PHYSIOCRATS AND MERCANTILISM
Ali Farrell
Kyle Tornow
Matt Steinman
Alex Shepard
TABLE OF CONTENTS

What is Mercantilism?

What is Physiocracy?

History and political atmosphere of the time

The founders and major contributors to each
MERCANTILISM 1500-1750

From Philipp Wilhelm von Hornick, in his Austria Over All,
If She Only Will of 1684

1. 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.
MERCANTILISM

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.
MORE ON THE THEORY




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"
CRITICISMS OF MERCANTILISM



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 antiMercantilist thought
PHYSIOCRACY
Greek for “Government of Nature”
 Originated in France in late 18th century
 Source of national wealth is from productive
work through land and land development

Francois
Quesnay
Anne-Robert
Jaques Turgot
PHYSIOCRATIC BELIEFS
 Free
trade is best
 Property rights are necessary
 Investment capital establishes growth
 Wealth is not infinite
 Diminishing returns exist
TABLEAU ÉCONOMIQUE
 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
KEY HISTORICAL EVENTS: 1500-1750
1500-1550
Spanish expansion.
 1517 – Martin Luther’s 95 Theses.
 1519-1522 – Ferdinand Magellan’s voyage.
 1533 – Henry VIII separates from Rome.
 Portuguese expansion.

1550-1600
England in the Elizabethan Era.
 1568 – The Eighty Years’ War.
 1577-1580 – Sir Francis Drake’s voyage.
 Iberian unification and the Anglo-Spanish War.
 Venetian decline.

1600-1650
The Dutch Golden Age.
 Unification of England and Scotland.
 English expansion.
 1618 – The Thirty Years’ War.
 1648 – The Peace of Westphalia.

1650-1750
The Anglo-Dutch Wars.
 1664 – Thomas Mun’s Treasure by Foreign Trade.
 1684 – Philipp von Hornick’s Austria Over All.
 Global empires enter into decline.
 1767 – James Steuart’s Inquiry into the Priciples
of Political Economy.

KEY HISTORICAL EVENTS: 1750-1800
1750-1800
1730 – Richard Cantillon’s Essay on the Nature of
Commerce.
 1754 – The Seven Years’ War.
 1758 – Francois Quesnay’s Economic Table.
 1775-1776 – The American Revolutionary
War/Declaration of Independence. Adam Smith’s
The Wealth of Nations.
 1789-1799 – The French Revolution.

SIGNIFICANT INDIVIDUALS:
MERCANTILISM
Philip Von Hornigk:
- Born 1640, Died 1714
Giovanni Botero:
- Born 1544, Died 1617
Thomas Mun: (Right)
- Born 1571, Died 1641
SIGNIFICANT INDIVIDUALS:
PHYSIOCRATS
Richard Cantillon:
- Born 1680, Died 1734
Francois Quesnay: (Right)
- Born 1694, Died 1774
Anne-Robert-Jacques Turgot :
- Born 1727, Died 1781