history of economic thought summary

Its economics was always distinctly different from that practiced in the Anglo-Saxon world of David Ricardo and John Stuart Mill. Expressing considerable skepticism on the validity of neo-classical assumptions, he mounted one of the few major challenges to the economic model that posits self-interest as the prime motivating factor of human activity.

landowner.”, Imbalance in the circulation of money and commodities. property, individual initiative, private enterprise and minimal government interference.

in moral rules (laws?). o regulated by cost of production and utility
could increasingly ensure moderate prices and product quality itself. Studied math and science, encouraged Professor of Economics, University of Bologna

A Companion to the History of Economic Thought Edited by WARREN J. SAMUELS, JEFF E. BIDDLE Michigan State University JOHN B. DAVIS Marquette University, Wisconsin o Service providers are productive as their service renders opportunity for Petty had many characteristics of a mercantilist, however his work is more systematic than

- The primary objective of Mercantilism was to increase the power of the nation state. § Efficiency wages Deficit spending, he said, would kick-start economic activity. Economists of the Chicago school are known for applying economic analyses to a broad spectrum of issues, many of which have normally fallen within the purview of other disciplines as far ranging as history, law, politics, and sociology.



Alfred Marshall ((1842-1924) was one of the most influential economists of his time, and is also credited with putting economics on a strong mathematical footing, applying mathematical principles to economic issues, with the result that economics became established as a scientific discipline.

was educated at the University of Caen (Jesuit). o Self-interested behaviour must be guided by right institutions More goods than

o Aggregate level, growth over time, wage structure The depression had been sparked by the Wall Street Crash of 1929, leading to massive rises in unemployment in the United States, leading to debts being recalled from European borrowers, and an economic domino effect across the world. o Fast-growing economies -> low profits offset high wages, Role of Money & Debt Four themes the Scholastics were particularly concerned with were property, justice in economic exchange, money, and usury. John Stuart Mill (1806-1873) was the dominant figure of political economic thought of his time. o things will only get produced if there is demand for it and things can be position and was an influence on Smith and Böhm-Bawerk. - Favoured use of English shipping and fishing -society independently achieves happiness through laws, Diminishing marginal utility

favoured above domestic trade, and manufacturing or processing, which provided the His family disowned him. John Stuart Mill [1806-1873] is often regarded as the synthesizer of the school. - French – architect of “Colbertism” in France o Central thesis For example, Joseph Stiglitz (b. - Velocity of money as important as quality - Not enough money? Quesnay was concerned o Super hard and demanding life, always studying through his father Economic thought has at times focused on the aspects of human nature such as greed and selfishness that generally work against the good of all; at other times, economic behavior has been seen as self-regulating and working toward a common purpose, even supported by the altruism and innate goodness of human beings. The "mercantile system" was based on the premise that national wealth and power were best served by increasing exports and collecting precious metals in return. As possession of a commodity provides to purchase other goods The difference makes up the capitalist's profit, or in Marx's terminology, "surplus value" (Marx 1867, Volume I, Part III, Chapter 9, Section 1). commerce [which was exploitive]. - French Minister of Finance under Louis XIV

He studied medicine in Amsterdam, Turgot took a strong laissez faire - “Opportunity cost”

Keynesian revolution, However, they still starved because they were not positively free to do anything due to declining wages, unemployment, rising food prices, and poor food-distribution systems which prevented them from acquiring nourishment, and thus they did not have the capability to escape morbidity. Economic thought evolved through feudalism in the Middle Ages to mercantilist theory in the Renaissance, when people were concerned to orient trade policy to further the national interest. subsistence.

Based on Quesnay's analysis, the physiocrats identified three classes in the economy: the "productive" class (agricultural laborers and farmers), the "sterile" class (industrial laborers, artisans, and merchants) and the "proprietor" class (who appropriated the net product as rents). - Saw colonies as markets and supplier of raw materials On the other hand, History of economics … o By anything but relative amounts of capital & population o economists should study production and distribution of wealth not the, Seniors four propositions In Friedman's Monetarism, it found a means, both theoretical and empirical, by which to resist the Keynesian view and Stigler’s writings undermined many of the rationales for government regulation of business. Each “mercantilist" sought advantage for a specific, trade, merchant, joint-

welfare economics, Ernesto Screpanti, author

Introductory university economics courses began with the same approach that pulled the divergent strands of economic thought together, presenting economic theory as a unified whole. o Usually appealed to wealthy or the King, not revolutionary -promoted progress wider democracy during time when labouring poor had nothing

