ABSTRACT
In Chapter 5 we began our study of the history of economics with the French Physiocrats who, in the 1760’s, constructed the first systematic and comprehensive economic model. François Quesnay and his disciples failed to initiate a continuing school of economic thought but they deserve a prominent place in the history of social science for a number of reasons. Their classification of the members of society as ‘agriculturalists’, ‘artisans’, and ‘landowners’ introduced the notion that the fundamental structure of the social order consists of classes that are defined in terms of their economic roles and status. This became, with modifications, a central feature of orthodox classical economics and the grand social theories of Karl Marx and Friedrich Engels. The Physiocratic notion that the agricultural sector of the economy produces a ‘surplus’ introduced an idea that, again with modifications, played a prominent role in the Ricardian and Marxian models and, as we shall see in this chapter, the ‘neoclassical’ economic analysis which, in the later nineteenth and early twentieth centuries, replaced the Ricardian model. Though they did not advocate ‘laissez-faire’ as a general policy, the Physiocrats viewed economic processes as governed by general ‘laws’, analogous to those that control natural phenomena, thus introducing the nomological conception of economics, which has dominated the methodological stance of the discipline down to the present day. The most prominent feature of the Physiocratic model, the conception of the economy as a circular flow of expenditures and incomes, was not used by the classical economists. It lurked in the background of the nineteenth-century literature that focused on the functioning of the monetary system, but it re-emerged prominently as an analytical paradigm in the 1930s when the sub-discipline of ‘macroeconomics’ began to be developed in a systematic fashion.
