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Book Review: The Formation and Distribution of Wealth: Reflections on Capitalism by Anne-Robert Turgot

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The Formation and Distribution of Wealth: Reflections on Capitalism by Anne-Robert Turgot (Translated and Edited by Kenneth Jupp) is an important treatise on the early foundations of capitalism. Turgot traces the development of early capitalism from its inception through to the recapitulation of the five basic uses of capital.

Turgot believed that capital was useful to buy land with earning power, to invest in agricultural enterprises by farming the land, to invest in trade or industry, to invest in commercial enterprise and to lend in order to bring in a profit greater than the revenue invested in the same sum as invested in land.

Turgot embraced the notion of thrift when he stated that thrift increases capital, increases the number of lenders, and reduces the number of borrowers. Extravagance produces the converse. Furthermore, the lowering of the rate of interest proves that thrift has usually prevailed over extravagance. Since interest on money has declined in Europe for centuries, the conclusion is that thrift rather than extravagance has been the general rule, according to Turgot.

The author believed that there were two great subdivisions in society. These subdivisions encompassed producers and wage earners. Producers extract from the earth to furnish the whole of society with subsistence and raw materials. Wage earners turn the raw materials into practical use by applying labor in exchange for subsistence living. Herein lies an important negation in early capitalism.

Turgot explained the foundations of capitalism with considerable clarity, although the capitalism of the 1700’s has evolved into an improved (although imperfect) model today. At present, many workers receive compensation over the bare subsistence level. Examples are municipal union workers, federal government employees, workers who have access to profit sharing, workers who invest, as well as workers who inherit legacies of property and other valuables. Lastly, today’s workers have access to franchise forms of organizations, as well as alternative business models like affiiliates and partnerships.

The Formation and Distribution of Wealth is an excellent reference on the foundations of early capitalism. The book provides an important explanation of capitalism’s basic premise. The idea of subsistence living in exchange for labor needs to be reworked in order to have utility in the world of today.

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About Dr Joseph S Maresca

I've taught approx. 34 sections of collegiate courses including computer applications, college algebra, collegiate statistics, law, accounting, finance and economics. The experience includes service as a Board Director on the CPA Journal and Editor of the CPA Candidates Inc. Newsletter. In college, I worked as a statistics lab assistant. Manhattan College awarded a BS in an allied area of operations research. The program included courses in calculus, ordinary differential equations, probability, statistical inference, linear algebra , the more advanced operations research, price analysis and econometrics. Membership in the Delta Mu Delta National Honor Society was granted together with the degree. My experience includes both private account and industry. In addition, I've worked extensively in the Examinations Division of the AICPA from time to time. Recently, I passed the Engineering in Training Exam which consisted of 9 hours of examination in chemistry, physics, calculus, differential equations, linear algebra, probability/ statistics, fluids, electronics, materials science/structure of matter, mechanics, statics, thermodynamics, computer science, dynamics and a host of minor subject areas like engineering economics. A very small percentage of engineers actually take and pass the EIT exam. The number has hovered at circa 5%. Several decades ago, I passed the CPA examination and obtained another license in Computer Information Systems Auditing. A CISA must have knowledge in the areas of data center review, systems applications, the operating system of the computer, disaster recovery, contingency planning, developmental systems, the standards which govern facility reviews and a host of other areas. An MBA in Accounting with an Advanced Professional Certificate in Computer Applications/ Information Systems , an Advanced Professional Certificate in Finance and an Advanced Professional Certificate in Organizational Design were earned at New York University-Graduate School of Business (Stern ). In December of 2005, an earned PhD in Accounting was granted by the Ross College. The program entrance requires a previous Masters Degree for admittance together with a host of other criteria. The REGISTRAR of Ross College contact is: Tel . US 202-318-4454 FAX [records for Dr. Joseph S. Maresca Box 646 Bronxville NY 10708-3602] The clinical experience included the teaching of approximately 34 sections of college accounting, economics, statistics, college algebra, law, thesis project coursework and the professional grading of approx. 50,000 CPA examination essays with the American Institute of Certified Public Accountants. Additionally, membership is held in the Sigma Beta Delta International Honor Society chartered in 1994. Significant writings include over 10 copyrights in the name of the author (Joseph S. Maresca) and a patent in the earthquake sciences.