Why is the History of Economic Thought Important?

Why is the History of Economic Thought Important?

• 1. So you don’t have to reinvent the wheel
• 2. To gain a broader perspective on problems and issues
• 3. To add a neat quote to a paper that might increase probability of acceptance
• 4. To sound like you know what you are talking about
• 5. It’s fun

Standard Organization of Economic Writing

• Early Preclassical (800 BC-1500)
• Pre Classical (1500-1776)
• Physiocrats Mercantilists—
• Classical (1776-1870)
• NeoClassical (1870-1990s)
• Historical and Institutionalists (1800-2000s)
• Modern

Classifications are generally after the fact and not to be taken seriously.

• Who created the term Classical?
• Who created the term neoClassical?
• Where did Schumpeter classify Adam Smith?
• Is modern economics neoClassical?

Early Preclassical (800 BC-1500)

• Chinese-Guan Zhong
• Greek Hesiod, Xenophon, Aristotle, Plato
• Arab
• Indian
• Scholastics-Aquinas

Quotation from Quan Zhong (700 BC)

• At the sight of profit, no one will ever refrain oneself from going after it; at the sight of danger or disaster, no one will remain at the spot without running away. This is human nature. Why would a merchant make a non-stop trip day and night, trying to double his speed, without considering a thousand miles a long distance? It must be the case that there is profit ahead awaiting him. Why would a fisherman go out to the sea that is hundreds of miles away and thousands of fathoms deep, sail against the tide, and venture his life on the dangerous voyage day and night? It must be the case that there is profit in the water awaiting him. Therefore, if the profit is believed to be in the mountain, no one would hesitate to climb up even if it is thousands of meters high. If the profit is believed to be in the water, no one would hold back from penetrating the water even if it might be unfathomable. Thus, a wise governor would take advantage of people's interests in seeking profits, by just allowing people to do what they want to do freely. Consequently, his people by themselves will be satisfied and content. They go forward [to pursue their interests] without anybody pushing them; they come along [to pursue their interests] without anybody pulling them. In that case, the governor will have no worries or troubles at all, while the people are getting richer and richer by doing things they opt to do. This is just like a bird hatching its eggs -- sitting on them silently, relaxed, and expecting the fledglings to come out.