Turgot And Adam Smith Analysis

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Recommended: Contributions of Adam Smith to economic thought

Every school of thought in economics as in all other social sciences was influenced by the surrounding society together with its ideas, problems and life experiences. The Physiocrats, Anne Robert Jacques Turgot and Adam Smith make no exception. For the first, pre-revolutionary France with its lavish aristocracy and the environment of the Age of Reason had a tremendous impact on their writings and thoughts. For Turgot, his work as an intendant (tax collector) and later as a minister gave him a comprehensive view on the economy that made his works distinguish themselves from the ones of the Physiocrats. In the case of Smith, it was the period of the Scottish Enlightenment with its liberal ideas, and the social problems posed by population growth and poverty that gave shape to many of his concepts. In this essay I shall discuss the origins and distribution of wealth looking at the points of view of the Physiocrats, Turgot and Smith. In the case of the Physiocrats, the main source of wealth is undoubtedly land and subsequently agriculture. Quesnay, the leader of the Physiocratic school, in his Tableau Economique labels the expenditure in agriculture as “productive”, while all the other expenditures made in the economy are qualified as “sterile”, or simply put, unproductive. Hence, the Physiocrats completely overlook capital as a factor of production and include it under the latter tag. However, this omission must be read, as I said in the introduction, in the light of the predominantly agricultural society they were living in. Quesnay and his school argued in favour of less wasteful spending of the nobility which was considered as unproductive and harmful for France at that moment and which set the stage for the French Revolution. Fo... ... middle of paper ... ...f the free market could come with a fair or desirable result, especially in the situations when people evade the market forces by establishing cartels, as we would call them today (Smith, 1776; 1976, p.145), or when the provision of public goods is involved (Smith, 1776; 1976, p.687). To sum up, it can be said that that the Physiocrats saw land as the only source of wealth, Turgot further added capital and labour (although explicitly emphasised the importance of farmers) in a rather clear and modern way and Smith, although he explains the role of capital and land extensively, sees the source of wealth to be in labour. With respect to the distribution of wealth, we could say that all three see the market as a proper medium of allocation, although especially Smith expresses some reservations with respect to the results that the market tool would provide. (1199 words)

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