The Physiocratic School and the Tableau economique

In July 1757 Quesnay met Victor Riqueti, Marquis of Mirabeau, in his entresol. Mirabeau had become famous with the publication, a few months earlier, of L’ami des hommes, an agrarian and populationist book.

As in Ricardian “Strong cases”, the economic table was built in order to explain the functioning of basic principles. Which ones? Two kinds of economic table can be distinguished, even if, as indicated above, one can make room for a third kind with the disequilibrium approach in Philosophie rurale (1763), “Premier probleme economique” (1766) and “Second probleme economique” (1767) (Eltis 1996).

Figure 2 The arithmetic formula

second is limited to the “Analyse de la formule arithmetique du tableau economique” (see Figure 2).

In the “Zig-Zag”, the major concern was spending. The formalization showed how the rent paid by the farmers to the landlords (600 livres) was successively received and spent by the other two classes (the agricultural or productive class and the artisan or sterile class), giving rise to the same amount of net product (600 livres). The initial expenditure of the landlords is divided into two equal sums (300 livres), one for the luxury consump­tion of food and the other for the luxury consumption of furniture, clothes and the like. Then, the sterile class spends half of the money received (150 livres) in order to buy food and raw materials from the productive class, the other 150 livres are used to reconstitute the capital of the sterile class, possibly with some goods bought abroad. The productive class spends 150 livres in order to get manufactured goods from the sterile class, while the 150 left are spent within the sector. The two classes go on spending half the money received until all the money is finally spent. When this spending process is completed the gross total revenue received by the productive class (300 livres from the landlords and 300 livres from the sterile class) is equal to the circulating capital (or annual advances in Quesnay’s language) of this class; consequently, the reproduction of the capital gener­ates a net product of an equal amount, as shown in the central column of the table. In line with Keynesian insights (there is a multiplier equal to two), Quesnay has shown that the sums spent by the landlords are crucial: the various classes are related by flows of money and, to use Michael Kalecki’s idea, those in possession of money (landlords) earn what they spend whereas the others spend what they earn.

Hence, the formula can be considered as an attempt to overcome the difficulties remaining in the “Zig-Zag” model, that is, to say how the reproduction of the capital (circulating and fixed capital, money capital) results from the monetary flows among the three classes. At the outset, the productive class has 2 units of money, and has invested 10 units of fixed capital and 2 units of circulating capital; the sterile class has only 1 unit of circulating capital; this capital generates a gross production of 5 units of agricultural goods and 2 units of manufactured goods. Then the productive class pays the rent or net product to the landlords, with the 2 units of money. The circulation process begins with (a) landlords spending half of their rent to get luxury food from farmers (1 unit) and (b) luxury goods from artisans (1 unit); thereafter, artisans buy 1 unit of agricultural produce for their food (c) while farmers reconstitute their fixed capital with 1 unit of manufactured goods (d), since this capital suffers from an annual depreciation of one- tenth of its value.

To sum up, the landlords have spent all the money received as rent in order to consume; the artisans have sold 2 units of manufactured goods, and have spent the corresponding amount of money in order to buy food and to reconstitute their capital; the circulation process has thus allowed these two classes to get in the end what they had in the beginning. What about the productive class? They have sold 3 of the 5 units of agricultural goods produced, they have bought the necessary manufactured goods in order to reconstitute their fixed capital, while the 2 remaining units of agricultural goods reconstitute their circulating capital; finally, the money capital is reconstituted as well, since they have 2 units of money equal to their gross revenue (3 units) minus their expenses (1 unit). Every form of capital is thus reproduced, in value and in use value, by the class, which possessed it formerly: the process of circulation has reproduced the initial conditions of production.

The actual spending of all the money received by the various classes is a crucial hypoth­esis; however, Quesnay adds a further hypothesis since landlords have to spend half of their rent in each sector. If they do not, if they spend more on manufactured goods than on food, then, according to Quesnay, the reproduction of agricultural advances could not be achieved and a process of decline would necessarily ensue. Modern analysis does not corroborate this point, since if artisans go on spending all their money buying agri­cultural output, agricultural revenue would be left unchanged and the only effect would be a change in the proportion of both sectors in the economy (Cartelier 1991).

At the end of the 1750s, by way of Mirabeau’s brother, Quesnay had recruited another disciple in the person of Pierre-Paul Lemercier de la Riviere (1719-1801), who was to be the Intendant of the French West Indies in the early 1760s and the author of L’ordre naturel et essentiel des societes politiques (1767).