Turgot
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ANNE ROBERT JAQUES TURGOT, BARON de Laulhne (1727-1781)

Turgot worked in a variety of posts, from working in the church, navy and various government posts. His major works were enshrined in the 'Reflexions Sur la formation et la distribution des richness’. This was a major work, in the sense it defined a clear analysis economic thought. 

In his work ‘Reflexions’ Turgot presents a model of the consequences of the transformation of an agricultural society by the introduction of a capitalist mode of production. 

The introduction of the capitalist mode of production was shown to sub-divide the working class into two. These were seen as the productive and the stipendary class. The productive class was seen as the entrepreneurs in manufacturing, commerce and agriculture, who were ‘all owners of large capital, which they invest profitably on advances in setting men at work’.

The stipendary class was the labourers who own no property and ‘who receive no profit but their wages’. The transformation of a feudalistic into capitalistic society meant that a new class structure arose, which consisted of:

  • LANDLORDS - Receiving income from the lions share of rent from land.

  • ENTREPRENEURS – Who lived of the profits from investments.

  • LABOURERS – Without any property, living on wages from landlords and entrepreneurs.

Within ‘Reflexions’ Turgot also discusses the law of diminishing returns. Turgot demonstrated how more applications of a factor of production (Capital) are applied to a constant factor (Land) the end result will be an initial increase then a decrease on the Capital deployed.

Turgot’s general argument for laissez-faire are stated in his ‘Praise of Gournay’ they are applied to particular branches of trade. He stated ‘every man knows his own interest better than to another to whom it is of no concern ….. consequently every man ought to be left at liberty to do what he likes’. Turgot agreed with free trade and the resulting increase in competition provided the most effective protection of consumer rights.

Turgot advocated a single direct tax on land was the best possible tax partly on the score of equity but even more on the score of economic development. Taxation on commodities was not in conformity of his Laissez-faire position as it constituted a barrier to free trade.

Turgot also elaborated on the conditions he considered favourable for economic growth, regarding economic policy concerning government intervention in economic affairs, taxation and other restrictions placed on trade and industry. In many respects his views went further than Quensay, he can therefore be described as one of the major contributors to the rise of economic liberalism in Europe during the Eighteenth century.

The main features of the economy as described by Turgot were:

  • Theory of Value 

  • Exchange

  • Price Determination via Laissez-faire

  • Capital Interest and the law of diminishing returns

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