It looked as if this dogmatic optimism would dominate the whole Classical school, especially the French writers, and that natural law would usurp the functions of Providence. To-day it is everywhere discredited, but when it first loomed above the horizon its splendour dazzled all eyes. Hence the many laudatory remarks, which to us seem hyperbolical, if not actually ridiculous.[21] But it was no small thing to found a new science, to set up a new aim and a fresh ideal, to lay down the framework which others were to fill in.
It was the practical results, however, that revealed the full powers of the “natural order.” It so happened that the mass of regulations which constituted the old régime fell to the ground before its onslaughts almost immediately, and it all came about in this fashion.
Knowledge of the “natural order” was not sufficient. Daily life must also conform to the knowledge. Nothing could be easier than this, for “if the order really were the most advantageous”[22] every man could be trusted to find out for himself the best way of attaining it without coercion of any kind.[23]
This psychological balance which every individual was supposed to carry within himself, and which, as the basis of the Neo-Classical school, is known as the Hedonistic principle, is admirably described by Quesnay.[24] “To secure the greatest amount of pleasure with the least possible outlay should be the aim of all economic effort.” And this was what the “order” aimed at. “When every one does this the natural order, instead of being endangered, will be all the better assured.” It is of the very essence of that order that the particular interest of the individual can never be separated from the common interest of all, but this happens only under a free system. “The movements of society are spontaneous and not artificial, and the desire for joy which manifests itself in all its activities unwittingly drives it towards the realisation of the ideal type of State.”[25] This is laissez-faire pure and simple.[26]
These famous formulæ have been so often repeated and criticised since that they appear somewhat trite to-day. But it is certain that they were not so at the time. It is easy to laugh at their social philosophy, to mock at its naïveté and simplicity, and to show that such supposed harmony of interests between men does not exist, that the interests of individuals do not always coincide with those of the community, and that the private citizen is not always the best judge even of his own interests. It was perhaps necessary that the science should be born of such extreme optimism. No science can be constructed without some amount of faith in a pre-established order.
Moreover, laissez-faire does not of necessity mean that nothing will be done. It is not a doctrine of passivity or fatalism. There will be ample scope for individual effort, for it simply means leaving an open field and securing fair play for everyone, free from all fear lest his own interests should injure other people’s or in any way prejudice those of the State. It is true that there will not be much work for the Government, but the task of that body will by no means be a light one, especially if it intends carrying out the Physiocratic programme. This included upholding the rights of private property and individual liberty by removing all artificial barriers, and punishing all those who threatened the existence of any of these rights; while, most important of all, there was the duty of giving instruction in the laws of the “natural order.”
II: THE NET PRODUCT
Every social fact had a place within the “natural order” of the Physiocrats. Such a wide generalisation would have entitled them to be regarded as the founders of sociology rather than of economics. But there was included one purely economic phenomenon which attracted their attention at an early stage, and so completely captivated their imaginations as to lead them on a false quest. This was the predominant position which land occupied as an agent of production—the most erroneous and at the same time the most characteristic doctrine in the whole Physiocratic system.
Every productive undertaking of necessity involves certain outgoings—a certain loss. In other words, some amount of wealth is destroyed in the production of new wealth—an amount that ought to be subtracted from the amount of new wealth produced. This difference, measuring as it does the excess of the one over the other, constitutes the net increase of wealth, known since the time of the Physiocrats as the “net product.”
The Physiocrats believed that this “net product” was confined to one class of production only, namely, agriculture. Here alone, so it seemed to them, the wealth produced was greater than the wealth consumed. Barring accidents, the labourer reaped more than he consumed, even if we included in his consumption his maintenance throughout a whole year, and not merely during the seasons of harvest and tilth. It was because agricultural production had this unique and marvellous power of yielding a “net product” that economy was possible and civilisation a fact.[27] It was not true of any other class of production, either of commerce or of transport, where it was very evident that man’s labour produced nothing, but merely replaced or transferred the products already produced. Neither was it true of manufacture, where the artisan simply combined or otherwise modified the raw material.[28]