It had been discovered that world was not formed by only Africa, Asia and Europe in 15th century. It is much bigger and there are lots of resources and wealth more. Technological development in navy led people to sail across oceans and reach far lands. People were now freer to travel and trade; as a consequence there would be a new class, defined as Merchants.
Feudal system was shaking, authority of landlords even kings and princes was not as powerful as before anymore. New economic system which would be named as Mercantilism by Adam Smith in the future, emerged.
Mercantilism was the economic counterpart of the previous early modern version of Political power; Divine right of kings and Absolute monarchies. It defends a national economy by monetary reserves and restricted rules. Authority which relies on lands and loyalty, gives place to new authority which is more central and national, raised on monetary reserves. More gold means powerful navy, powerful navy means powerful state. It was illogical to dealing with agriculture while new opportunities lay in front of people. So as a result of mercantilism agriculture and villages became unproductive. Colonization had been accelerated, it was forbid to trade with other nations for colonies, market was monopolized and there were high tariffs on imports. In order to have big amount of monetary reserves, all should be done was increasing the amount of export while decreasing the amount of import.
Colonist Europe was ready to explode at the mid of 18th century. Britain was the most successful while on the other hand France was bleeding. It would lead 7 years' war where all of the great powers of Europe except Ottomans would participate. In the mid of this war an economist Francois Quesnay published a book named Tableau Economique (Economic Table) in France in 1758. This book presented the first ever well-developed theory of economics and claimed totally opposite practices to Mercantilism which was the spirit of the age. This was perhaps the first work attempting to describe the workings of the economy in an analytical way. Economic Table was the summary and theory of ideas of Physiocracy which was the new and radical school of economic.
Physiocracy (from the Greek for "government of nature") is an economic theory developed by a group of 18th century Enlightenment French economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development" and that agricultural products should be highly priced.
Furthermore, it's most influential claim was free trade which would lead Liberal though in near future by influence Adam Smith and many more economists.
Characteristics of Physiocracy:
Natural Order: Social contract is unnecessary to live together; there is a natural order that allows people live together. (Way of Nature)
Individualism - Laissez faire: Self-Interest is the key motivation of economics; every man knows his own interests and work better for himself then for someone else. Laissez faire is free trade without any restrictions by state.
Private Property: Private property is the main branch of this theory so land owners should be supported legally.
Investment Capital: It recognizes that capital is needed by farmers to start the production process, and it is proponent of using some of each year's profits to increase productivity. Capital is also needed to sustain the labourers while they produce their product.
Physiocracy would be national economic policy of pre-revolutionary France, may be it would not save the Kingdom of France but it had changed the world. Physiocracy was not complete theory, basically it neglected the value of manufacture, there would be only agriculture could add value to wealth of nation.
However, Quesnay who had studied on medical before, showed that the economy was something to be respected, analysed and understood—much like a human body. It could not simply be moulded to suit the will of a self-important monarch. Later, The Comte de Mirabeau, an important figure during the Revolution, considered Quesnay's Tableau to be one of the world's three great discoveries—equalled only by the invention of printing and the discovery of money. The physiocrats, like many other thinkers of the eighteenth century, subscribed to the idea of a "natural order". They showed that unchanging laws governed all economic processes as Newton did in physic.
