Introduction to History of Economic Thought

A period before the 16th century, characterized by limited money & credit use, weak national states, and no clear economic theories.

The period after 1500 marked by rapid growth in trade, emergence of strong national economies, and development of formal economic theories.

The transition from a self-sufficient, individual economy to one reliant on money for transactions.

The rise of national states with unified economies, replacing the dominance of smaller entities, such as city-states.

The development of organized bodies of economic thought, replacing fragmented ideas with systematic theories.

The period after 1500 when political economy became the dominant focus, replacing moral philosophy as the primary lens for understanding economic issues.

A framework depicting the evolution of key economic thinkers and schools across history, highlighting continuities and disagreements.

Schools of economic thought that either build upon or reject the ideas of prior schools, showcasing the dynamic evolution of economic thinking.

Ideas that are not relevant to the time they are presented are often forgotten.

Ideas that solve contemporary problems are widely disseminated and popularized.

Economic concepts that are widely accepted today may become irrelevant in the future due to changing circumstances.

Keynesian concepts such as the saving function, fiscal and monetary policy, IS-LM analysis are now standard in economics textbooks.

Studying the history of economic thought helps us understand contemporary economic theories by understanding their origins and evolution.

Studying the history of economic thought can help us avoid past mistakes and make better economic decisions in the future.

Studying the history of economic thought provides a broader perspective on the evolution of economic ideas, problems, and solutions.

In economics, there are many unsolved problems and unanswered questions. Understanding past successes, errors, and dead ends can aid in solving future economic problems.

An approach in economics that believes internal factors within a discipline, such as the discovery and explanation of unresolved paradoxes, are primary drivers of theoretical advances.

Alfred Marshall's economic school, combining elements of classical economics (focus on supply) with marginalist thinking (focus on demand) to form a more comprehensive view of the market.

A concept developed by Alfred Marshall, representing the difference between the price a consumer is willing to pay for a good and the actual price they pay.

A concept developed by Alfred Marshall, representing the difference between the price a producer is willing to sell a good for and the actual price they receive.

A situation in which the price of a good or service is determined by the interaction of supply and demand, achieving a balance.

The idea that economic theory progresses primarily through the correction of errors made by previous economists.

A theoretical analysis of a situation where the price of a good is determined by the interplay of both demand and supply.

The use of generalized statements to describe the main ideas of a particular economic school, although exceptions may exist.

The idea that individuals should focus on tasks they are naturally gifted in and receive appropriate training for those tasks.

The concept that to ensure honesty in public service, individuals should not be allowed to accumulate wealth or property.

Plato's belief that the state should provide for the basic needs of those who volunteer to serve as guardians, even if they do not have private property.

The understanding that incentives, whether positive or negative, play a role in both economic activity and criminal behavior.

Plato envisioned a state where consumer goods could be bought and sold, but land and other property would be allocated by the state based on mathematical principles.

Plato believed that trade had a place in society, but he limited the role of markets in his ideal state.

The belief that profit and interest payments should be abolished in a just society.

The study of the evolution of economic thought and its connection to social changes can provide insights into other areas of human concern, such as politics, art, philosophy, and science.

The fair and proportional distribution of shared goods or resources, such as the spoils of war. Aristotle believed that the distribution should be based on individuals' 'merit' in acquiring the wealth.

Justice that aims to restore equality by compensating individuals who have suffered from past wrongs or injustices.

Justice in economic exchange between buyers and sellers. Aristotle believed voluntary exchanges were inherently just, as demonstrated by the example of two boys swapping tunics.

A Greek philosopher who made significant contributions to various fields, including logic, biology, ethics, and aesthetics.

The period in which Aristotle lived and conducted his philosophical inquiries.

A system where individuals engage in buying and selling goods and services, often in organized markets.

A situation where individuals have conflicting opinions or interests regarding a given topic or exchange. It can arise in various contexts, like disputes over property rights or the fairness of a trade.

A standard of behavior or practice that is considered ethically and morally acceptable within a particular context.

Aristotle believed that while voluntary exchange allowed for a range of possible prices, the "just price" was the harmonic mean of the lowest acceptable selling price and the highest acceptable buying price.

Aristotle saw acquiring wealth through productive activities and exchanging surplus goods as acceptable. However, he considered wealth gained through commerce and usury (lending money for interest) as unnatural and excessive.

Aristotle believed that society had a socially acceptable level of consumption, and exceeding this level was frowned upon.

Aristotle was suspicious of trade, believing it allowed for excessive wealth accumulation without hard work and beyond normal needs. This implied that money was being pursued for its own sake, contradicting his view of a good life.

Aristotle perceived markets as lacking in regulatory power and saw the administration of society as primarily a top-down process.

Money serves three primary purposes: as a medium of exchange, a measure of value (unit of account), and a store of value.

According to Aristotle, because the metallic content of money is a convention established by the state, the ruler has the authority to profit by decreasing the metal content of coins.