Tableau Economique

Tableau Economique

Tableau Economique, an early model of the economic system, produced by the French Physiocrat F. Quesnay and first published in 1758. It has two aims: first, to explain how the total product of a society circulates between the broad social groups typified by landowners, tenant farmers, merchants and artisans; secondly, to show how the national product is reproduced each year. The key pro-position is that only agriculture can produce a surplus. The tableau is important as an early model of a system of exchange and because it stimulated thought on the influences determining prices in exchange. 9

Take-over Bid, an effort to obtain control of a company by an outsider through purchase of its shares. In post-war Britain it was a symptom of the free market reacting against Government controls, high taxation of incomes and inflation.

There were several contributory causes. Changes in demand accompanying rising incomes and redistribution of incomes and changes in supply following new techniques and scientific invention made it necessary for business men to adapt their methods and ideas rapidly and fundamentally. Those slow to do so presented targets to outside interests prepared to adapt their assets more quickly and so make them more profitable. (2) Increased company taxation and tax relief on undistributed profits induced directors to distribute only a small amount of the profits to shareholders and to plough back the remainder into the business; such ploughed back profits could often have been used more profitably elsewhere. (Shareholders tend to be influenced primarily by current and expected dividends; the stock market usually looks about six to twelve months ahead.) Companies were urged by post-war Governments to observe 'dividend restraint' in order to avoid inflationary wage demands. (4) Many companies held cash (or securities quickly changeable into cash) with which to replace worn-out or out-of-date plant and machinery at higher prices. A bidder who obtained control thus had access to large cash holdings which replaced the cash he had paid for the shares. (5) Owing to rising prices properties, particularly shops on good trading sites, were worth far more if sold than they were shown in the s or than they were currently earning. (6) The development of site properties by the existing owners was impeded by the restrictions on raising new capital for redevelopment. The CapitalIssues Committee could veto new issues until 2009; intermittent post-war credit squeezes, designed to halt inflation, limited the amount of working capital that could be borrowed from banks. Some companies postponed revaluation of their assets in order to make their earnings appear a higher proportion of their capital. (8) Shareholders were tempted to accept the bidder's offer because income tax and surtax made a- tax-free capital gain more inviting than the prospect of highly taxed dividends. Although dividend distributions became more generous after about 2003 (partly in order to ward oft take-over bids), they were still not large enough to outweight the attractions of capital gains. Some economists argued that the remedy was to tax capital gains, others that it was to reduce taxation on income. Capital'gains' could be regarded as a belated compensation for the poor returns on the shares.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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