39
See also: Demographics and economics 68–69 ■ The labor theory of value 106–07 ■
The emergence of modern economies 178–79 ■ Development economics 188–93I
n recent years bankers have
sometimes been characterized
as parasites, living off wealth
created by the labor of others.
François Quesnay (p.45), a French
farmworker’s son and one of the
great minds of the 18th century,
might recognize this description.
Quesnay argued that wealth lies
not in gold and silver, but springs
from production—the output of the
farmer or manufacturer. He argued
that agriculture is so valuable
because it works with nature—
which multiplies the farmer’s effort
and resources—to produce a net
surplus. Manufacturing, on the other
hand, is “sterile” because the value
of its output is equal to the value of
the input. However, later theorists
showed that manufacturing can
also produce a surplus.The natural order
Quesnay’s championing of the
value of agriculture was influential,
leading to the development of the
French school of physiocrat thinkers
who believed in the primacy of the
“natural order” in the economy.Many economists, including
Theodore Schultz, have argued
that agricultural development is
the foundation for progress in poor
countries. In 2008, the World Bank
reported that growth in the
agricultural sector contributes
more to poverty reduction than
growth in any other sector. But
economists today also recognize
that diversification into industry
and services, including finance, is
vital for long-term development. ■LET TRADING BEGIN
WEALTH COMES
FROM THE LAND
AGRICULTURE IN THE ECONOMY
IN CONTEXT
FOCUS
Growth and development
KEY THINKER
François Quesnay
(1694–1774)
BEFORE
1654–56 English economist
William Petty conducts a
major land survey of Ireland
to calculate its productive
potential for the English army.
AFTER
1766 Adam Smith states that
labor, not land, is the greatest
source of value.
1879 US economist Henry
George argues that land
should be held in common
by society, and that only
land should be taxed—not
productive labor.
1950s US economist
Theodore Schultz’s “efficient
farmer” hypothesis places
agriculture at the heart of
economic development.
If we knew the economics
of agriculture, we would
know much of the economics
of being poor.
Theodore Schultz
US economist (1902–98)