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The Evolution of the Concept of Wealth from Aristotle to Adam Smith and Keynes

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The result of the Mercantilist theories was seen to be significant as government interventions for control on markets led to wars. Indeed many European nations went to war over the control of available markets and mercantilism can be said to be a contributory factor. This is how the first capitalist system evolved. This was the theory that encouraged, in fact, legitimized, wars and colonialism as a way to increase the wealth of a nation. The outcome was that nations like Great Britain, France, and Holland undertook great conquests to overtake economies that had great wealth.

Huge empires were built by small nations and this theory gave legitimacy to these endeavors. There was significant intervention by the governments on behalf of merchant traders to undertake these ventures for the vested interests. The advent of this theory resulted in the mercantile system as an enormous conspiracy by manufacturers and merchants of the time against consumers and labor to reap higher profits aided by the governments of the time. The objective was to increase the wealth of the few at the cost of suppression of many. Physiocrats          The severity of the Mercantilist theories came under great criticism from the French thinkers.

During the second half of the 18th century, Anne-Robert-Jacques Turgot and Francois Quesnay propagated that the wealth of nations was not gold and silver bullion but was derived from agricultural produce. These thinkers were called the Physiocrats and were very popular in their times. Perhaps this was the first well-developed theory that was comprehensive in its notions of economic wealth. This was the most significant contribution of describing the source of national wealth. This is a complete contrast to the Mercantilist's idea of national wealth which was confined to the wealth possessed by the ruling government or the ruler based on gold and silver or the favorable balance of trade.

However, the Physiocrats considered only agricultural labor as a valuable input ignoring the manufacturing activities altogether, considering them to be derivative of agricultural efforts. The Physiocrats abhorred cities and considered that the natural way of living was the best, praised farmers, hence the lofted position of agriculture in their theories. They called themselves economists but were named Physiocrats which is a Greek derivative meaning “ Government of Nature” .

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