The most central leitmotif of early modern economics was itsappreciation for the transformative effects of money. Hobbes, drawingon William Harvey, had depicted money as the blood that coursesthrough the body politic (see Christensen 1989; Apeldoorn 2017). Moneyvitalized a region, and was most effective if it was in circulationand “quickened”, that is, increased its velocity. Quesnayunderscored the importance of the circulation of money, particularlybullion, and its multiplier effects, again drawing an analogy toHarvey’s great discovery. The French had initially, under theinspiration of the Scottish émigré John Law (1705),embraced private banknotes and equity swaps. But after the collapse ofthe Mississippi Company in 1720, for which Law was blamed, they choseto hoard silver as household plate, and banking did not recover untilthe end of the century.
The World Wars, Russian and German Revolutions, and Great Depression (early to mid 20th century)
In this period the Scholastic theologians, notably Thomas Aquinas, took on the role of guiding society, and their writings included economic aspects of life. Four themes the Scholastics were particularly concerned with were property, justice in economic exchange, money, and usury. In this area they built on Greek thought as revived by medieval Muslim scholars, of whom perhaps the most well known was Ibn Khaldun of Tunisia. Economic theory grew out of societies’ need to account for resources, plan for the future, and exchange and allocate goods.
In contrast to Galbraith’s linguistic style, the post-war economics profession began to synthesize much of Keynes’ work with mathematical representations. Introductory university economics courses began to present economic theory as a unified whole in what is referred to as the neoclassical synthesis. “Positive economics” became the term created to describe certain trends and “laws” of economics that could be objectively observed and described in a value-free way, separate from “normative economic” evaluations and judgments.
Who Invented Economics First?
Mercantile theorists held that international trade could not benefit all countries at the same time. Money and precious metals were the only source of riches in their view, and limited resources must be allocated between countries, therefore tariffs should be used to encourage exports, which bring money into the country, and discourage imports which send it abroad. In other words, a positive balance of trade ought to be maintained through a surplus of exports, often backed by military might.
David Hume
Innumerable writings on money, trade and commerce were posthumouslygrouped by Adam Smith under the rubric of the “MercantileSystem”, or what eventually came to be known as Mercantilism.Many of the texts were polemical and self-serving, and endorsed Crownrights and monopolistic trade. Mercantilist writings sprang up acrosswestern Europe, particularly in seventeenth-century Sweden, Holland,and England (see Magnusson 1994; Stern & Wennerlind 2014). From the history of economic thought 21st century onwards, the concept of ecosystem services (the benefits to humans provided by the natural environment and from healthy ecosystems) are more widely studied in economics.208 Also climate change is more widely acknowledged as a major issue in economics, sparking debates about sustainable development in economics. Climate change has also become a factor in the policy of for example the European Central Bank. In the context of globalization, economists have been drawn to develop fields such as development economics which deals with economic aspects of the development process in low-income countries.
- 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.
- Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life.
- This macroeconomic model includes planetary boundaries, like climate change into its model.
- The commercial class was far more likely to beindustrious and enterprising, and serve as the backbone of moderncivil society and the custodians of liberal values.
Despite the prevalence of the model, the term mercantilism was not coined until 1763, by Victor de Riqueti, marquis de Mirabeau (1715–1789), and popularized by Adam Smith in 1776, who vigorously opposed it. Aquinas discusses a number of topics in the format of questions and replies, substantial tracts dealing with Aristotle’s theory. Questions 77 and 78 concern economic issues, primarily what a just price might be, and the fairness of a seller dispensing faulty goods. Aquinas argued against any form of cheating and recommended always paying compensation in lieu of service obtained as it utilized resources. Whilst human laws might not impose sanctions for unfair dealing, divine law did, in his opinion. Multipart, illustrated series of articles on the parallel relationships between economists and anti-slavery advocates in the mid- to late 1800s.
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. Instead, many notable thinkers and societies throughout history have contributed to the field of economics. These decisions explain, for example, why the price of an individual diamond is relatively higher than the price of an individual unit of water. Though water is a basic need to live, it is often plentiful, and though diamonds are often purely decorative, they are scarce. Malthus was one of a group of economic thinkers of the late 18th and early 19th centuries who were grappling with the challenges of emergent capitalism following the French Revolution and the rising demands of a burgeoning middle class. Among his peers were three of the greatest economic thinkers of the age, Jean-Baptiste Say, David Ricardo, and John Stuart Mill.
In the 1970s HET became a separate sub-discipline with its own periodicals and meetings. The number of scholars who worked in HET did not decline, even though the major research and postgraduate training centres lost interest. The primary theme concerns the development of economic thought as this emerged in the various continental traditions including the Islamic tradition. These continental traditions differed substantially, both substantively and methodologically, from the Anglo-Saxon orientation that has been dominant in the last century for example in the study of public finance or the very construct of the state itself.
While a strong advocate of traditional property laws to insureeconomic flourishing, Hume underscored their contingent nature,pointing to the voluminous quantity of law books that meantinterpretation would never come to an end. In opposition to Locke,Hume believed that the appeal to an ancient contract forming thecommonwealth was merely a myth. Ancient land rights were primarilygained by conquest and usurpation, and sustained by privilege, ratherthan a reward to the sweat of one’s brow. By contrast, themodern commercial era that enabled the spread of capital and hencemoveable wealth, moved in step with the rise of representativegovernment, either in the form of a republic or a constitutionalmonarchy such as his own (McArthur 2007; Harris 2015). 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. When people mix their labor with an object it becomes a “commodity.” He also distinguished the use value of a commodity from its exchange value.
For twenty years after its appearance, as Schumpeter suggests, ‘there is little to report as far as analytical work is concerned’ (p. 379). One of the most interesting and controversial of the arguments put forward by Schumpeter in The History of Economic Analysis is that the evolution of economic ideas does not proceed smoothly, but in jumps, through a succession of epochs of revolution and consolidation; of language confusion and ‘classical’ periods. This is also a useful idea for the historian of economic thought because, if true, it would provide a clear organizational framework for the subject. In fact, this idea immediately leads to an almost natural division of the history of economic thought into epochs, a division based on a succession of ‘classical situations’ and revolutionary periods.
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