The two circulations of the Tableau Economique

Quesnay produced his first Tableau Economique towards the end of 1758 or the beginning of 1759; he offered five successive versions of this, extending to 1768. These versions were illustrated by one or more figures, commonly called “Zig­zags”, for the first five versions (1758-63), and “Formule Arithmetique du Tableau Economique” for the last one (1768).

In the different versions of the Tableau Economique, Quesnay endeavours to clarify the concepts of “avances” and “reprises”. Advances are capital that an entre­preneur commits previously in an activity with the intention of replenishing this with profit. In the second version of the Tableau Economique, Quesnay (1759a, 407) dis­tinguishes between “avances primitives” and “avances annuelles” by the farmer. The first indicates what will subsequently be called fixed capital; the second circulating capital. In Quesnay’s mind, the first are the initial funds needed for the establishment of the farm (mainly the purchases of horses, ploughs, carts, seeds, maintenance of the horses and the wages of workers): this fund is recovered over several accounting cycles. The second is a fund that finances expenses of all kinds incurred over the accounting cycle, which is recovered in full at the end of the cycle - Quesnay (1759b, 417) mainly mentions the costs of animal feed and the subsistence of workers.

These advances, especially the primitive ones, are subject to degradation, acci­dents that require compensation (Quesnay 1760, 444, 469). Quesnay adds a special account to his accounting, the “interets des avances” (primitive and/or annual) rep­resenting the amount that the farmer withdraws from the proceeds of his sales to maintain and renew his advances.

The concept of “reprises” which appears in the third version of the Tableau (Quesnay 1759b, 424n.) groups together all the amounts that the farmer subtracts from his receipts at the end of the cycle to finance the next expenditure cycle, the other part of the receipts being the net product. “Reprises” are made up of two parts, the amounts replenishing the annual advances and the interest of the advances (primitive and/or annual). Sharecroppers in small-scale cultivation are too poor to have primitive advances, which are financed and partly replenished at the end of the cycle by the landowners in addition to their rent. Craftsmen, manu­facturers and traders in manufactured commodities make annual advances, but not primitive advances, on the grounds that they have credit and do not need large funds to establish or sustain their activity (Quesnay 1756b, 148).

On this basis, Quesnay innovates by applying the concept of class to these two economic sectors (Piguet 1996), the “productive class” of farmers and the “sterile class” of craftsmen, manufacturers and traders in manufactured commodities, which he distinguishes from the “class of proprietors” (of land), which holds the net prod­uct, reduced by simplification to rent. Indeed, according to Quesnay (1757a, 161, 202, 198), there are two types of wealth: on the one hand, the “renascent wealth” of agriculture, “primitive wealth, always renewed” or “real wealth”; on the other hand, the “pecuniary wealth” and “industrial wealth” which “do not multiply any revenue further”. The thesis by which only the agricultural sector is productive, that is, gen­erates the net product, is a major characteristic of physiocracy: it will trigger a long and bitter debate, from which the movement will emerge discredited.

The different versions of the Tableau Economique aim to show how the pro­cesses of production and circulation are entangled and restored. This leads to a first proposition, namely that the wealth of an agricultural nation only increases if the land revenues increase and are spent on consumption. Quesnay (1757a, 184-5) bases this proposition on a passage in Cantillon’s Essai which explains that all activities are proportional to the number of landowners or the product of their land. A second proposition can also be deduced from these Tableaux: if through the cir­culation of revenue landowners are the source of the process of enrichment of the nation, there is a second, equally essential circulation, that of the advances of the farmers which are spent to regenerate the wealth of the nation.

The first representation of the Tableau Economique, called “Zigzag”,^[78] depicts an interweaving of expenditure made by three classes - the landowners, the productive class and the sterile class - during the same accounting period. Starting from the initial endowments held by these three classes, this expenditure, each time less than half, ends up replenishing the initial endowments spent. The purpose of the figure is to demonstrate that this orderly interweaving of expenditure allows the identi­cal reproduction of the economic machine of an agricultural nation. By analogy, the figure has been compared to the physiological mechanism of blood circulation (Mirabeau [1763] 1764 I, 13-14, 66), the physical mechanism operating ball clocks and hydraulic machines (Wise 1993; Charles 2003, 2004), and to the geometric series. The first two analogies visually reinforce the idea of a mechanism that repro­duces itself durably, even indefinitely, under certain conditions, once it has been set in motion. What illustrates the geometric series is the idea that the expenditure pro­cess takes place for a regular and decreasing reason until it is cancelled, under the assumption, of course, of a simultaneous regeneration of the wealth spent, Quesnay only retraced the geometric series without putting it into an equation.^[79]

The two other figurations, the “Precis des resultats de la distribution” and the “Formule Arithmetique du Tableau Economique”, condense the many expenditure transactions establishing the Zigzag into just a few, transforming them into annual transactions.

