Physiocracy

Physiocracy was an economic school that flourished in France in the mid eighteenth century, founded by the physician and economist Francois Quesnay. Quesnay set out the physiocratic system most fully in his 1758 Tableau Economique, a diagram tracing how income flows in a circular pattern between landowners, farmers and merchants, and arguing that agriculture is the only sector that produces a true net product, a surplus of value beyond what is consumed in production. Physiocrats held that manufacturing and commerce merely transform or move value created elsewhere and produce no net addition to wealth, and they advocated a single tax on land rent in place of the complex web of tariffs and levies imposed by the mercantilist state. The school never grew large, but its emphasis on natural economic laws and its opposition to mercantilist trade restriction directly influenced Adam Smith, who met French Physiocrats including Quesnay while traveling in France in the 1760s, and Physiocracy is generally credited as the first systematic school of economic thought, predating classical economics by roughly two decades.