43
landowners produce nothing. They
spend their $2 million equally
between farming and artisan
products, and consume all of them.
They receive $2 million in rent from
the farmers—which the farmers can
just afford, since they are the only
group to produce a surplus—and so
the landowners end up back where
they started. The farmers are the
productive group. From a starting
point of $2 million they produce
$5 million worth of agricultural
products, over and above what
they consume themselves. Of
this $1 million worth is sold to
landowners for their consumption.
They sell $2 million worth to
artisans, half for consumption and
half as raw materials for the goods
the artisans will produce. This
leaves $2 million worth to be used
toward next year’s growing season.
In terms of production they are
back where they started. However,
they also have $3 million from
sales, of which they spend
$2 million on rent and $1 million
on artisan goods (tools, agricultural
implements, and so on).
Quesnay referred to any group
outside the land-based farmers and
landowners as “sterile,” because he
believed that they could not produce
a net surplus. The artisans, in this
instance, use their starting amount
of $2 million to produce $2 million
worth of manufactured goods over
and above what they consume
themselves. These are sold equally
to landowners and farmers. ButSee also: Measuring wealth 36–37 ■ Agriculture in the economy 39 ■ Free market economics 54–61 ■
Marxist economics 100–05 ■ Economic equilibrium 118–23 ■ The Keynesian multiplier 164–65
LET TRADING BEGIN
Those farmers and artisans then use
the money to buy goods from yet
more farmers and artisans.Money and goods
flow between
producers and
consumers.Farmers use this
money to buy goods from
artisans and other farmers.Landowners collect rent
from farmers and buy goods from
farmers and artisans.Artisans use this
money to buy goods from
farmers and other artisans.This multi-level buying
and selling activity
happens continuously.Quesnay’s Economic Table shows
the zigzag flow of wealth between
farmers, landowners, and artisans.
It was the first attempt to explain
the workings of a national economy.they spend their entire revenue
on agricultural products:
$1 million for their own
consumption, and $1 million on
raw materials. They have
consumed everything they have.
Quesnay’s model does more
than present end-of-year results—
it also shows how money and
goods circulate through the year
and demonstrates why this is so
important. The sale of products
between the various groups
continues to generate revenue,
which is then used to buy more
products, which produces yet
more revenue. A “multiplier effect”
occurs (in Quesnay’s diagram it
appeared as a zigzag series of
lines), similar to that presented ❯❯