Introduction
It is the second doctrine after mercantilism that had influenced public policy very strongly during the 18
century. Before the classical work of Adam Smith in 1776, there were only two doctrines or schools of
thought that had significant and dominant domination over politics and economic policies of that time.
Here we will discuss on Principles of Physiocratic School of Economic Thought
Physiocracy is an economic thought or economic theory developed by an organized group of French
economists in the 18 century. This school of thought was led by Francois Quesnay (1694-1774). Francois
Quesnay was a French economist and chief architect of the Physiocratic school of economic thought. He
published the ‘Tablue Economics’ in 1758 and provided the foundations of the ideas on the Physiocratic
school of economic thought.The Physiocratic school of economic thought is considered as the founder of
economic science as they were the initiator to grab the principles including economic phenomena and to
develop a theoretical system. In such a sense, the
Physiocratic school is known as the initial school of economic thought
Background/ Circumstances in France
The historical, economical, and political background plays a vital role in the emergence of any thoughts
and principles. Sohere is the short discussion on the overall scenario of France during the emergence of
the Physiocratic doctrine.
 Roughly the Physiocratic school was evolved around the 1750s.
 The background was started from the tenure of Louis-XIV
 Louis-XIV ruled between 1643 to 1715. King was known as an absolute despot. Louis-XIV had
tried the centralization of all the powers in hisruling period. France won many big wars in the
leadership of Luis-XIV but France also involved in different unnecessary wars and at the endthat
had created a huge burden of economic debt on France.
 It was the time during which there were massive progress and development in art, culture,
painting, and music, etc. but at the same timeeconomy of France was facing so many problems.
 The agriculture sector of France was almost devastated and there was an increasing amount of
public debt due to several unnecessary wars inwhich France involved.
 Under the rule of Louis-XIV J.B. Colbert was the Controller General of Finance and he was a strong
supporter of mercantilism. Thusmercantilism was also called Colbertism in France.
 Colbert had neglected the agriculture sector and focused public policies in the manufacturing
sector to raise international trade and to developFrance as a strong nation-state.
 Under Colbert, mercantilism was carried to an excessive scale. On the other hand, Louis-XIV
involved in different wars with other Europeancountries that were unnecessary to be involved,
and at the end of the story, the economy of France had turned worse from the bad.
 He also promoted Catholic Christianity as the official religion by replacing the Protestants. He
centralized all the powers and exempted all thenobilities or officials and churches from tax
burdens.
 After such, all the burden of tax rested on the farmers where the policy of Colbert had entirely
ignored the agriculture sector and formulated allthe public policy in favor of mercantilists’
philosophies.
 This made farmers living more worst and almost all farmers suffered famine types of problems.
Thus the economy was ruined, agriculture wasentirely devastated and all the economy was in an
unrest state.
 Tenure of Louis-XV
 Louis-XV ruled from 1715 to 1774. This was the time in which the Physiocratic school of
economic thought emerged.
 During the time of Louis XV, France was again involved in the wars and one of them was 7 years
war with England.
 France was defeated by England in such war and as a result economy of France had gone into
more harsh conditions.
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Public debt was increasing more. And on the other hand, King Louis-XV was not a good
administrator and was not able to handle economicaffairs in better ways. Conditions in France
were becoming difficult day by day.
Francois Quesnay (1694-1774)-Introduction
He was a French economist and intellectual leader of the Physiocratic school of economic thought.
Quesnayprofessionally engaged as the consulting physician to King Louis XV at Versailles. He published
his first book on thepolitical economy in his 60s.
Quesnay was born into a decent family of the labor class. He cultured the behavior of reading from a
household medicalcompanion and quickly acquired a voracious appetite for additional books and
additional learning.
Through his quick self-education and skills, he steadily climbed up and finally entered into the service of
local aristocrats. He finally became a vital part of enlightenment thinkers and was popularly known as the
leader of physiocratsand economists.
