Superphysics
The Physicocrats Versus Adam Smith
January 23, 2025 3 minutes • 470 words
Table of contents
Adam Smith’s economic system encourages competition for a race to the bottom.
A young man’s education would be more effective, less tedious, and less expensive if he began working diligently as a journeyman. He would be paid in proportion to the little work he could do.
The master would be a loser because he would lose 7 years of wages to his apprentice.
In the end, the apprentice himself might be a loser because his trade could be so easily learned that he would have more competitors.
The increased competition would reduce the profits of the masters and the wages of the worker. The trades, the crafts, the mysteries, would all be losers. But the public would be a gainer because the work of all craftsmen would become cheaper this way.
The Physiocrats on the other hand preferred high prices since it would mean greater revenue, which would mean more wealth.
Maxim 18: Establish Good Prices for Agricultural Products and Merchandise
The price of agricultural products and merchandise in a country should not be lowered as it would make the reciprocal commerce with foreign countries disadvantageous to the nation. As is the purchasable value of things, so is the revenue. Abundance and that is given away for free is not wealth. But, on the other hand, dearth and high prices is misery.
Therefore, abundance and high prices is opulence.
The modern competitive global economic system is based on Adam Smith.
For example, China is able to out-produce other countries and sell products that are cheaper than the rest. This low cost is a huge benefit for the world and so it would be unthinkable to be cut off from Chinese production.
However, the Physiocrat system is not totally non-existent. It is seen in the OPEC countries which artificially keep the price of oil high for their own benefit. This gives their governments a huge budget surplus:
- Saudi Arabia uses is excess revenues for overseas investments
- Venezuela uses its excess for social programs
In 2024, India switched to the Physiocratic system without knowing it.
The Modhi government reduced the exports of rice, causing it to rise in price globally. This is similar to OPEC cutting production.
Like the Physiocrats, the Indian government expects to earn more taxes from the increased prices. However, this is not so easy since the rice trade is not as centralized as the oil industry.
Trump Trade War
More recently, Trump has created tariffs against various nations. This will raise prices, forcing a shift from direct trade to a roundabout trade.
This will still flood the US with foreign goods and fail to raise US productivity.
This is why the Mercantile period abandoned the trade war policy because there were so many loopholes that were exploited by smugglers and documentation hacks.
