"Political Economy" emerged  during the 1700s as a part of the rationalist, reformist discussion and critique of the reigning political and economic structures. The new philosophers and political writers saw more than the rhetorical value of calling for “reason” to be applied in the reform of human affairs and governance. Flourishing studies of the processes of balance and regulation in the natural world (Nature’s “Economy”) led to comparisons of nature and society. The obvious biological parallels between humans and other animals promoted thinking about the inherent (biological) behaviors and nature of the human. No consensus emerged about innate properties, other than to insist upon their presence and influence in social life. For some, reason would correct the fallible human inclinations; or else it was the noblest of our tendencies, with a necessity to contrive social structures to allow it to blossom. No simple alliances were dominant: either rational skeptics or natural theologians could accept either view. Two highly influential works of the later part of the century combined a vision of design and innate human nature in an explanation of social organization.

 Adam Smith, while professor of moral philosophy at the University of Glasgow, published The Theory of Moral Sentiments (1759).  Considering Adam Smith first as a moral philosopher and critic of the structures of state, built upon a proposed "science of Man," we can make sense of his works. He was enamored of mathematical elegance, the structure of "systems", and attracted to a psychological (human nature) approach to the foundation of ethics. As his friend David Hume put it in his own Enquiries Concerning Human Understanding and Concerning the Principles of Morals (1749), "The same motives always produce the same actions." Typical of attempts at moral commentary in the Enlightenment, Smith wanted to build a theory of moral judgment that would be universal, beyond the specific biases of one's immediate society. The approach can be considered “Newtonian” in proposing a dynamics of development, to address the common question of the time on how humans form their moral views and social relations. Beginning life with neither, humans in Smith’s model develop from observation and reactions a view of themselves, in a “mutual sympathy of sentiments” with others. Thus a theory of moral behavior arises out of an innate human property, which itself comes from a beneficent Providence, ensuring social order. With sympathy the foundation of an ethical society, human self-interest is held in balance. 

The idea of self-interest is further explored in Smith’s most famous work, An Inquiry into the Nature and Causes of the Wealth of Nations (1776) – though Smith himself held the theory of moral sentiments to be more important. As the title implies, the inquiry produced a dynamic model of economics meant to explain how to optimize the wealth of the nation. Following the Physiocrats’ ideas of balanced cycles, Smith proposed that the way to maximize productive labor was through competition driving the division of labor. His theory of economics was intended to be a political intervention in public administration and the commercial system of Britain, also from a foundation of universal principles. It’s a theory linking productivity, prices, and universal increase of the standard of living. Most influentially, it’s a theory promoting free and extensive markets, rather than monopolies, protections or privileges. In a free and competitive market, processes of self-interest would by themselves interact to produce the optimum. In a brief metaphor, Smith famously likened such a dynamic process to an “invisible hand”: 

“As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” 

Self-interest clearly depends on the human capacity for rational judgment, again a theory based on an innate quality of humans. Lest we think that his was a model of unlimited self-interest, he also wrote "All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind." 

Smith himself did not carry out the full implication of this idea of processes that produce ends that were not designed into the process. He is, nonetheless, commonly cited for the foundation of market economics as a modern science.  Such dynamic models, with their emphasis on Progress, provided a foundation in natural philosophy for a view of historical progress, dynamic change, and models of interactive systems that had enormous influence in the development of theories of history, society, economics, and evolution.

The other “foundation” of a modern social science was the work of another member of the “Scottish Enlightenment,” and incidentally like Smith a friend and collaborator with David Hume. Adam Ferguson became professor of natural philosophy at the University of Edinburgh in 1759, and within a few years was professor of moral philosophy. His treatise An Essay on the History of Civil Society (1767) is often cited as the beginning of the science of sociology or anthropology. In it, he produced a natural history of the progress of humankind, built on a model of created, universal human attributes: the recognition of “fellow-feeling” (sympathy), the pursuit of pleasure, the will to power, and aggression and conflict within our innate sociality. As with Smith’s works, it is a dynamic model of natural order arising out of human interactions, with progress its inevitable outcome. The division of labor drives commerce and progress. The resulting history is a familiar one: a “stages” narrative of the historical transition of society from savage hunter-gathering to barbarian pastoralism to refined commercial society. Like Smith, Ferguson worried about the excesses of capitalism, but he nonetheless promoted an ideal of progress through technological innovation. 

In addition to these two members of a "Scottish Enlightenment," the Physiocrats were a group of French philosophes who followed the ideas of François Quesnay, a physician to the French court. Intertwined in the world of salon conversation and government policy, they developed economic doctrines, based on their economic theories of agriculture with land and production as the sources of wealth. Some, such as Baron Jacques Turgot, became important advisors to government. They were advocates of the dissolution of taxes, being ineffective for an optimal economy. They sought a system that would produce fair prices and wealth, strongly advocating free trade. Emphasizing agriculture also meant a treatment of the new industrialism and commercial economy as of secondary importance at best. All of their ideas depended upon a vision of natural laws to be applied in society -- the term "physiocrat" meant "the rule of nature," as fixed and determinable as Newtonian physics, and just as much to be left alone to operate along natural lines as any Newtonian mechanism. Along with reformed tax policies, they wrote critiques of policy and governance, with the idea that the optimal society would follow the economic and moral laws of nature. True law would be consonant with natural law.