Question

To what extent were Quesnay and Turgot precursors to Smith? Be sure to discuss the main similarities and differences between their work and Smith’s. (Essay Question)

Answer 1

Quesnay and Turgot were physiocrats and Adam Smith was a classical economist. And it is well known that physiocrats' works paved the way for classical economists. So it is very much accepted fact that Quesnay and Turgot were precursors to Smith.

Turgot is also known as the French Adam Smith as there are many similarities between their works. Turgot's ' Reflactions on the Production and Distribution of Wealth' which predated Smith's ' The Wealth of Nations ' by ten years argues against government intervention in the economic sector. Turgot recognised the function of the division of labor , investigated how prices were determined and analyzed the origins of economic growth. Like Francois Quesnay, Turgot was a leading physiocrat who attempted to reform the most stifling of his government's economic policies.

Turgot's most important contribution to Economics was to point out that capital is necessary for economic growth and that the only way to accumulate capital is for people not to consume all they produce. Most capital, he believed, was accumulated by landowners who saved the surplus product after paying the cost of materials and of labor. Turgot agreed with Quesnay's notion of the circular flow of savings and investment, where savings in one period become investment in the next.

Turgot analysed the interdependence of different rates of return and interest among different investments, noting that interest is determined by the supply and demand for capital. Although the rates of return on each investment may vary, he argued in a competitive free market economy with capital mobility, rates of return on all investments will tend toward equality. This argument of Turgot is very similar to Smith's.

Turgot distinguished between a commodity's market price determined by supply and demand and it's natural price , the price it would tend to if industries were competitive and resources could be reallocated. An increase in demand, for example, could increase a good's price , but if resources were free to enter that industry, the new supply would bring the price back down to its natural level. In this reasoning, Turgot anticipated Adam Smith.

Turgot also predated Smith in recognising the importance of the division of labor for an economy's prosperity and he was the first economist to recognise the law of diminishing marginal returns in agriculture. Predating the marginalists by a century, he argued that each increase in an input would be less and less productive.

Turgot applied many of his laissez faire economic beliefs during his thirteen year appointment ( 1761-1774) as chief administrator for the Limoges district under Louis 15 and the minister of finance, trades and public works from 1774- 1776 under newly anointed Louis 16.

In the latter job one of his first measures was to abolish all restrictions on sales of grain within France, a measure the Physiocrats had long advocated . He ended the government's policy of conscripting labor to build and maintain roads, and replaced it with a more efficient tax in money. Milton Friedman has called the replacing of taxes in kind with taxes in money " one of the greatest advances in human freedom ". Turgot abolished the guild system left over mediaeval times. The guild system, like occupational licensing today prevented workers from entering certain occupations without permission. Turgot also argues against the regulation of interest rates.

Also, it was Quesnay who coined the term " laissez faire, laissez passer" , which was later advocated by Adam Smith in his book ' Wealth of Nations'. It is also well known that Quesnay's work paved the way for classical economics in particular for Adam Smith who latched on the Physiocratic notions of free trade and the preeminence of the agricultural sector.

Thus. Quesnay and Turgot were precursors to Smith.