Our aim in this piece of work is to explain the physiocratic thoughts and its incredibly great influence for today’s economy due to the fact that it was the first ideology stating that the earth does not contain any value without mankind’s effort because without it, natural resources would not have been exploited or innovated in order to create new ones.
Another relevant factor to include in this paperwork is to show understanding of the positive and negative circumstances of this ideological stream so that we can analize and study their thinking.
Adam Smith was influenced by a group of french writers known as the Physiocrats. These were relevant due to the fact that they scrutinized the mechanism of unregulated …show more content…
Their fundamental concept was the performance of the natural law of the policy formulation for the favorable performance of the economy. Even though the laws were independent from human will, men could discover them in an objective manner.
Physiocrats built theoretical models through isolating economic variables. They achieved important discoveries throughout this process such as the interdependence of various economic sectors such as the micro/macroeconomic analysis.
Physiocrats realized that England was much more advanced in terms of agricultural techniques than France; therefore they were more concerned about the macroeconomic process. This is why France was developing in an uneven way due to the fact that they had old techniques. As a way to enhance their situation they became interested in nature and the causes of the Wealth of Nations and the policies that enhanced the economic growth.
It is relevant to highlight that Physiocrats did not focus on money itself, but in forces driving towards the economic development. They studied the foundation of physic value and concluded that the origin of wealth was the agriculture and …show more content…
They considered Quesnay’s economic table as their optimum theoretical achievement as it provided with a representation of the monetary income flow between the diverse sector within the economy and the annual creation and circulation of net proceeds throughout the economy,
The Quesnay’s table represents a methodological advance in the economic development and an attempt to analyze the reality as it is by means of abstraction.
They believed that basic motivation in the economic activities of the human beings was the desire to maximize the profits. Prices were set in the market by the economic activity and the determination of those prices could be studied by the natural laws that were independent from the human will. They concluded that the free competition led to the best pricing and that society would benefit if individuals were guided by their own interest. They also included that the taxes should be based only on the ground.
Due to the fact that Physiocrats believed in a natural order superior to any human design, they conceived the economy as a self-regulating mechanism and therefore rejected the controls imposed by the mercantilist