Notes On Marx’s Theories Of Surplus Value – Volume 1 – Chapter 2 – The Physiocrats

Marx credits the Physiocrat school with being the group that laid the foundation for modern political economy. He does so because of their analysis of capital “within the bourgeois horizon” which Smith and Ricardo both followed on from and developed further. The Physiocrats established the forms that capital assumes in circulation (fixed capital and circulating capital) and the connection between the process of circulation and the reproduction process of capital. The Physiocrats also developed the understanding of the value of labour power being that which is required to sustain the worker and there being a difference between this labour power and the value that labour power creates. As Marx notes, this difference does not exist with any other commodity. Therefore the Physiocrats had discovered what the minimum level of wages would be under capitalism, although they did not actually put it that way in their own writings. The Physiocrats also investigated the origins of surplus value from the sphere of circulation into the that of production, another element that was developed later by Adam Smith. The Physiocrats saw agricultural labour as the only real source of productive labour because it is the only labour that produces a surplus value in the form of rent. Profit is viewed by the Physiocrats as a kind o higher wages paid by the landowner which the capitalists consume as revenue. The view of agricultural labour being the sole real source of profit was later discarded by Adam Smith as we shall see in the notes on the next chapter.