Physiocrats
born in Ireland, lived in france; banker and writer; involved in south sea bubble; mysterious death
Cantillon bio
land theory of value: to figure out wages in terms of land, developed a theory of population, subsistence wage can be characterized with the amount of land required for pop to keep size, very agrarian
Cantillon main contribution
disagreed with mercantilsits b/c thought trade was a positive sum trade, collusive relationship btw gov and industry harmful
adam smith
one of first authors to place importance on role of entrepreneurs, bear risk of uncertain market prices provide liquidity
cantillon on entrepreneurship
two productive sectors: agriculture and manufacturing; three social classes: landowners, entrepreneurs and hired workers; special role for towns as marketplaces enabling the conduct of trade in the most efficient way, circular flow of income model
cantillon on the model of flows of goods and money between different sectors
land is the unique source of wealth (both emphasize land value but physiocrats saw manufacturing and commerce as sterile) tax should be laid directly land rents, free trade
main ideas of physiocrats
quasi mercantilist b/c beliefs about gold and wealth
on mercantilism
focused on the commodity part, value of money can be expressed as a function of its cost of production; quantity theory of money not entirely valid, gold miners would be the only agents gaining from the discovery of gold, most effects on prices temporary
on monetary theory
there exists natural order and gov shouldn't intervene. land produces wealth; manufacturing or commerce is sterile activity; direct response to Colbert's industrial policy and subsidizing domestic manufacturing
physiocrats
french centered on french court, first real school of economics, addressed to the problems of French economy and the afterschocks of the Colbert mercantilism
physiocrats and quesnay
derived from Cantillon, input-output model of French economy trying to replicate the flow of income between farmer entrepreneurs, hired workers, manufactures and landowners, estimates for size of sectors and was intended to be used as an instrument in policy making
tableau economique