Published by EH.Net (June 2013)
Liana Vardi, The Physiocrats and the World of the Enlightenment. New York: Cambridge University Press, 2012. viii + 315 pp. $99 (hardcover), ISBN: 978-1-107-02119-8.
Reviewed for EH.Net by Steven Pressman, Department of Economics, Monmouth University.
Most economists know Physiocracy primarily through the Tableau ?conomique and its theory about the unique productivity of agriculture. But, as Liana Vardi makes clear in her informative and scholarly history, the first school of economic thought was much more than this. Physiocracy rests on particular social and psychological foundations; its economic model requires specific human behaviors and a certain view of human nature.
To quote Hamlet, therein lies the rub. Economics gets into trouble when making implausible behavioral assumptions. We cannot dream what humans will perchance do; economists need to understand real people and how their actions impact the economy. Spending and saving behavior determines economic outcomes according to the Tableau (see Pressman 1994). Yet, individual behavior may lead to slow economic growth. How to make microeconomic behavior consistent with what is needed for macroeconomic growth became a main preoccupation of Physiocracy; then it led to its downfall.?
Vardi explains this dilemma mainly through biographical sketches of the main Physiocrats. As she documents, Quesnay and Mirabeau were the odd couple of collaborators. Quesnay was a finicky Felix; Mireabeau the emotional Oscar. For both, self-interest had to be balanced with social concerns so the French economy could flourish.
Mirabeau was the heart of the partnership ? an aristocrat who spent his time writing plays and epic poems. His L’ami des Hommes (1756) contained the main Physiocratic principles and attracted a large following. Its central message was that sound agricultural principles would enable France to prosper and grow.
Quesnay was the rational half of the partnership. Vardi debunks many myths surrounding his life. Quesnay did not walk from his home in M?r? to Paris on a regular basis to purchase books. Given the distance, this story is implausible (which I can attest to having made the trek recently by train). Quesnay’s father was not a lawyer but a farmer who also collected taxes for the local abbey (p. 25). This gave Quesnay first-hand insight into the inefficient French system of taxation. Early in his life, Quesnay worked as an engraver as well as a surgeon. This instilled in him concerns about detail and precision, two characteristics needed to develop the Tableau.
Quesnay first achieved fame by opposing physicians who advocated blood-letting as a cure for disease. Then he became the physician of Mme. de Pompadour, and lived in a half-basement underneath her suite at Versailles.
Quesnay and Mirabeau met during the summer of 1757. In Mirabeau, Quesnay found a spokesperson for his doctrines and for extolling the virtues of the Tableau. Although Mirabeau never really understood the model, he claimed it was a major discovery. Quesnay added Tableaux to later editions of L?ami des Hommes.?
Vardi’s main thesis is that the Achilles heel of Physiocracy was its view of human nature. The Tableau requires that everyone behave (on average) in a particular way. Specifically, people had to spend more than half their income on agricultural goods to generate economic growth. How could this come to be? For Quesnay, rationality would control human impulses. Logical argument would overcome self-interest and get people to behave in ways consistent with the natural order and for the benefit of France. In contrast, for Mirabeau, self-interest and self-fulfillment were essential parts of human nature; as a result, aristocratic edicts or government actions were needed to restrain human desires.
Both approaches encountered problems. Quesnay had to get people to behave or spend in ways that would generate growth in the French economy. But Quesnay intuited the principles of the Tableau through a flash of insight. He could not explain his spark of creativity or the principles of the Tableau in simple terms; consequently, others could not follow his model and behave appropriately. In contrast, Mirabeau had no head for math; so he focused on developing the moral underpinning of the Tableau. But moral suasion proved inadequate when it conflicted with self-interest and/or ingrained habits.
As a result, the Tableau failed to win many converts. By the late 1760s Quesnay and Mirabeau turned their attention away from the Tableau and began to focus on policy ? in particular, promoting agrarian reform in France. Mercier de la Rivi?re became the political and policy advocate for such reform, and Du Pont de Nemours convinced Anne-Robert-Jacques Turgot, France?s Comptroller-General, to support the Physiocrat policy program. A second generation of Physiocrats focused on education as a means to harmonize the instincts of man and the needs of society. Yet a fine line separates education and indoctrination. At many times, the Physiocrats crossed this line. When it became a harsh doctrine, using state coercion to change the moral values of French citizens, people developed second thoughts about Physiocracy.
Vardi does an excellent job explaining how Physiocracy became a strange sort of religious doctrine, seeking to convince people to act according to the dictates of the natural order for the benefit of France. It failed because it never convinced people to behave in ways that would promote growth and could not get government officials to institute appropriate policies to help achieve this end. At bottom, its problem was a model that was far too complex and out of touch to achieve its main goal.
Vardi?s biographical essays give her story a distinctive human touch as well as an historical context. However, her training as an historian and her lack of understanding of the Tableau are somewhat of a hindrance. Like Hamlet in Tom Stoppard?s play Rosencrantz and Guildenstern are Dead, the Tableau sits in the background as we watch other characters perform. For example, we are told that the Tableau analyzed economic blockages similar to the way that physicians analyzed blockages in the blood. This metaphor is on target, but does not help us understand the workings of the Physiocratic model or how their policy proposals follow from it. In addition, readers are not informed about the spending propensities that lead to stagnation, simple reproduction or economic growth in the Tableau.
Things get even worse when the book moves away from Quesnay and Mirabeau; then the Tableau disappears entirely from the narrative. Still, this enjoyable and informative history of the first school of economic thought deserves a large readership. Economists can benefit from the context provided in this work and can supplement the story with explications of the working of the first economic model. Non-economists can benefit from the story of how human behavior undermines economic theory and policy; so too can economists.
Pressman, S. (1994) Quesnay?s Tableau ?conomique: A Critique and Reconstruction (Fairfield, NJ: Augustus Kelley).
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|Subject(s):||History of Economic Thought; Methodology|
|Time Period(s):||18th Century|