The succession of three different figurations of the table, the coexistence of Zigzag and the Precis in Philosophie rurale, as well as their replacement by the Formula in the final sixth version have been interpreted in various ways. Most commentators have perceived in this succession the difficulties of construction and an attempt to conceal or overcome them, some have seen in it the sign of an evolu­tion in Quesnay’s thinking, others the proposition of a visually clearer figure, and others finally search for a figure that would better grasp the dynamic problem of economic growth and decline.

The Zigzags, 1758-63

The first version (late 1758-early 1759) gives little information about the expendi­ture transactions that are not denominated: only their origin, allocation and their amount. However, it delivers four operating rules that Quesnay will try to maintain:^[81]

(i) According to the principles of accounting, any transaction is both an expenditure and a receipt and can be inventoried by its origin and its allocation. The zigzag of transactions is supposed to respect this expenditure/receipt balance. Quesnay (1758, 1179) emphasises this requirement to avoid double counting.

(ii) The landowning class immediately spends all its revenue, half on purchases of agricultural commodities and half on purchases of manufactured commod­ities. This expenditure generates a series of successive expenditures between the productive class and the sterile class.

(iii) Like the landowners, the productive and sterile classes spend their receipts, half on agricultural commodities and on manufactured commodities; unlike the former, they therefore spend their receipts half on internal purchases within each class and half on external purchases (from the other class).

(iv) The reproduction rate of the net product is equal to 100% of the amount in value of annual productive advances.

This circulation is based on a certain number of assumptions, such as the homo­geneity of agricultural and manufacturing production, complete freedom of trade, large-scale cultivation, the “bon prix”, expenditure of the landowner’s revenue entirely on final consumption, or even the compensation of imports by exports. On the basis of a revenue (reduced by simplification to land rent) of £400, annual pro­ductive advances of £400 and annual sterile advances of £200, an orderly series of expenses is incurred, initially, between the landowners and the two productive and

Figure 5.1 First version of the Zigzag (in £)

sterile classes and, second, between these two classes of advances and within the productive class. At the end of this series, we obtain (i) an agricultural production in value (£800) that restores the advances spent and pays the revenue of the land­owners and (ii) a manufacturing production (£400) that restores only its advances, the £200 that makes the difference having been spent on the subsistence of agents of this class.

The expenditure transactions that make up the Zigzag can be expressed in the form of the aggregate money flows of the accounting period (Figure 5.2).

This first version of the Zigzag reveals several grey areas. First, some transac­tions are not represented by an expenditure line, in particular internal purchases by the productive and sterile classes. Likewise, no expenditure line starts from the initial amounts of productive and sterile annual advances. Then, Quesnay does not specify the nature of these advances (money or goods). Finally, as the income of

Figure 5.2 The money flows between the three classes (in £)

each class of advances is being used in internal and external expenditure, the net product appears, not as an accounting balance between receipts and expenditure but as an unexplained surplus by the interweaving of expenditure.

Successive Zigzags (1759-63) can be interpreted as the mark of a certain dis­satisfaction by Quesnay and as so many attempts to resolve the difficulties encoun­tered in the first version. The figurative representation is indeed imperfect. The Zigzag makes the expenditure of initial revenue of the landowners clearly vis­ible, but much less so that of the initial, productive and sterile, annual advances. Likewise, it makes expenditure transactions between the three classes visible, but transactions within the two classes of advances invisible. Finally, the wording of certain transactions changing from one version to another suggests a difficulty in balancing receipts and expenditure. Successive Zigzags can also be interpreted as attempts to complicate an economic process presented initially in a simple form. Thus, in versions 2 and 3 (1759a, 1759b), Quesnay introduced foreign trade by presenting it as an internal expenditure of the manufacturing class. In version 4 (1760), he tries to show the impact on the reproduction of the net product of an increase in the share of the landowner’s expenditure on manufactured commodities (to the detriment of expenditure on agricultural commodities), or a tax levied on the receipts of the productive class.

