Physiocracy and Robotocracy: Not the Focus But Rather for My Clarification of Thought: May 24, 2014

The physiocrats of eighteenth-century France saw the country as having four kinds of jobs:

1. Farmers
2. Skilled artisans
3. Flunkies
4. Landowning aristocrats

Farmers, they thought, produced the net value in the economy–the net product. Their labor combined with water, soil, and sun grew the food they and others ate. Artisans, the physiocrats thought, were best seen not as creators but as transformers of wealth–transformers of wealth in the form of food into wealth in the form of manufactures. Aristocrats collected this net product–agricultural production in excess of farmers’ subsistence needs–and spent it buying manufactured goods and, when they got sated with manufactured goods, employing flunkies.

Set the wage needed to attract people into the artisan professions as numeraire: set it equal to 1. Then in this framework, the key economic variables are:

• the fraction of the population who are farmers: f.
• the net product per farmer: n.
• the fraction of the population who can be set to work making manufactured goods that aristocrats can consume before becoming sated: m.

The key equilibrium quantity in this system is:

(nf-m)/(1-f-m) = w

This gives the standard of living of the typical flunky–say, a runner for His Grace the Cardinal. The numerator is the amount of resources on which flunkies can subsist: the net product received by landlords minus the amount of the net product spent employing artisans. The denominator is the flunky share of the population. The quotient of the two is the flunky wage: w.

If this flunky wage w is low, the country is poor. Flunkies are then ill-paid. Begging and thievery are then rampant. Moreover, the reserve army of underemployed and potentially-unemployed flunkies puts downward pressure on artisan and farmer living standards as well.

If this quantity w is high, the country is prosperous.

The physiocrats saw a France undergoing a secular decline in the farmer share f. They worried. A fall in f produced a sharper decline in w. Thus they called for:

• Scientific farming to boost n, and so boost the net product nf.
• A reallocation of the tax burden to make it less onerous to be a farmer–and so boost the farmer share f and thus the net product nf.

With the unquestioned assumption that there were limits on how high the net product per farmer n could be pushed, the physiocrats would have forecast that France of today, with only 5% of the population farmers, would be a hellhole: enormous inequality and absolute poverty, with huge numbers of ill-paid flunkies sucking up to the aristocratic landlords.

Well, the physiocrats were wrong about the decline of the agricultural share of the labor force…

And let us hope that the techno-pessimists are similarly wrong about the rise of the robots…