P HYSIOCRATS AND M ERCANTILISM Ali Farrell Kyle Tornow Matt Steinman Alex Shepard

T ABLE OF C ONTENTS What is Mercantilism? What is Physiocracy? History and political atmosphere of the time The founders and major contributors to each

M ERCANTILISM From Philipp Wilhelm von Hornick, in his Austria Over All, If She Only Will of That every inch of a country's soil be utilized for agriculture, mining or manufacturing. 2. That all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials. 3. That a large, working population be encouraged. 4. That all export of gold and silver be prohibited and all domestic money be kept in circulation. 5. That all imports of foreign goods be discouraged as much as possible.

M ERCANTILISM 6. That where certain imports are indispensable they be obtained at first hand, in exchange for other domestic goods instead of gold and silver. 7. That as much as possible, imports be confined to raw materials that can be finished in the home country. 8. That opportunities be constantly sought for selling a country's surplus manufactures to foreigners, so far as necessary, for gold and silver. 9. That no importation be allowed if such goods are sufficiently and suitably supplied at home.

M ORE ON THE T HEORY Mercantilists viewed the economic system as a “zero-sum game” This makes it impossible to maximize the common good Believed that world trade was fixed and that the only way to increase it was to take from another country They also believed that farmers should live on "margins of subsistence"

C RITICISMS OF M ERCANTILISM Mercantilists did not believe that the value of money was relative Believed that the amount of gold and silver contained within a countries borders were the only measure of wealth Adam Smith was considered to be the father of anti- Mercantilist thought

P HYSIOCRACY Greek for “Government of Nature” Originated in France in late 18 th century Source of national wealth is from productive work through land and land development Francois Quesnay Anne-Robert Jaques Turgot

P HYSIOCRATIC B ELIEFS Free trade is best Property rights are necessary Investment capital establishes growth Wealth is not infinite Diminishing returns exist

T ABLEAU É CONOMIQUE Written by Francois Quesnay in 1758 Paved foundation for physcratic economics Three “movers” in the economy 1. The Proprietary – Landowners 2. The Productive – Agricultural Laborers 3. The Sterile – Merchants/Non-raw material laborers

K EY H ISTORICAL E VENTS :

Spanish expansion – Martin Luther’s 95 Theses – Ferdinand Magellan’s voyage – Henry VIII separates from Rome. Portuguese expansion.

England in the Elizabethan Era – The Eighty Years’ War – Sir Francis Drake’s voyage. Iberian unification and the Anglo-Spanish War. Venetian decline.

The Dutch Golden Age. Unification of England and Scotland. English expansion – The Thirty Years’ War – The Peace of Westphalia.

The Anglo-Dutch Wars – Thomas Mun’s Treasure by Foreign Trade – Philipp von Hornick’s Austria Over All. Global empires enter into decline – James Steuart’s Inquiry into the Priciples of Political Economy.

K EY H ISTORICAL E VENTS :

– Richard Cantillon’s Essay on the Nature of Commerce – The Seven Years’ War – Francois Quesnay’s Economic Table – The American Revolutionary War/Declaration of Independence. Adam Smith’s The Wealth of Nations – The French Revolution.

S IGNIFICANT I NDIVIDUALS : M ERCANTILISM Philip Von Hornigk: - Born 1640, Died 1714 Giovanni Botero: - Born 1544, Died 1617 Thomas Mun: (Right) - Born 1571, Died 1641

S IGNIFICANT I NDIVIDUALS : P HYSIOCRATS Richard Cantillon: - Born 1680, Died 1734 Francois Quesnay: (Right) - Born 1694, Died 1774 Anne-Robert-Jacques Turgot : - Born 1727, Died 1781