History of Economic Thought

(intro)
 Reference
• The Evolution of Economic Thought
Eighth Edition
by: Stanley L. Brue and Randy R. Grant

• Fifty major economists

second edition
by: Steven Pressman
 THE VALUE OF STUDYING ECONOMICS
AND ITS HISTORY
• Such a study enhances one’s understanding of
contemporary economic thought.
Mark Blaug, “contemporary theory wears the
scars of yesterday’s problems now resolved,
yesterday’s blunders now corrected, and
cannot be fully understood except as a legacy
handed down from the past.”
 THE VALUE OF STUDYING ECONOMICS
AND ITS HISTORY
• The vast amounts of analysis and evidence that
economists have generated over the decades can
provide a closer check on irresponsible
generalizations. This should enable us to make
fewer errors than in the past when making
personal decisions and when formulating
national and local economic policies. Yet
numerous unsolved problems and unanswered
questions remain in economics. Our
understanding of past successes, errors, and dead
ends will be useful in solving these problems and
answering these questions.
 THE VALUE OF STUDYING ECONOMICS
AND ITS HISTORY
• The study of the history of economic thought
provides perspective and understanding of
our past, of changing ideas and problems, and
of our direction of movement. It helps us
appreciate that no group has a monopoly on
the truth and that many groups and
individuals have contributed to the richness
and diversity of our intellectual, cultural, and
material inheritance.
THE VALUE OF STUDYING ECONOMICS
AND ITS HISTORY
 THE FIVE MAJOR QUESTIONS

What Was the Historical Background of the School?

• Economic theory often develops in response to changes
in the environment that draw attention to new problems.
Some knowledge of the times is essential to understand
why people thought and acted the way they did. Ideas
irrelevant to society at the time they are presented tend
to wither and die, whereas those that are useful and
effective in answering at least some questions and in
solving some problems are disseminated and
popularized, thereby contributing to the stature of their
authors.
 THE FIVE MAJOR QUESTIONS
What Were the Major Tenets of the School?
• Were there patterns of uniformity in ideas of groups
of economists living in those eras? Were there
exceptions?
 THE FIVE MAJOR QUESTIONS
Whom Did the School Benefit or Seek to Benefit?
• The concern here is to identify groups of people
who develop common ideas based partly on self-
interest and partly on other considerations that
help shape their concept of how an economy
should be organized and in what direction it
should move; which groups supported each
school of thought and the groups to which each
school appealed for support, either successfully
or unsuccessfully.
 THE FIVE MAJOR QUESTIONS
How Was the School Valid, Useful, or Correct in Its Time?
Two opposing dangers:
• One is the erroneous idea that thinkers of the past were
wrong, naive, ignorant, or foolish and that we, being
wiser, have discovered the final truth.
• The other is every dominant idea of the past right, just,
and good in its time.
The possible validity of economic theories must, of course,
be related to their time and place, but they may have been
wrong or deficient even when first presented. Critical
approach, of course, must be applied to current thinking
also. Concepts that are widely accepted today are often
inapplicable to earlier times, and they may become
inappropriate in the future.
 THE FIVE MAJOR QUESTIONS
Which Tenets of the School Became Lasting
Contributions?
• It identifies the ideas presented by a school that have
been of lasting significance and thus can still be
found in current economics textbooks. Here those
contributions that “have stood the test of time” will
be sorted out from those that, although perhaps
valid in their day, outlived their usefulness as new
evidence emerged or as social conditions changed
 Attitudes and skills
Besides knowledge of different schools of economic
thought, this course is expected to develop
Attitudes:
• Critical and analytical
• Open minded
• Respect
Skills
• Excerpt the essence
• Linking history, theory and practice
• Presentation
• collaboration