MERCANTILISM AND PHYSIOCRACY

By: Felipe Argote

THE MERCANTILISTS

Economic relations between countries is a zero sum game. This means that someone loses what someone wins. This is the central concept that defines the mercantilist. The term is not from themselves or even about an economic think. Rather it is later coined by his detractors. The mercantilist are convinced that to make more powerful a nation should put tariffs on imported products and ensure the maximum export. Also felt that the strength of the emerging nation states was given by the volume of gold that they could accumulate. Not all current mercantilist, despite having a very backbone of thought, started from the same premises. So we know the French mercantilism Jean Baptiste Colbert summed up in gold accumulation, domestic market protection and export subsidies, then there is the known as the Spanish mercantilism Bullionism concept that focuses only on the accumulation of wealth in precious metals, and English mercantilism focused on foreign trade as a source of wealth of a country. In all cases it is not a stream of economic thought but a list of measures centered in government protectionism.

THE PHYSIOCRATS

From the Physiocrats many took some of their original ideas to further process their own theories. Of course it is harder to develop a hypothesis when there is nothing written. Rather than establish a model the Physiocrats are sure that there is a divine natural order and that the way of men to try to understand, not change it. This current arises from 1756 describes the certainty of a rule of nature against the interventionist mercantilism. Specifically attributed to Vincent de Gournay's is the phrase: "laissez-faire, laissez passer”. Let it be, let it pass. However they are Riquetti Victor, Marquis de Mirabeau and Jean Froncois Quesnay especially the founders recognized this trend. The term physiocracy means rule of nature. This is the concept later taken by liberal currents and specifically Adam Smith's invisible hand.

Quesnay was a doctor by profession and became the court appointed physician at the age of 58. Following the 63 meets with Mirabeau and of this meeting emerged the first school of economic thought.

Physiocracy represented the interests of farmers. They believe that all the wealth was produced by the land since the product was superior to the components. According to them the industrial class, craft, and trade was sterile because their final product of its components differed only in human labor. This will take the historicist in its labor value theory that later developed both Smith and Ricardo and later Carl Marx.

However, his concept of economic freedom is not consistent with their political ideology because instead supported the authoritarian power.

Le tableau économique de Francois Quesnay develops his view of how the rent moves. In short believes that society is divided into three classes: agriculture, one that creates wealth, sterile, composed of craftsmen and merchants, and landowners. If the agricultural class produces 5,000 million francs of this 2,000 million paid to the owners of the land and spent 1,000 francs to buy what produce industrial and artisans such as clothing, tools and more. Then the owners of its 2,000 spent income received by 1,000 on land given to them products and a thousand craftsmen in which farmers obtained while the craftsmen spent 1,000 of their income on agricultural products and 1,000 it paid to owners. If landlords spend more than necessary for products of the craftsmen, can exist then a contraction in the economy.