Pros & Cons and Policy Lessons from Quesnay Table

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Pros & Cons and Policy Lessons from Quesnay table A. Conclusions 1. Strength Quesnay has pioneered in studies on reproduction and the dynamics of gross domestic products over both aspects: values and objects. Importantly, his economic table has laid the groundwork for research in reproduction later on. Quesnay has successfully come up with such concepts as input, output and surplus, which is way ahead of his time. In his theory, the movement of products is associated with the movement of money. Moreover, the economic table followed correct rules, which means that money is pumped into circulation and then returned to its starting point. 2. Weakness However, Quesnay’s table has some weak points. Specifically, he misunderstood the true value of goods, which means that Quesnay only saw agricultural production as real material wealth; the other industries were just reprocessing by-products of agriculture. What is more, Macro Analysis stopped at simple reproduction: in the economic table, Quesnay only analyzed the economy structure in simple reproduction, which means the output of this year equaled that of next year. Finally, Quesnay has forgotten the importance of economic areas other than agriculture: in the economic table, he ignored the role of consumer goods manufacturing and intermediaries manufacturing sectors. That's why he did not see the role of industry to agriculture (such as supply of machinery, fertilizers ...). It can be drawn from the table that the Industry sector does not utilize its own products. B. Policy Lesson: An important policy conclusion of the economic table is that tax should only be imposed on landlords. Taxes should not be imposed on the industry because it does not produce a surplus. Any attempt to taxation in this area will reduce the input of the industry. As input correctly equals output in the industry so that any

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