The proposed reforms of the Physiocrats accordingly, were ushered into the world under the form of an abstract intellectual system, which it was hoped would give to the movement at once its inspiration, its initiative, and its point of departure. This system undertook to demonstrate that Agriculture, which had hitherto been slighted, was not only an important but the one supremely important industrial occupation, while manufactures, which had hitherto been the main concern of Governments, were not only inferior to it, but were the most unproductive and even menial of services. But to get the fulcrum necessary for this proposed reversal and upheaval of opinion, the system needed some large central principle as a core from which its deductions were to be drawn; and this the Physiocrats found in the doctrine afterwards accepted by Adam Smith and made the basis of his 'Wealth of Nations,' - the doctrine namely that in Agriculture alone do the powers of Nature come to the assistance of man, and not in Manufactures. The doctrine doubtless sounds strange to us moderns accustomed to see a little water heated in a boiler and made to run an engine do the work of thousands of men; but it must be borne in mind that neither this nor any other of the great discoveries and inventions which have made the greater part of the wealth of the modern world, had then, or for years after the time of Adam Smith, appeared on the industrial horizon.

As, however, the doctrine furnishes us with the key to the distinction between the Mercantilists on the one hand and the Physiocrats and Adam Smith on the other; and, what is more important, as its secret influence, as we shall see, like that of a fateful star has presided over the progress and development of the orthodox Political Economy from its birth to the present hour; it is necessary for use to see first of all how the Physiocrats built their system around it. This once clear, we shall then be able to judge whether the alterations made in this system of the Physiocrats by Adam Smith and his orthodox successors, are sufficient to neutralize the effects of founding a highly complex system of Political Economy on a basis so palpably absurd as this dictum of Adam Smith that 'in Agriculture, Nature labours along with man, but that in Manufactures, Nature does nothing, and man does all.'

The first point then which we have to note is, that the reason the Physiocrats thought that it was only in Agriculture that Nature came to the assistance of Man, and not in Manufactures, was because in Agriculture there was always a surplus which went to the landlord in rent after the farmer's profit and expenses had been paid, whereas in Manufactures there was no surplus beyond what was necessary to pay the profits on capital and the wages of labour. For although, said they, a piece of lace for a pair of fine ruffles, for example, could be made from flax costing a penny, and yet sold for as much as £30, still there was no surplus; for it would take two years to make it, and during that time the food and clothing of the maker would cost the £30. And from this they argued that manufacturers and artisans and labourers in general were only a kind of 'out-of-door menials' whose work practically only paid for their keep. But as, like in-door menials, sporting dogs, and carriage horses, all these classes had to be kept out of the raw produce of the soil, they went on to argue, as their second point, that if you wanted the surplus of raw produce, which constituted the real wealth of the nation, to increase, you would have to do either one or other of two things; - you would either have to devise means by which the miscellaneous general population of manufacturers, artisans, and labourers could be fed at less expense, or else devise means by which the surplus of raw products which fell naturally to the landlords after keeping these unproductive menials, should he increased.

And it was the special boast of the Physiocrats that they had shown how to do both by a single device, and at a single stroke. For all you had to do, said they, was to completely reverse the prevailing policy of the Mercantilists, and to throw open your country fully and freely to foreign trade by abolishing all tariffs, duties, and restrictions whatever, external or internal, and you would find that the double result would at once follow. For by freely permitting the entry of foreign goods which could undersell their own, not only would the manufacturers, the workmen, and the labouring population generally get their clothing and household appurtenances at cheaper prices, but what was more important, the landlords and farmers would get theirs cheaper also. This would increase the landlords' surplus - the all important point with the Physiocrats inasmuch as by their hypothesis its increase could alone increase the wealth of the nation - and by so doing would give the landlords more money to expend in improving the cultivation of the soil, which in its turn would yield a still larger surplus, and this in turn again would either keep the same number of manufacturers and workers in greater comfort, or would permit of larger families and a larger population; and so either way would add to the wealth, prosperity, and power of the State. By this scheme, its authors pointed out, all would be for the best all round, and it would be to everybody's interest to support and perpetuate it.

But were the Government, on the contrary, still to continue in its Mercantile policy, and load foreign manufactures with import duties, the expenses of living for all classes, including the landlords, would be so increased, that the surplus left over in the hands of the landlords which was the real wages fund out of which all the other classes (except the farmers) were kept, would be so lessened that not only the general population but the nation as a whole would suffer. The only persons who would gain by the import duties, they contended, would be the manufacturing capitalists whose profits would be increased at the expense of those of the farmers and landlords, on the ground that of a given amount of capital invested, the one could not get more without the others getting less. But as it was one of their cardinal doctrines that the manufacturers were an 'unproductive ' class, inasmuch as what they produced was only sufficient for their keep and added nothing to the wealth of the country, while the landlords and farmers were the only 'productive' classes, inasmuch as in their occupations alone did Nature come to the assistance of man by yielding a surplus as her free gift, the result of loading foreign manufactures with import duties would be economically bad for all classes - for the working population, as well as for the nation as a whole.