A school known as “Physiocracy” emerged on the European continent, in France, in the mid 18th Century. Physiocrazy posits that the earth generates surplus. More specifically, Physiocrats purport that agriculture – and only agriculture – generates outputs greater than its inputs. That is, one seed of grain planted in the earth yields many more seeds. Through this the Physiocrats conclude that the earth and agriculture is the source of economic "surplus."
Francois Quesnay is noted as the main exponent of Physiocracy. Quesnay is also known for creating his famous Tableau Economique. In his Tableau, Quesnay charts how surplus produced in agricultural is allocated between and among three classes. In the France of his day, Quesnay suggests three social classes: landlords, agriculturalists, and those artisans making handicrafts, noted as Class Sterile.
Mark Blaug (1986, pp. 233-4) teaches us that Adam Smith resigned from his professorship at the University of Glasgow in 1763. Serving as tutor to the Duke of Buccleuch, Smith visited France where he is noted to have come into contact with Quesnay and other Physiocrats.
There exists little if any evidence that Smith was indeed influenced by Quesnay's school. In his notable contribution An Inquiry into the Nature and Causes of the Wealth of Nations (1776), Smith clearly departs from Physiocratic principles by noting the importance of a "division of labour." Rather than noting the importance of agriculture, Smith's purports that the division of labour serves as the way for greatly increasing material output. In his inquiry (Heilbroner, 1986, pp. 61-62) Smith describes production in a pin factory. He mentions that every worker gets his own process, e.g. a ...