PHYSIOCRATS AND MERCANTILISMAli FarrellKyle TornowMatt SteinmanAlex 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 anti-Mercantilist 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 – Landowners2. The Productive – Agricultural

Laborers3. 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