History of Economic ThoughtECON 311-001

Boise State University

Fall 2015

Professor D. Allen Dalton

Syllabus• Texts• Expectations of Students• Grading

• Papers• Weekly Problem Sets and Take-home Final• Class participation

• On-line Resources• Class Website• Resources• Grading Guidelines (Papers and Participation)• Course Outline and Readings

Course Introduction

Economics

“Men undoubtedly behaved economically for many centuries before they undertook to analyze economic behavior and arrive at explanatory principles. At first, this analysis was more implicit than explicit, more inarticulate than articulate, and more philosophical and political in mode than economic. But in the face of ubiquitous and inevitable scarcity, the study, in various forms and for various proximate purposes, went on.”

- Joseph Spengler and William Allen, Essays in Economic Thought: Aristotle to Marshall, Rand McNally, 1960, p. 2.

Why study the History of Economic Thought?

Why should one study the History of Economic Thought?

A.Isn’t modern economic theory (as found in textbooks and taught in courses) the apex of the progressive development of the science?

B.As a positive science, don’t economists shed false theories and adopt true theories?

If A and B are true, why study the mistakes of the past?

Why should one study the History of Economic Thought?

“Come to appreciate that most modern ideas have long histories - that there is ‘little new under the sun.’

Recognize that many theories are short-lived and that they often reflect the concerns of a particular time period, and thereby come to a critical understanding of contemporary theory.”

- Bruce Caldwell, Syllabus, History of Economic Thought, EC 555, Fall 2003, UNC-Greensboro.

Why should one study the History of Economic Thought?

“…the past has a useful purpose and, yes, study of the history of economics is important for the contemporary student of economics.”

- Vaggi and Groenewegen, “Prologue,” p.xv,

A Concise History of Economic Thought

My Biases

• Politics– Individualist Anarchist– Free Market Anti-capitalist

• Economics– Austrian Eclectic

Acquiescence and Innovation

• "Acquiescence means accepting the framing of a problem, and working on it from within the terms of the frame. It's a kind of mental economy, but also a kind of sloth." – Badim, in Kim Stanley Robinson's Aurora

Jewish, Greek and RomanContributions

Judaism: Scarcity and Interest

Genesis 3: 17-19

... "Because you listened to your wife and ate from the tree about which I commanded you, 'You must not eat of it,' "Cursed is the ground because of you; through painful toil you will eat of it all the days of your life. It will produce thorns and thistles for you, and you will eat the plants of the field. By the sweat of your brow you will eat your food until you return to the ground, since from it you were taken; for dust you are and to dust you will return."

Interest prohibition

• Exodus 22: 25-27

• Leviticus 25: 35-37

• Deuteronomy 23: 19-20

• Psalm15

Greeks: Specialization, Organization, and Justice in

Exchange

Hesiod and Xenophon• Hesiod

– Works and Days• Scarcity, agricultural management

• Xenophon– Oikonomikos

• Household/Estate management• Efficient organization

– Extension to the city-state and empires– Markets are peripheral

Plato and Aristotle

Plato•Problem of ethics lies in apparent conflict between individual pleasure and social good.•Justice defined as co-operation of the parts in a whole.

Aristotle•Ethics is concerned with individual happiness; Politics is concerned with collective happiness.

Plato• Plato

– first recognizable economic theory • explanation of the division of labor in The

Republic

– Nature of the ideal state – The Laws• exclusion of traders and workers from

citizenship; slavery taken for granted• limitation of markets, private property and

money

Aristotle• Aristotle

– Origin of state does not arise from Plato’s patriarchal family, nor the Sophist “social contract,” but exchange (self-sufficiency) ties men together.

– Defense of private property against Plato’s communism focuses on incentives, peaceful coexistence, and the opportunity to act benevolently.

– Slavery defended on basis of natural inequality.

• (contra Cynics and Epicureans)

Aristotle• Aristotle on Wealth-Getting

– Differentiates between natural and unnatural (agricultural and barter v. trade)

– Differentiates between wealth and money

– Theoretical explanation origin of money• money arises as medium of exchange to solve the

problems of barter• money arises as a commodity with preexisting

(intrinsic) value

– Condemnation of usury (“unnatural” use of money)

Aristotle• Aristotle on Justice and Exchange

– Types of Justice• distributive (spoils of war)• rectificatory (compensation for loss)• commutative or reciprocal (exchange)

– What is Aristotle’s theory of exchange? Of justice in exchange?

• Is exchange an exchange of equals?• Is justice in exchange an exchange of equals?• Is money the medium by which unequals become

“equalized”?

Philosophy• Epicureanism

– Emphasis on happiness, pain and pleasure (foreshadows later utilitarianism).

• Stoicism– View that human science is working out of

that which is determined by the supreme intelligence leads to natural law view of nature and human action.

Romans: Law and Contract

Law and Economics• Jurisprudence and Legal Concepts

– Adoption of Stoic natural law into legal codes– Law of Corporation– Law of Contract

• Justice in exchange as voluntary agreement• Fraud

• Land and Political Economy– Commerce v. Agriculture– Slavery and serfdom– Roman conquest and