He wrote the book ‘Circulation of Blood’. This book was purely a medical book. He gained popularity
among thinkers andelites through his book, honesty, and professional ethics. But he is more popular with
his economic contribution and hisfamous work ‘Tablue Economics’-1958.
It is said that his interest in economics arose only in 1957. Because of his knowledge-provoking books,
writings, andpopularity in his profession he got a connection to the royal and elite estate of Versailles.
After getting a connection with the elite class of Versailles, he was able to buy a huge amount of land and
became thelandlord. After becoming a landlord he started to advocate for the agriculture sector and
farmers and created thefoundation of the Physiocratic school of economic thought.
Gradually Quesnay came with his famous economic ideas and theories. His entire contribution to the
political economywas supped by his Tablue Economics (1758). Through Tablue Economics he presented
the relationship between thedifferent economic classes and sectors of the French society and the flow of
payments between them. Like a circular flowmodel, he had presented such a type of relationship for the
first time. He developed the concept the economicequilibrium.
This concept of Quesnay is considered an ancestor of the multi-sectoral input-output systems of Marx,
Sraffa,and Leontief and modern general equilibrium theory.
Philosophy or Principles of Physiocratic School
The Physiocratic school of economic thought is based on the principle of the natural order. If we consider
the backgroundin which Physiocracy had emerged then we can say that Physicracy was developed as the
criticism or response ofexcessive exercise of mercantilism.
The physiocrats supposed that the mercantile policies have created damages to the economy and nations
instead ofdoing making them strong. So they advocated their policies just opposite to the policies of
mercantilism.
Around the time when physiocracy was starting to appear, agriculture was a so neglected sector under
mercantilism as itwas considered incapable to generate surplus capital. Mercantilism collectively was
against the overall agriculture.
On the other hand, agriculture was unstable, going from bad to worse conditions and in danger due to the
badadministration and heavy taxation on third-class people of society including farmers by king Louis-XV.
So the entireagriculture and farmer class were so unhappy, they were facing famine and having very bad
living conditions. So we canrefer that Physiocracy was developed as against an alternative to
mercantilism
Reasons or Factors Behind the Emergence of Physiocracy
Physiocracy was an organized and systematized group of thinkers in the 18 th century led by Quesnay.
Many economic,political, and social factors were there to provoke and guide the emergence and rise of
physiocracy. Major causes orfactors are pointed as below;
 Excessive exercise of mercantilism and in the name of mercantilism there was fuller ignorance of
the massive agriculture sector. J.B. Colbertthe Controller General of Finance and a strong
supporter of mercantilism, the Mercantilism in France had brought to an extreme degree.
Morethan 90 percent of the people were in the agriculture sector but they were neglected and
regulated through strong government policies. Sothese all factor-stimulated people like Quesnay
and invented alternative economic theory to prove that the mercantile policies were
notconstructive for the development and prosperity of a nation. By giving the theoretical assault
to mercantilism they developed the Physiocraticschool of economic thought.
 The taxation provisions adopted by King Louis XV were so unfair, corrupt, inefficient, and unjust.
The clergy, nobles, and elites of the societywere fully exempted from the tax burden. But the tax
burden on the farmers and other common people was so high. These taxation policies ofthe
government had the people unpleasant and horrid. So they all were looking for a new way of life
and new thought of the political economy.
 The economy of France was ruined during that period. Louis XIV and XV involved many
unnecessary wars, and as a result, the governmentwas facing a debt trap and ultimately
bankruptcy. It was also another reason behind the emergence of Physiocracy.
 There was enlarging and ongoing exploitation of lower-class people by upper elites. For example,
French farmers were oppressed anddemoralized by the nobles and landlords in different ways.
Farmers used to harvest and grow food and crops on the land of landlords and themajority of
production was taken by landlords. Farmers were unable to even fulfill their hunger and at the
same time government wasimposing different sorts of taxation upon them. Due to mercantilism,
there was no proper market for agricultural production as well.
