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Societies for the History of Economics

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From:
Fred Foldvary <[log in to unmask]>
Reply To:
Societies for the History of Economics <[log in to unmask]>
Date:
Wed, 22 Apr 2020 14:38:11 +0000
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> Is the primacy of agriculture or the sterility of manufactures in textbooks anymore? 
> Bruce Littleboy,

The primacy was not just agriculture but all primary production, including mining and fishing.
Because nature contributes to value, these industries generate a "net product" or surplus.
The imp^ot unique is the Phyiocratic single tax on the net product or surplus.

Competitive manufacturing is "sterile" if it does not generate a net product. 
What the Physiocrats overlooked was that manufactures (and services) 
do generate a net product or producer surplus, as locational rent.

Neoclassical economics has overlooked this also, as the textbooks say that
in the long run, competitive industry has zero economic profits, not reconciling
this with a long-run upward-sloping supply curve which indicates a
producer surplus which is an economic profit. How can firms have zero profit
while the industry has a profit? Because the surplus goes to land rent.

The Physiocratic policy of taxing only the surplus rather than taxing labor and capital,
and not hampering trade with taxes, should indeed be in the textbooks.

Physiocracy also has a model of economic development as the public revenue
from the surplus is plowed back into the economy as investments in infrastructure.
Japan followed this model in the latter 1800s.

Fred Foldvary

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