Corn, Cattle, Land and Labour: Physiocratic Ideas in the Wealth of Nations

This paper discusses the use Adam Smith made in the Wealth of Nations (WN) of physiocratic concepts and ideas. Notwithstanding his critique of the ‘Agricultural system’, Smith endorsed many distinctively physiocratic ideas and in his analyses of value and distribution, of the reproduction and accumulation of capital, and of development and growth adopted (and adapted) several physiocratic concepts. In particular, the paper argues that Smith adopted the ‘material expenses’ approach of the Physiocrats and sought to use it side by side with his tentative proposal of a labour-based approach to the theory of value, and draws attention to inconsistencies and tensions which arise from the simultaneous presence of the two different approaches to the theory of value in the WN. By adopting physiocratic ideas on the relationship between corn prices and money wages, Smith is also seen to have provided the key elements for David Ricardo’s ‘corn ratio reasoning’ in his early theory of profits.