The History of Economic Thought Quiz

Development of Economic Thought Summary

• The history of economic thought studies the philosophies and theories of economics and political economy from ancient times to the present day.

• Ancient Greek writers like Aristotle examined ideas about wealth acquisition and property ownership.

• The Western world did not separate economics from philosophy until the 18th-19th century Industrial Revolution and the Great Divergence.

• Thomas Aquinas argued for a just price that covers production costs and ensures social order.

• Duns Scotus suggested a just price should consider costs of labor and expenses, while Jean Buridan argued that a just price is what society collectively is willing to pay.

• Arab Muslim scholar Ibn Khaldun expressed a theory of civilization lifecycle, specialization of labor, and the value of money as a means of exchange.

• Mercantilism, a political movement and economic theory, advocated for using military power to protect local markets and supply sources.

• The Jesuit School of Salamanca in Spain developed economic theory in the 16th century.

• Sir Thomas More's Utopia inspired the English Poor Laws and communism-socialism movement.

• Nicolaus Copernicus published the first known argument for the quantity theory of money and the first form of Gresham's Law.

• Jean Bodin analyzed inflation caused by importation of gold and silver from South America, and Barthélemy de Laffemas mentioned underconsumption theory.

• Leonardus Lessius claimed Aquinas' just price approach was no longer workable, and made the first statement of the price of insurance based on risk.

• English economists Edward Misselden and Gerard Malynes argued over free trade and government regulation of companies, with Misselden advocating for state regulation of trade to insure export surpluses.

• English economist Thomas Mun described early mercantilist policy in his book England's Treasure by Foreign Trade.

• Sir William Petty applied Francis Bacon's rational scientific tradition to economics, coining the term "political arithmetic".History of Economic Thought

• Philipp von Hörnigk introduced statistical mathematics and became the first scientific economist.

• Jean-Baptiste Colbert set up national guilds to regulate major industries in France.

• Pierre Le Pesant, Sieur de Boisguilbert wrote the first notion of an economical market, questioning mercantile economic policy and valuing the wealth of a country by its production and exchange of goods.

• Charles Davenant displayed the first understanding of consumer demand and perfect competition.

• Sir James Steuart published the first book in English with the term "political economy" in the title, and the first complete economics treatise.

• Emperor Aurangzeb compiled Islamic economics policies, eventually leading to the period of Proto-industrialization in Mughal India.

• John Locke believed that people contracted into society, which was bound to protect their property rights, and argued that the government should positively work to ensure their protection.

• Dudley North argued against assuming a need for a favorable balance of trade and that trade benefits both sides, promotes specialization, division of labor, and wealth for everyone.

• David Hume denounced mercantilist assumptions and argued that it is impossible to strive for a favorable balance of trade.

• François Quesnay believed that agricultural surpluses, by flowing through the economy in the form of rent, wages, and purchases, were the real economic movers.

• Jacques Turgot viewed society in terms of three classes: the productive agricultural class, the salaried artisan class, and the landowning class.

• Adam Smith is popularly seen as the father of modern political economy, and his publication, The Wealth of Nations, argued for a "system of natural liberty" where individual effort was the producer of social good.Notable Figures and Schools in Political Economy

• Edmund Burke, a political philosopher, was a critic of liberal politics and condemned the French Revolution.

• Jeremy Bentham was a radical thinker and developed the concept of utilitarianism, advocating for universal suffrage, freedom of speech, free trade, and health insurance.

• Jean-Baptiste Say helped popularize Adam Smith's work in France and developed Say's Law of markets, which argued that there could never be a general deficiency of demand or a general glut of commodities in the whole economy.

• David Ricardo was a wealthy stock market trader who believed in a free-market economy and described the manner in which income is distributed in the population.

• John Stuart Mill was a leading political philosopher and developed a textbook, Principles of Political Economy, which was used as the standard text by most universities well into the beginning of the twentieth century.

• The classical economists saw the first economic and social transformation brought by the Industrial Revolution and were divided on issues such as the source of value, the causes of economic growth, and the role of money in the economy.

• Karl Marx wrote Das Kapital, which critiques political economy and argues that the economy is bound to tend towards a steady state.

• Henry George popularized the economic philosophy now known as Georgism, which declined in popularity in the second half of the 20th century.

• The London School of Economics was founded in 1895 and has produced influential economists such as Sir Roy G.D. Allen.

• Neoclassical economics developed in the 1870s and was divided into three main independent schools: the Cambridge School, the Austrian School of Economics, and the Lausanne School.

• William Stanley Jevons published Theory of Political Economy in 1871, stating that at the margin the satisfaction of goods and services decreases.

• Alfred Marshall attempted to put economics on a more mathematical footing in his 1890 work Principles of Economics.

• New Institutional Economics was founded in 1972 by Harold Demsetz and Armen Alchian, an updating of the works of Ronald Coase.

• The Austrian School of Economics advocated for the use of deductive logic and was led by Carl Menger.Overview of Economic Thought from 19th to 20th Century

• Francis Ysidro Edgeworth introduced indifference curves and the generalized utility function along with Edgeworth's Limit Theorem.

• Friedrich Hayek believed that centralizing economic decision-making would lead not only to infringements of liberty but also to depressed standards of living.

• Wilhelm Roscher founded the German historical school of economics, which promoted the cyclical theory of nations and spread through academia in Britain and the U.S.

• Thorstein Veblen, one of the best-known early critics of the "American Way," criticized materialistic culture and wealthy people who conspicuously consumed their riches as a way of demonstrating success.

• The Keynesian revolution, including the publication in 1936 of The General Theory of Employment, Interest, and Money by John Maynard Keynes, was the most important development in economic thought during the Great Depression.

• Ragnar Frisch and Jan Tinbergen pioneered Econometrics, while Leonid Kantorovich developed Linear Programming for the optimal allocation of resources.

• Ecological economics was founded in the works of Kenneth E. Boulding, Nicholas Georgescu-Roegen, Herman Daly, and others.

• Energy accounting was proposed in the early 1930s as a scientific alternative to a price system or money method of regulating society.

• Institutional economics based on the concept that the economy is a web of relationships between people with diverging interests, including monopolies, large corporations, labor disputes, and fluctuating business cycles.

• Arthur Cecil Pigou insisted on the possibility of market failures, claiming that markets are inefficient in the case of economic externalities, and the state must interfere to prevent them.

• Market Socialism was developed in the late 1920s and 1930s by economists Fred M. Taylor, Oskar R. Lange, Abba Lerner et al., combining Marxian economics with neoclassical economics after dumping the labor theory of value.

• The Stockholm School of Economics was founded by Eli Heckscher, Bertil Ohlin, Gunnar Myrdal et al. based on the works of John Maynard Keynes and Knut Wicksell.

Test your knowledge of the history of economic thought with this informative quiz. From ancient Greek philosophers to modern-day economists, this quiz covers the key figures and schools of thought that have shaped economic theory over the centuries. With questions covering topics such as the development of mercantilism, the rise of neoclassical economics, and the impact of the Keynesian revolution, this quiz will challenge and educate anyone interested in the history of economics. So put your thinking cap on and take the quiz to see