 Agriculture was taken as an important productive sector in England. They had mentioned that to
develop trade in the ignorance of theagriculture sector was the wrong policy so that the
agricultural revolution was starting in Britain. But in France, the overall economic condition was
becoming worse from bad and their economy was so unbalanced. So they were also in a kind of
compulsion to think about trade,manufacturing at the expense of the agriculture sector.
 Enlightenment, renaissance, and other thoughts of philosophers also provoked the significance of
humanism, social norms, and values over amere collection of billions. People like Dante, Voltaire,
John Locke, and Immanuel Kant, and so on with the development of science andphilosophy
focused on rational thinking, humanism, people’s sovereignty, separation of church and state,
freedom of speech and expressions,and so on. These all had stimulated new economic thought.
 Rising population (increased by 30 percent from 1700 to 1789) but there was no scientific
advancement in the agricultural sector. At thesame time, there was increasing government debt
and the government was spending half of its budget on debt repayment.
Policy Implications of Physiocrats
The Physiocratic school of economic thought is considered the first organized doctrine of economic
science. Physiocracywas also considered the revolution of people (common people and thinkers) against
Mercantilism.
 According to Physiocrats the natural law and order should be adopted everywhere and natural
order should be the base of functioning.This term means that they advocated for the removal of
government intervention from the order of nature or god. In economic language, wecan call it
lassies fair or no government intervention of the government in economic affairs.
 They considered agriculture as the productive sector and also said that real wealth would come
from agriculture. All the sectors other thanagriculture are sterile sectors for them. They
considered foreign trade was a necessary evil.
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Physiocrats measured labors engaged in agriculture only are productive factors. Net product or
real wealth was only generated from theagriculture sector and not from the manufacturing
sector. According to them, agriculture was the only source of wealth or net product.
They generated tools and mechanisms of organization of economic activities and economic
classes or economic sectors.
They advocated a single tax system and tax should be imposed on net product only.
Why it is Called First Organized Economic Thought
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Physiocrats talked about economic relations and behavior for the first time in scientific
methods.They considered agriculture as the major source of wealth generation. Economic
development was their main concern and for such agriculturewas the only productive sector to
assist.
They analyzed for the first time capital and capital formation. The generation of net output was
concerned with capital formation.
They had shown and analyzed the interconnection between different social classes with the help
of an economics table.
Physiocrat initiated for releasing the role of government from economic affairs.
They advocated only one tax system as a direct tax upon net output.
Criticisms of the Physiocratic School of Economic Thought
The physiocrats policy prescriptions were criticized on the following grounds;
 Physiocracy considered agriculture only as the productive occupation and source of wealth
generation. It was their wrong assumption. Tradeand industry are equally important and
productive but they ignored the role of trade and commerce.
 They referred to manufacture as unproductive although it creates utility and agriculture only as
of the productive source of net output. Thatwas also their wrong idea.
 Physiocrats divided labor into productive and unproductive. According to them, labor engaged in
agriculture was considered productive andothers were unproductive.
 They advocated for natural law and the law of God. It means they advocated complete freedom of
economic activities. Absolute freedom is notfavorable.
 Complete ignorance of manufacturing and commerce was another drawback of Physiocrats.
 This school of thought advocated for single taxation and tax should be imposed on the production
of net products. This was somehowconsidered against the interest of agricultural society.
Conclusion
Thus Physiocracy was an organized group of economic thinkers belonging to France. This group was led
by Quesnay.They believed in natural law and order. Physiocrats considered agriculture as the main
productive occupation to generatethe real wealth of nations and said that trade is a necessary evil. Their
thought advocated for laissez-faire and non-intervention of government in economic affairs.
They gave different tools of analysis relating to wealth generation, social classes, and distribution of the
generatedwealth. In 1776 with the classical influencing work of Adam Smith the philosophies of
Physiocracy got replaced. However,this school of thought was considered the first scientific economic
thought and it had created the never forgetting pace inthe history of economic thought.