Growth and development
François Quesnay (1694–1774)
1654–56 English economist William Petty conducts a major land survey of Ireland to calculate its productive potential for the English army.
1766 Adam Smith states that labor, not land, is the greatest source of value.
1879 US economist Henry George argues that land should be held in common by society, and that only land should be taxed—not productive labor.
1950s US economist Theodore Schultz’s “efficient farmer” hypothesis places agriculture at the heart of economic development.
In recent years bankers have sometimes been characterized as parasites, living off wealth created by the labor of others. François Quesnay, a French farmworker’s son and one of the great minds of the 18th century, might recognize this description.
Quesnay argued that wealth lies not in gold and silver, but springs from production—the output of the farmer or manufacturer. He argued that agriculture is so valuable because it works with nature—which multiplies the farmer’s effort and resources—to produce a net surplus. Manufacturing, on the other hand, is “sterile” because the value of its output is equal to the value of the input. However, later theorists showed that manufacturing can also produce a surplus.
Quesnay’s championing of the value of agriculture was influential, leading to the development of the French school of physiocrat thinkers who believed in the primacy of the “natural order” in the economy.
Many economists, including Theodore Schultz, have argued that agricultural development is the foundation for progress in poor countries. In 2008, the World Bank reported that growth in the agricultural sector contributes more to poverty reduction than growth in any other sector. But economists today also recognize that diversification into industry and services, including finance, is vital for long-term development.
"If we knew the economics of agriculture, we would know much of the economics of being poor."
Theodore Schultz
US economist (1902–98)