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By Root 2012 0

than from that of the individual entrepreneur, that physiocratic influence is to be seen at its strongest. For it is here that Smith divides the stock of society into fixed and circulating capital, where the latter included goods in process and those ready for sale during a particular period but which remain at the outset in the hands of the manufacturers, farmers and merchants who compose the system. In this way Smith presented the functioning of the economy in terms of a process of withdrawal (through purchase) from the circulating capital of society, which was matched by the replacement of the goods thus used up, by virtue of current productive activity. It is surely this kind of perspective on the working of the system which shows just how clearly Smith had grasped the significance of what the physiocrats were trying to do.

While Cannan tended to be dismissive of the influence of Turgot upon Smith, he concluded that despite the deficiencies of Quesnay’s basic model,

Nevertheless, in the fact that it attempts to give a comprehensive view of the total results of the industry of a year, it marks an enormous advance in economic theory, and we can easily imagine that an acute mind like Adam Smith’s would immediately grasp its importance.54

But the reader should note that other assessments have been mixed. J. A. Schumpeter, for example, asserted that Smith ‘almost certainly… did not fully grasp the importance of the Tableau économique.’55Melchior Palyi, writing on the occasion of the 150th anniversary of the publication of The Wealth of Nations, asserted that Smith’s treatment of physiocracy had been ‘scornful’,56while more recently, Murray Rothbard expressed the view that Turgot’s influence on Smith was ‘minimal’.57

There were others, closer to the event, who were also doubtful with regard to Smith’s account. Dugald Stewart, Professor of Moral Philosophy at Edinburgh University, and a profoundly influential figure in the early years of the nineteenth century, felt that Smith’s assessment of physiocracy had been less than generous,58while Francis Horner, his pupil, argued with respect to Smith’s debts

That Smith did not properly distinguish the real import of the [physiocrats’] economic system, is now confessed, we believe, even by those who agree with him in rejecting it. We are further satisfied that he derived a much larger portion of his reasoning from them, than he himself perhaps recollected; that his principles on the formation and distribution of national riches approached more nearly to those of Quesnay, than he was himself aware; and that, to have recognised an entire coincidence, it was only necessary for him to have followed out his analysis a few steps further.59

Other contemporaries were equally puzzled as to Smith’s lack of acknowledgement of Turgot. Condorcet, for example, writing on the Reflections, concluded that this essay ‘may be considered as the form of the treatise on The Wealth of Nations written by the celebrated Smith’. Dupont de Nemours, as Winch has recently reminded us, was even more forthright. The Reflections, he wrote,

consists of a very short octavo volume of less than 80 pages which is, nevertheless, particularly clear: everything that is true in the estimable but difficult work that M. Smith has since published on the same subjects in two large quarto volumes can be found there: and everything that Adam Smith has added lacks precision and foundation.’60

Cannan, however, asserted that at a later period Dupont ‘repented of this outbreak, and confessed to a certain want of knowledge of the English tongue which had prevented him from appreciating Smith’s work as he ought to have done.’61

Perhaps the last word should be left to Smith, who recognized that the system,

with all its imperfections, is, perhaps, the nearest approximation to the truth that has yet been published upon the subject of political economy, and is upon that account well worth the consideration of every man who wishes to examine with attention the principles of that very important science.62

THE MERCANTILE SYSTEM