Where it is revealed that Adam Smith was Quesnay’s Feeble Student…
Faithful Anglo-Saxons love to evoke Adam Smith and Ricardo, who are famous British economists.
Adam Smith is viewed as the first temple of economics, inventor of the free market. And that is the first set of deep mistakes. First, there was never any free market, ever since there are tribes, and they are governed. Even a government of pirates has laws. Which its market obeys.
Second, Adam Smith was actually a student. All right, we all are, but some of us do like Einstein, and get “their” main ideas somewhere else. They are not the ultimate creators. Ultimate creators are the ones worth pondering: their reasons are always deeper and more interesting than that of their parrots.
Adam Smith went to France, and learned from the physiocrats. The most prominent physiocrats were towering personalities. One, Turgot, became France’s Prime Minister (under Louis XVI), another was king Louis XV’s surgeon and “first doctor” (so economy was a love of his, as it was with the philosopher who named and founded economics, Xenophon. Lovers tend to think better than those paid to think correct thoughts).
What was the idea of physiocracy? Well, it’s in the name: the power of nature. Physiocracy views economics as an application of the laws of nature, hence its great reverence to agriculture.
As The Economist put it at some point: “If YOU asked twenty well-educated souls to identify a physiocrat, only a couple could help you out. Writers like A.R.J. Turgot, the Marquis de Condorcet and Francois Quesnay are not household names, unlike Adam Smith or David Ricardo. But they are important. According to one late-19th century historian, the physiocrats (who called themselves the “économistes”) created “the first strictly scientific system of economics”.
Adam Smith was half the age of Francois Quesnay when the latter instructed the former (43 versus 72). At the time, intellectuals from Britain and France heavily influenced each other, to the point theater has been written about them. The phrase laissez-faire, coined by fellow physiocrat Vincent de Gournay, came from Quesnay’s writings on China
Some say that physiocracy was a theory of wealth. In this reduced vision of physiocracy, the physiocrats, led by Quesnay, believed that the wealth of nations was derived solely from the value of agriculture. In that parody, Quesnay’s understanding of value-added was rather primitive—he could not see, for example, how manufacturing could create wealth. But that is certainly not true, as Quesnay greatly admired the Chinese universal education system, and its vaunted examinations producing mandarins who ruled the empire (without aristocracy).
Moreover, as Quesnay was France’s top doctor, he could not possibly believe that there was no added value in science and medicine. Quite the opposite. Quesnay, Louis XV’s esteemed friend, was called by the king, “my thinker”. Quite a compliment, as another friend was Voltaire. So that physiocrats believed in agriculture alone is a parody.
Farmers certainly produced wealth. To quote Karl Marx in “Das Kapital”, “the Physiocrats insist that only agricultural labour is productive, since that alone, they say, yields a surplus-value”.
The physiocrats are most commonly known for these most simplistic economic ideas which do not reflect their subtlety. Indeed these parodies are not their most important contribution to economic thought. Rather, it was the physiocrats’ methodological approach to economics that was revolutionary.
Before physiocracy, economics was not viewed as a scientific discipline, but rather a strategic one (this is what is called “mercantilism”). Mercantilist thinkers sometimes assumed that amassing gold, or military power was the best economic strategy… And indeed, it often was. Economic efficiency was irrelevant.
But Quesnay was a scientist (for most of his life, he was a surgeon, trained with the best, who then, at age 50, became an official medical doctor). And Quesnay wanted to apply the scientific principles of medicine to the study of economy. The “Tableau Economique”, which shows in a single page how an entire economy functions, and the abstruse book which contained it, is Quesnay’s most famous contribution.
Quesnay,an immensely respected figure, showed that the economy was something to be respected, analysed and understood—much like a human body. It could not simply be moulded by the will of a monarch (or government, or a bunch of know-nothing aristocrats).
This was a hugely important step forward. The elder Comte de Mirabeau, father to the main leader in the first few months of the Revolution, before an untimely death at age 40, considered Quesnay’s Tableau to be one of the world’s three great discoveries—equalled only by the invention of printing and the discovery of money. As The Economist says:
Familiar notions of contemporary liberal economics, laissez-faire, the invisible hand, etc. derive from Quesnay’s scientific approach. The physiocrats, like many other thinkers of the eighteenth century, believed in “natural order”. They showed that unchanging laws governed all economic processes. Consequently, it is generally thought that the physiocrats were opposed to government intervention: the dead hand of the state would only corrupt the natural evolution of the economy.(but, as Quesnay’s admiration for the Chinese governmental system based on erudition, and for Confucius, and Quesnay’s de facto appartenance to the government shows, that’s another nefarious Anglo-Saxon parody). T. Jacob Viner, a Canadian economist, referred to the physiocrats as one of the “pioneer systematic exponents” of laissez-faire… Alongside with Adam Smith.
But the root of physiocracy was much more general. Adam Smith was the student.
Why is the preceding important? First it destroys the Anglo-Saxon hubris that the Anglo-Saxon culture invented modern economic theory and practice. And that it succeeded because of it (whereas the proper application of gunnery has more to do with it).
In truth, it is quite the opposite. When Louis XIV, the self-flattered “Sun King” took control of the state, he discovered, to his dismay, that France had only twenty (20) major capital ships. England and the Netherlands each had one hundred (100). Each.
Because the Netherlands and England practiced the exact opposite theory to Physiocracy (which would be created in name a century later). The Great Powers, starting with the Imperium Francorum, Francia, and, seven centuries later, Portugal, Spain, etc., practiced Mercantilism, or how to create economic opportunity with big armies and then, big guns. And you know what? Right now the super states of the USA, China and Russia are practicing Mercantilism, while Europe practices Physiocracy. Obama has turned out to be a major practitioner of Mercantilism. Mercantilism has been his main activity. Europeans have not understood this at all.
Guess who is winning?