The foreign-trade doctrines of the physiocrats

Although the Physiocrats were not primarily interested in the subject of foreign trade, they did devote some discussion to the matter which has hitherto been neglected. The bulk of their foreign-trade theorizing was concerned with the negative task of demonstrating the fallacies of the balance-of-trade doctrine of the Mercantilists. On the positive side, while they argued for free trade, based largely upon their "natural-order" philosophy and upon an incomplete realization of the benefits of international specialization, in practice they were primarily concerned with achieving the free exportation of grain. In the course of their discussions, attention was devoted to the quantity theory, the price-specie flow mechanism, the velocity of circulation of money, the "terms of trade," the law of markets and the foreign exchanges. Most of their ideas on these matters were borrowed from other writers, notably Hume, Cantillon and Boisguilbert. Moreover, inasmuch as they held fast to a narrow conception of the real nature and gains of foreign trade, and viewed it disdainfully as a necessary evil, the Physiocrats' positive contributions to the subject were at best meager and unsatisfactory.