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History of Economic Ideas

This document provides an overview of the history of economic ideas, beginning with mercantilism and the physiocrats. It discusses key concepts like wealth, money, trade, colonies, land/agriculture, classes, and surplus. The document emphasizes that economic ideas are ideologically conditioned and influenced by the historical context and problems of the time. It traces the progression of thought from mercantilism and physiocracy to classical political economy with Adam Smith, David Ricardo, and Karl Marx, laying the foundations for neoclassical economic ideas.

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Shivang Mohta
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91 views12 pages

History of Economic Ideas

This document provides an overview of the history of economic ideas, beginning with mercantilism and the physiocrats. It discusses key concepts like wealth, money, trade, colonies, land/agriculture, classes, and surplus. The document emphasizes that economic ideas are ideologically conditioned and influenced by the historical context and problems of the time. It traces the progression of thought from mercantilism and physiocracy to classical political economy with Adam Smith, David Ricardo, and Karl Marx, laying the foundations for neoclassical economic ideas.

Uploaded by

Shivang Mohta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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HISTORY OF

ECONOMIC IDEAS
LECTURE 1
Ideas?
• What are economic ideas?

• Are they theories and empirics?

• What do we mean by history of economic ideas?

• Where is the Origin of Economics?

• What is Economics?

• Is this apart from Politics?


Wealth is the Centre
• Question is how to increase wealth?

• Wealth lies in precious metals.

• Precious metals meant money.

• Money as a store of value.

• Increase in the value of money can only come through


trade

• Exchange creates value


Mercantilism
• Trade regulation
• Protectionism through Import quotas, export subsidies,
tariffs and export duties on imported goods
• Merchants create wealth

• Importance of Colonies

• Promote National Power

• Guaranteed Markets
Physiocrats
• Where lies the wealth?

• Who creates wealth?

• Land and cultivation: Post hunter-gatherer, post


trading society

• Emergence of classes: landlords, merchants, peasants

• Bourgeoisie and Labourer


Ideas and Ideology
• Ideology: historically –relative character of ideas
• Analytical separation between the two is not possible
• Ideology refers to a whole system of thought, or
coordinated set of beliefs and ideas
• Ideology is a framework
• When we discuss Ideas, the reference to framework
and ideology is inseparable
• Philosophical Standpoint
Role of Ideology in Economic
Theory
• Contrasted with scientific core of the subject, by
implication being regarded as accretion of ethical
postulates and so-called value judgments

• Objective vs Subjective

• Normative vs Positive

• Metaphysical Analysis does not have a place in


scientific theory
Schumpeterian View
• Vision : Complex shape of reality and of the nature of
problems confronting mankind in any given historical
situation is ideological

• Ideology enters in pre-analytic cognition

• Ideology before Ideas

• Can we distinguish between the way in which we see


things from the way in which we wish to see things?
Behind Economic Thought
• Economic thought is ideologically conditioned

• Economic analysis is independent and objective?

• History of the formal structure of economic ideas

• Where are the propositions coming from?

• Is there independence between economic content and


meaning of propositions?

• Necessity of study of history of economic ideas


Towards Classical Political
Economy
• Mercantilists in 17th and early 18th centuries spoke in
terms of favourable balance of trade
• Idea of generation of surplus
• Favourable to firms engaged in foreign trade
• Trade meant power and wealth
• Implied state intervention in trade and economy
• This provided the background to intellectual protests
of Physiocratic School
Towards Classical Political
Economy
• Physiocrats believed that agriculture was the only
genuinely productive sector of the economy.

• Agriculture is the generator of surplus

• Agriculture was seen as multiplicative compared to


Industrial Production

• Quesnay’s Tableau Economique communicated this


finding.

• Surplus was diffused through transactions


Surplus and Power
• Where does economic power and source of wealth lie?

• Concept of class

• This was the centre stage of contribution of Classical


Political Economy by Adam Smith, David Ricardo
and Karl Marx

• Generation of Neoclassical Economic Ideas

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