Main ideas of physiocrats

WRITER: MUSHTAQ AHMAD
STUDENT OF BS ECONOMICS

2. The Physiocrats Contributed On The
Theoretical Side, Three Important
Ideas, Namely:
The concept of natural order.
The concept of net product.
The circulation of wealth.

3. Natural order has been defined by the physiocrats as the
providential order made by God for the welfare of
mankind. It is universal and unchangeable.
The natural laws are the expression of the will of God.
To discover and to understand these laws is man’s first
duty and to live according to them is his second duty.
Natural order aimed at securing pleasure to the people.
Physiocrats are not in favor of equality. They formed
interdependency & final dependency on a nature.
All human being are interdependent, no one is
dependent, so it increase the happiness of mankind.
It implied that only under conditions of freedom, man
can enjoy the maximum happiness and derive maximum
advantage in economic matters.
They are in favor of free market but there should be
minimum interference in economic affairs by
Government.

4. The concept of net product was the direct outcome of
the philosophy of natural order of the physiocrats.
The mercantilists has maintained that the source of
wealth lay in foreign trade and that it consisted of
precious metals.
The physiocrats differed from the mercantilists on both
these ideas.
Physiocrats considered agriculture as the only source of
wealth.
To the physiocrats the only productive wealth was
agriculture. To them the other occupations, other than
agriculture were unproductive and sterile.
In agriculture nature labours along with man. By the gift
of nature (fertility) agriculture produces more than
what the farmers consumes. This surplus production in
the agriculture sector is called as "Net product".

5. Based upon the concept of Net Product.
This idea was first given by a famous physiocrat Quesnay
through tableau economique.
Quesnay has divided the society into three classes. OR
In other words the physiocratic system is based on the
division of society into the following three classes:
The productive class. It consisted of farmers, who
cultivate the soil and pay the rent to the landlords.
The proprietary class included the landlords and the
king.
The sterile class or unproductive class. This class
included all those people who are engaged in non-
agricultural occupations. Merchants, artisans, domestic
servants, government servants, doctors, lawyers,
teachers, etc.

7. All wealth is produced by the productive class.
The value of the total produce produced by the farmers in any year is
equal to five million francs.
Out of this agricultural class requires two million francs for their
maintenance. So the two million do not circulate in the economy. The
remaining produce worth of three million francs is distributed in the
following manner.
Since the productive class requires industrial goods, it will buy them
from the sterile class for one million franc, the remaining two million
francs pass on to the hands of landlords and the government in the
form of rent and taxes.
The proprietary class lives on these two million francs. It spends one
million francs for food and the other for the purchase of industrial
goods.
According to the physiocrats the sterile class or unproductive class
produces no surplus. But still it receives two million francs. The sterile
class uses the two million francs for buying the necessaries of life and
raw materials for industries from the productive class.
Thus the two million which have come into the hands of the
unproductive class return to their starting point, namely, the farmers.
Thus the cycle is complete.

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