Development and Underdevelopment in the History of Economic Thought

The Physiocratic Analysis of Money: A Reappraisal

Menuet Maxime, University of Orleans
Villieu Patrick, University of Orleans

Few studies have focused specifically on the physiocratic analysis of money. Most historians and economists consider that the Physiocrats were concerned with money as a medium of exchange alone, and neglected its function as a store of value. However, that neglect was enigmatic because, for the Physiocrats, money was metallic and therefore storable. This article defends the argument that the Physiocrats’ monetary analysis concealed an internal contradiction between (i) their vision of the circulation of riches, in which money was neither the object of trade nor even a necessary utensil, and (ii) their doctrine of natural law, which made commodity money the necessary element for the equality of trade. As a simple means of exchange, Quesnay and his followers recognised that money could be replaced by paper. However, in order to comply with the “value for equal value” principle of exchange, money had to be made of precious metal, as Le Trosne, the main architect of the physiocratic monetary doctrine, forcefully asserted. The Physiocrats therefore disregarded the role of money as a store of value not because they were unaware of this function, but because the contradiction could only be overcome by deliberately ignoring this function. For the Economists, it was a question of making the holding of money undesirable and excluding it from their model.


Keywords: physiocracy, money, mercantilism, cartelism, metallism

Paper file