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Turgot: Founder of Classical Economics
New Series, Vol. 54, No. 216 (Nov., 1987), pp. 417-428
Published by: Wiley on behalf of The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines
Stable URL: http://www.jstor.org/stable/2554177
Page Count: 12
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Turgot's capital theory is rightly famous. This paper argues that his contribution to distribution theory should also be recognized as a major achievement. The interest rate (or profit rate) is equalized between different activities and governed by returns at the agricultural margin (intensive and extensive). Returns decrease as the margin moves out with capital accumulation. This implies a rent theory and a theory of accumulation substantially equivalent to that of Ricardo, and makes Turgot, who wrote before Smith, the original inventor of the main lines of classical economics.
Economica © 1987 London School of Economics