Adam Smith's Simplified Wealth of Nations, Book 4, Chapter 9c: Errors of the physiocrats

Chapter 9c: Errors of the physiocrats

24 According to this liberal and generous system:

  • 25 On the contrary, a landed nation hurts its own interest when it oppresses foreign nations by high duties or prohibitions by:
    1. By raising the price of all foreign goods, it sinks the real value of its own surplus produce
  • By giving a monopoly of the home market to its own merchants, artificers, and manufacturers, it raises mercantile and manufacturing profits over agricultural profits
  • This policy discourages agriculture in two ways:

    1. By sinking the real value of its produce and lowering its profit rate
  • By raising the rate of profit in all other employments
  • 26By this oppressive policy, a landed nation will be able to raise up artificers, manufacturers, and merchants of its own sooner than by the freedom of trade.

    27 Mr. Quesnay's Economic Table represents:

    Mr. Quesnay is the very ingenious and profound author of this system and its mathematical models.

  • Some subsequent formulas show how:
  • 28 Some speculative physicians imagined that the human health could be preserved only by a precise regimen of diet and exercise.

    Mr. Quesnay is a very speculative physician.

  • He did not consider that, in the political body, the natural effort every man to continually better his own condition is a principle of preservation which can prevent and correct the bad effects of a partial and oppressive political economy
  • If a nation with perfect liberty and justice could not prosper, then no nation could have ever prospered.
  • 29 The capital error of this system was in representing the artificers, manufacturers, and merchants as unproductive

    1. 30This class annually reproduces the value of its own annual consumption.
  • Farmers and countryside labourers annually reproduce a net produce.
  • A marriage which produces three children is certainly more productive than one which produces only two.
    1. 31It is improper to consider artificers, manufacturers, and merchants in the same light as menial servants.
  • On the contrary, the labour of artificers, manufacturers, and merchants naturally realizes itself in vendible commodities.
    1. 32The labour of artificers, manufacturers, and merchants do increase the society's real revenue.
  • The artificer's produced value is not greater than his consumed value.
  • 33 The patrons of this system assert that the consumption of artificers, manufacturers, and merchants is equal to the value of what they produce.

    4. 34 Without parsimony, farmers and country labourers can do no better in increasing their society's real revenue than artificers, manufacturers, and merchants.

    1. By some improvement in the productivity of useful labour actually maintained in it
    2. By some increase in the amount of that labour
    3. 35 The improvement in the productivity of useful labour depend on:

      1. the improvement in the worker's ability
      2. the improvement of the machinery with which he works
      3. 36The increase in the amount of useful labour actually employed depends on the increase of the capital which employs it

      4. If merchants, artificers, and manufacturers are naturally more inclined to parsimony and saving than proprietors and cultivators, they are more likely to increase their society's useful labour and real revenue.
      5. 37 5. Even if the revenue of a country were measured in food, a trading and manufacturing country would always have greater revenue than a country without trade or manufactures

      6. The town's inhabitants frequently possess no lands of their own.
      7. What a town is to its countryside, an independent state may be to other independent states.
      8. Holland draws most of its subsistence from other countries.
      9. A small amount of manufactured produce buys a large amount of rude produce.
      10. The manufacturing country exports goods that can subsist and accommodate a very few.
      11. The non-manufacturing country exports the accommodation and subsistence of many.
      12. The people of the manufacturing country must always enjoy more food than what their own lands could afford.
      13. 38 This system, with all its imperfections, is perhaps nearest to the truth on political economy.
      14. This system is worth the consideration of anyone who wishes to examine the principles of political economy.
      15. It has many followers.
      16. Men are fond of:
      17. The paradox of their system on the unproductive nature of manufacturing labour has perhaps contributed greatly to multiply its admirers.
      18. Because of them, French agriculture was delivered from oppressions.
      19. This sect has very many works.
      20. François Quesnay
        François Quesnay
      21. Marquis de Mirabeau was a very diligent and respectable author.
        1. The invention of writing
      22. The invention of money
      23. The invention of Economic Table

      24. Next: Chapter 9d: Foreign Economic systems