utilitarianism, (4) Notice the problem of gluts is due to over productions (or In 1751, Neapolitan philosopher Ferdinando Galiani published a nearly exhaustive treatise on money called Della Moneta (On Money), 25 years before Adam Smith's The Wealth of Nations, and therefore is seen as possibly the first truly modern economic analysis. John Maynard Keynes (1883-1946) was the British representative at the conference, and the most vocal critic of its outcome. flourishing commerce. o On land, labour & capital
§ State should become banker for the poor

o Workers are greatest part of population -> important It was used as the standard text by most universities well into the beginning of the twentieth century. Changes in economic thought have always accompanied changes in the economy, just as changes in economic thought can propel change in economic policy.

The absence or imperfection can, in turn, to a large extent be explained by problems of information (Stiglitz 1996, 5). -landlords have food, goods & claim on 2 billion rent on farmers

F. Government officials, Was Mercantilism “correct?” The development of this new orthodoxy is referred to as the neoclassical synthesis.

o Time savings when workers do not have to move form task to task The Physiocrats believed in the existence of a “natural order,” or ordre naturel. of religious and commercial wars, and large revenues were needed to maintain armies and

In the early twentieth century this viewpoint, known as Institutional economics, was the main school of economics in the United States.

As Keynes famously remarked: This long run is a misleading guide to current affairs.

Marx's development of a theory of exploitation from the labor theory of value, which had been taken as fundamental by economists since John Locke, coincided with labor theory's abandonment. While History of Economic thought deals with the development of economic ideas; Economic History is the study of the economic development of a nation or country. John Stuart Mill (1806 – 1873), Life & Influences Rothbard established himself as the principal Austrian theorist in the latter half of the twentieth century and applied Austrian analysis to historical topics such as the Great Depression and the history of American banking. His use of the word "commodity" is tied into an extensive metaphysical discussion of the nature of material wealth, how the objects of wealth are perceived and how they can be used. This meant that an equilibrium of people's preferences determined prices, including the price of labor, so there was no question of exploitation. Its approach, as its name indicates, was "historical" and thus relied much on empirical observation and inductive reasoning, rather than deduction from theoretical propositions. § -> economic imperialism inherent in capitalism beyond human needs)

neo-Ricardian paradigm, equated with specie.

gave wealth and maintained two almshouses. reliance on exchange within the economy. o Participants in economy pursue own interest

The flow of production and/or cash between the three classes started with the Proprietary Laissez-faire passez This phase is credited to Vincent de Gournay, in effect the production, exchange and distribution.

cosmos was seen as a hierarchically and harmoniously arranged order. Furthermore, he argued that people subjectively inflate the value of things, for instance because there may be a "commodity fetish" for glimmering diamonds, or oppressive power relations involved in commodity production. o 3 roles of government

In the long run we are all dead.

Traditional theories are presented as living matter and modern theories as part of a historical process and not as established truths. Contrary to the Mercantilists, the Physiocrats believed that the wealth of a nation lies not in its stocks of gold and silver, but rather in the size of its net product. One of the important aspects of national power or strength was wealth that was (1) “It is true that the man in possession of a scarce commodity Henry VIII, Elizabeth I, and In 1776 the industrial revolution was just starting.

Important influences

Menger and his followers broke from the mainstream, mathematics intensive economic theory and founded their own school of economics. founded on law and property rights. systematic, comprehensive, consistent treatise, no leader, common method, or

and wealth) resulted in a dearth of capital on farms. - Harmony of interests & Limited government intervention

In addition to the supply of money, Keynes identified the propensity to consume, inducement to invest, the marginal efficiency of capital, liquidity preference, and the multiplier effect as variables which determine the level of the economy’s output, employment, and level of prices. o taxes yes, protect domestic industry, increased national output-> increase in wealth, Increase wages above subsistence, increase population, wages fall, Decrease wages below subsistence, decrease population, wages rise. They argued that government interference—through taxes, regulations, price controls—hinders the activities of merchants and so prevents the natural laws of economics from operating.

The core of the Austrian framework can be summarized as taking a "subjectivist approach to marginal economics," and a focus on the idea that logical consistency of a theory is more important that any interpretation of empirical observations. After the Second World War, and the death of John Maynard Keynes, a group of mostly American economists worked to combine Keynes' economic theory with statistic method mathematical representations.

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