Schools of Economic Theory: Physiocrats Term Paper

Interesting economic school, standing in side from others in history of economic idea, is a school of Physiocrats in France. However, “physiocrats” (which means “rule by Nature”) is the name which they got in future, at their time they named themselves as “economists”.

Name that was given to this school by more late researchers is not casual, because it exactly reflects essence of their economic views. A word “physiocrat” is conducted by the filiations from two Latin words – “physios” (nature) and “cratos” (power). Indeed, the source of rich and prosperity nation Physiocrats was seen exceptionally in development of agriculture sector.

The founder of this school was François Quesnay (1694-1774), court physician Ludovic XV. He formulated substantive theoretical provisions, economic and political program of physiocrats. Physiocrats  declared agriculture is the unique sector, which created country’s prosperity. They insisted on that exactly the constantly reproduced agricultural wealth serve as basis for all of other wealth forms, provide employment for all types of professions, promote to the prosperity of population, spur to action industry and support prosperity of nation.

For their theory Physiocrats took Issac Newton’s idea and continue reveal it that the universe was mechanistic and applied this mechanistic world view to the social production and distribution of goods and services. They considered the phenomena of the mercantile economic mercantilism – is the distribution of goods with the calculated goal of achieving profit and has convinced that, the distribution of goods operated under the same mechanistic and natural laws that the rest of the world operated under. The Enlightnment thinkers were occupied by applying mechanistic thought to other areas of social organization, so it seemed absolutely natural to use these principles to the economy.

By the way, the laws which were discovered in action by the Physiocrats in economy, were following:

1. the natural tendency of mercantilism – produce wealth, thereby that mercantilism left to its own device would enlarge wealth of a nation;
2. the natural tendency of mercantilism ”“ serve to their own self-interest, but in persecution of their self-interest, every person benefits from additional wealth which was created;
3. mercantilism naturally brings good results in increasing  labor productivity.

Moreover, government interference in direct for mercantilism tax, rules, price controls-hinders actions of the companies – an acceptor and so prevents these laws of the nature of the economy to exist; none of increased payment wealth, has enlarged the will to capacity to be a marketed controlled mercantilism. The Physiocrats argued, that  government should leave the economy alone and allow individuals within economy to do all for realizing their own self-interest; this doctrine they have named laissez-faire, or “allow them to do.”

All these ideas presented above are have a straight attitude to the Enlightenment cultural ideas. And the notion connected with the purpose of economy grows, means the wealth increasing which can have place only with progress appearance and human intervention to the history process what are directed on the human conditions improvement. Saying about the idea of laissez-faire, becomes understandable that society in the big amount consists of selfish and competing people who, in meeting their own self-interest, can improve all world around them to receiving own wealth. Saying about government, the Physiocrats not only argued, but also advocated  a policy of laissez-faire, which called for minimal government interference in the economy and leaving the place for active people self-interest  position. People should have the necessary level of autonomy for their interest realizing and these principles were the part of the freedom development idea and had also a big value for the future nation wealth and prosperit.