Physiocrats, representatives of classical bourgeois political economy in the mid18th century in France. The school was headed by F. Quesnay. Physiocratic theories emerged in the context of the mounting crisis of the feudal system and of the economic decay of France. Criticising mercantilism, the physiocrats thought that the government had to focus attention not on the development of trade and the accumulation of money, but on the creation of an abundance of the "fruits of the earth”, in which, they claimed, the real wealth of the nation lay. The problem of surplus value or of "net product" which they pictured as a certain increase in use values, and not as a value increment, underlay the physiocratic economic theory. They regarded nature as the only source of wealth and, therefore, saw surplus value as nothing but a physical gift of nature. They held that agriculture was the only branch where the net product was produced. The physiocrats called those engaged in agriculture the productive class. They identified industry as a “barren” sphere which did not create "net product”, and therefore thought that workers engaged in industry were a barren class. The physiocrats are credited with moving the question of the origin of social wealth and surplus value from the sphere of circulation to that of material production, albeit limited by agriculture alone. Thus, they laid the scientific groundwork for the analysis of capitalist production as a whole. The physiocrats advocated unlimited rule of private ownership, - free competition and free foreign trade. The most valuable part of their theory was that they based the status of classes in society on its economic structure. The scientific merit of the physiocrats is that unlike the mercantilists, who identified capital with its money form in which it operates in the sphere of circulation, they regarded capital in the form it assumed in the production process. They laid the foundation for a scientific analysis of fixed and circulating capital in the form of a theory of initial and annual advanced money. The physiocrats were the first in the history of economic thought to examine the laws of reproduction and distribution of the aggregate social product under capitalism (Quesnay’s Tableau Economique). The founders of Marxism were very appreciative of this attempt, and regarded it as outstanding for its time.