

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Tableau Économique

• Written by Francois Quesnay in 1758
• Paved foundation for physcratic economics
• Three movers in the economy
• The Proprietary Landowners
• The Productive Agricultural Laborers
• The Sterile Merchants/Non-raw material laborers

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Key Historical Events 1500-1750
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1500-1550

• Spanish expansion.
• 1517 Martin Luthers 95 Theses.
• 1519-1522 Ferdinand Magellans voyage.
• 1533 Henry VIII separates from Rome.
• Portuguese expansion.

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1550-1600

• England in the Elizabethan Era.
• 1568 The Eighty Years War.
• 1577-1580 Sir Francis Drakes voyage.
• Iberian unification and the Anglo-Spanish War.
• Venetian decline.

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1600-1650

• The Dutch Golden Age.
• Unification of England and Scotland.
• English expansion.
• 1618 The Thirty Years War.
• 1648 The Peace of Westphalia.

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1650-1750

• The Anglo-Dutch Wars.
• 1664 Thomas Muns Treasure by Foreign Trade.
• 1684 Philipp von Hornicks Austria Over All.
• Global empires enter into decline.
• 1767 James Steuarts Inquiry into the Priciples
  of Political Economy.

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Key Historical Events 1750-1800
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1750-1800

• 1730 Richard Cantillons Essay on the Nature of
  Commerce.
• 1754 The Seven Years War.
• 1758 Francois Quesnays Economic Table.
• 1775-1776 The American Revolutionary
  War/Declaration of Independence. Adam Smiths The
  Wealth of Nations.
• 1789-1799 The French Revolution.

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Significant Individuals Mercantilism

• Philip Von Hornigk
• - Born 1640, Died 1714
• Giovanni Botero
• Born 1544, Died 1617
• Thomas Mun (Right)
• - Born 1571, Died 1641

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Significant Individuals Physiocrats

• Richard Cantillon
• - Born 1680, Died 1734
• Francois Quesnay (Right)
• Born 1694, Died 1774
• Anne-Robert-Jacques Turgot
• - Born 1727, Died 1781