Showing posts with label Physiocracy Vs Classical Economics. Show all posts
Showing posts with label Physiocracy Vs Classical Economics. Show all posts
Sunday, November 5, 2023
06. Physiocratic Economic Policy
As discussed in the previous post, in the mid-18th century Physiocracy emerged as an economic theory and was able to not only overcome the weaknesses of Mercantilism but also effectively respond to the prevailing political conditions in Europe at that time.
In here we can see key principles and policies associated with Physiocracy:
1. Primacy of Agriculture -
According to physiocrats, a nation's main source of wealth is its agricultural output. And also, according to them agriculture produced a "net product" or surplus that could be taxed to support the state and non-agricultural activities. Physiocrats believed that promoting agriculture would lead to economic growth.
2. Tableau economique –
This is a concept which is developed by Francisco Quesnay and is also central element of Physiocracy. Also, this concept/theory was explained by a diagram. This diagram depicts the interdependence of economic classes and sectors specially the role of agricultural sector.
3. Single tax system –
This concept proposes a single tax on agricultural land. This would replace various taxes and revenue sources and it will lead to a simplified tax structure.
4. Laissez-Faire –
Laissez faire, which literally translates as "allow to do”, with the idea being "let people do as they choose”. Physiocrats believed in minimal government intervention in the economy. They argued that the government should not interfere with the natural economic order.
5. Opposition to Mercantilism –
Physiocracy emerged as overcome the weaknesses of Mercantilism. While mercantilism considered aggregation of precise metals as the wealth (refer previous post), in physiocracy lands especially fertile lands use for agricultural activities was considered as the ultimate source of value and the foundation on which the economy relies.
Ø Written by
Mithila Madhawa 20829
Lithira Rajapaksha 20896
References
· Laissez-Faire
· THE PHYSIOCRATIC THEORY OF ECONOMIC POLICY By WARREN J. SAMUELS
07. Spanish Economic Thought
The following paragraph discusses the growing interest in early Spanish economic thought. This was shaped by Spanish scholasticism, Spain’s historical pursuit of precious metals after finding a new world by Christopher Columbus in 1492.
At that time gold and silver flowed into Spain from Mexico and Central and South America. Then prices in the nation began to rise. As a result, Spanish scholars were thinking implications of these changes. During that period, economic matters were examined using a religious lens, and economic activities were matched with spiritual values like justice and fairness. This can be referred to as Spanish scholasticism.
There were three Spanish thinkers. They are Martin de Azpilcueta, Louis de Molina, and Count Campomanes.
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| Martin de Azpilcue |
In 1556 Azpilcueta exhibited a valuable understanding of the quantity theory of money. That idea showed that changes in the general price level are influenced by the amount of money in circulation. He observed that the scarcity of money led to lower prices while the abundance of money led to higher prices in the economy.
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| Louise de Molina |
Louis de Molina stressed the moral aspect of the economy. According to him, one should understand how markets function before making ethical judgments about the market. This led to deep analysis of market mechanisms including the law of demand and supply and quantity theory of money.
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| Count Campomanes |
Count Campomanes emphasized great freedom in international trade and economic measures. He believed that too much gold and silver from America coming into Spain was making things more expensive. It was a barrier to the country’s economy. He wanted to reduce the government rules and establish an economy where businesses have the freedom to operate their business activities.
In summary, this paragraph describes how people are becoming more interested in old Spanish ideas about money and trade. It happened because the Spanish used to look for valuable metals, like gold and silver, a long time ago. They had some smart people who thought a lot about how money works. This paragraph also tells us about the three important Spanish thinkers and what they said about money and economics.
Written by Tharindu Dilan
References
Mercantilism, Physiocracy, And Other Precursors Of Classical Economic Though
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