The Precis, 1763

In Philosophie rurale, Mirabeau and Quesnay associate the Zigzag with a more compact form, reduced to three annual transactions: (i) the expenditure of land­owners’ revenue (£2,000) in agricultural commodities for £1,000 and manufac­tured commodities for £1,000; (ii) the £1,000 received by the productive class is spent on manufactured commodities and (iii) the £1,000 received by the ster­ile class is spent on agricultural commodities. In total, the receipts of the pro­ductive and sterile classes are of the same amount and equal to their external sales (£2,000). Quesnay is imprecise about the internal expenditure of these two classes. He assures that the productive class spends all its annual advances, therefore partly in internal purchases, but the Precis (Figure 5.3) does not show any expenditure line starting from the initial allocations of annual advances or

(a) One-half of the expense of the revenue

(b) Total repayments of the sterile class to the productive class

(c) Total repayments of the productive class to the sterile class

Figure 5.3 The Precis (in £)

indicating internal expenditure. And, to obtain a revenue of £2,000 correspond­ing to 100% of annual advances, Quesnay modifies the equation of agricultural production: whereas in the first version of the Tableau Economique, this produc­tion was equivalent to the sum of the net product and annual productive advances (i.e. £800), now it is equivalent to the sum of the net product (£2,000), annual advances (£2,000) and the “interets des avances” (primitive and annual) of the productive class (£1,000).

The Formule Arithmetique, 1767-68

Like the Precis, this final version removes the geometric series that characterises the Zigzag. Expenditure transactions are reduced to a few annual flows and, for the first time, the Tableau Economique makes visual the expenditure lines starting from the initial amounts of annual advances held by the productive and sterile classes, thus more clearly juxtaposing the two circulations of advances and revenue.

Quesnay assumes an annual agricultural production - here called “reproduc­tion totale” - of 5 billion livres, and an annual manufacturing production of 2 billion. Agricultural production is obtained through an annual advance fund of 2 billion - these advances are presumed to generate 100% of net product - and a fund of primitive advances of 10 billion that deteriorates each year by 10% and must be replenished. Of these 5 billion, the productive class pays a revenue of 2 billion to the landowning class. Manufacturing production is obtained from the 1 billion of annual advances of the sterile class. Quesnay thus endows the productive class with 2 billion of annual advances, the landowning class with 2 billion revenue or rent and the sterile class with 1 billion of annual advances. Circulation can then begin.

id="Picutre 4" class="lazyload" data-src="/files/uch_group31/uch_pgroup24/uch_uch7229/image/image004.jpg">

Figure 5.4 The Formule Arithmetique (in £)

Quesnay's illustration (Figure 5.4) can be specified as follows:

(i) At the start of the period, owners spend all their income, half on purchases of manufactured goods from the sterile class (1 billion) and purchases of sub­sistence goods from the productive class (1 billion).

(ii) The sterile class spends 2 billion on the productive class: 1 billion in pur­chases of subsistence goods, from the billion received from the landowners, and 1 billion in purchases of raw materials, from its initial fund of annual advances. The internal expenses of this class have disappeared.

(iii) The productive class buys a billion in manufactured commodities from the sterile class in order to replenish its primitive advances and spends “two billion on [agricultural] products that it retains for its consumption” (1767— 1768a, 549), that is to say in internal expenses.

To sum up: (1) the landowning class has spent all its revenue; (2) the sterile class received 2 billion and spent 2 billion during the period, so it only has the value of 1 billion in annual advances that allowed it to start production and that it can again replenish; (3) the productive class produced for a value of 5 billion but only received 3 billion from the landowners and the sterile class: the missing 2 billion are explained by the intra-consumption of the productive class (to be considered from an accounting point of view as an expenditure but also as a receipt); (4) agri­cultural production is therefore equal to the sum of intra-consumption and external receipts of the productive class; (5) of these 5 billion, the productive class can carry out what Quesnay calls “reprises”, that is to say, replenish the 2 billion in annual advances and the 1 billion in “interets des avances primitives”, and pay the land­owners a revenue of 2 billion: each class thus recovers its initial endowment, and the reproduction can take place in the following period (Figure 5.5).

Figure 5.5 The money flows in the Formule Arithmetique¹²

Like the previous versions of the Tableau, the Formule Arithmetique is pre­sented as the illustration of a “regular order of the distribution of expenditure” cor­responding to “the state of prosperity of a kingdom whose territory would be raised to its highest possible degree of culture, freedom, and ease of trading, and where, consequently, the revenue of proprietors could no longer increase” (1767-1768a, 551, 554). This assumes expenditure of all the money received by the different classes, otherwise leaks out of the circuit would lead to a decrease in the volume of capital and production.

Later commentators have interpreted the imperfections of the Tableau Economique in various ways. The fact remains, however, that this representation of the circulation of wealth (revenue and advances) of a nation by means of three focuses (the three classes) and five expenditure lines constitutes a theoretical tour de force.

7.