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Chinese economics Chou Dynasty (771-249 BC).

Development during this period includes:

increased in land productivity, growth of
monetization and specialization, emergence of
merchants, cities, and market-places, and the
higher contrast between rich and poor. The
three writers in this golden age of Chinese
philosophy were the Confucianists, the Legalists,
and the Moists.

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 He was a Chinese philosopher and
politician of the Spring and Autumn
period. The philosophy of Confucius, also
known as Confucianism, emphasized
personal and governmental morality,
correctness of social relationships, justice,
kindness, and sincerity. Confucius

Ha-fei-tzu (280-233 BC) and Kuan Chung (c.

730-645 BC) were the Legalists during the First
Millenium. “The three main precepts of these
Legalist philosophers are the strict application
of widely publicized laws (fa), the application of
such management techniques (shu) as
accountability (xingming) and “showing
nothing” (wuxian), and the manipulation of
political purchase (shi). The Legalists

The Moists regarded economics as a

branch of moral philosophy.
This group of thinkers were led by
Mo Ti (c. 479-438 BC).

The Moists
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MEDIEVAL ARAB-ISLAMIC ECONOMICS

The Muslims viewed economics as means to

an end. The end was the salvation. The
ultimate goal of human action was to earn
heaven. A person could earn heaven through
economic activities, which are part of earthly
struggles. Muslims believed in homo Islamic,
not homo oeconomicus. The Muslims were
concerned with the treatment of economic
ideas in relation to ethical and political
principles. They put little emphasis on the
validity of economic formulations.

Abu Hamid al-Ghazali was a Persian

philosopher who was one of the most
prominent and influential Muslim
philosophers, theologians, jurists, and
mystics, of Sunni Islam.
He developed “a social welfare function Abu Hamid al-Ghazali (1058-
based on consideration of utilities
(masalih) and disutilities (mafasid).
1111)
Feudalism was the economic

MEDIEVAL ARAB-ISLAMIC ECONOMICS

Feudalism was the economic organization in

the Middle Ages. The king was the repository
of all legal property rights. He assigned land
in large parcels to his favored chiefs and
noblemen, who could also assign lands to
various subtenants. Ownership means the
right to use (usufruct), which became
hereditary. Usufruct was subject to
performance of military, personal and
economic duties. Economic production was
through agriculture using primitive
techniques (small scale production). Labor
services were provided by serfs.
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Aquinas’ contribution to Aristotelian value
theory were: his affirmation of the double
measure of goods (value in use vs. value in
exchange), and introduced wants into the
price formula. According to him, price varied
with wants. He did not explain this but just
made the connection between the two
variables: “If the price exceeds the quantity of
the value of the article, or the article exceeds
the price, the equality of justice will be
destroyed; just price of things consists of a
certain estimate;” the price may be changed
depending on location, time, or risk in
carrying it from one place to another.
AQUINAS Indigentia was a regulator of value.

David Friedman argued that just price

was a substitute for the unregulated,
competitive, market price when
markets had not yet reached the stage
of development. Medieval trade
involved few buyers and sellers, a
bilateral monopoly – one seller, one
buyer. David Friedman argued that the
“just price” was a kind of arbitrated
pricelocation, time, or risk in carrying it
from one place to another.
Indigentia was a regulator of value. David Friedman
argued that just price

Henry of Friemar, value is

determined by the common need
of something scarce; as long as
there was abundance in the face
of strong
demand, indigentia would not
Henry of Friemar raise price.
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Jean Buridan described

poverty as a state in which
someone does not have that
which he desires, which means
that indigentia could be applied to
luxuries and necessities. This was
backed by ability to pay.
Jean Buridan

Gerald Odonis focused on the

scarcity and quality of human
productive skills. This led him to the
theory of wage differentials, which
recognizes relative efficiencies of
different skills and the relative cost
of acquiring those skills. Odonis
explained why an architect earned
more than a stonecutter. Scarce
labor commands higher product price
because of product scarcity. Labor
serves as a regulator of value. Gerald Odonis

Adam Smith: system buillder

He was born on June 5, 1723 in Kirkcaldy,

Scotland. His parents were Adam Smith
and Margaret Douglas. He learned Latin,
mathematics, history and writing. He died
on July 17, 1790. His classic works: The
Theory of Moral Sentiments (1759), and
An Inquiry
5 | P a ginto the Nature and causes of
the Wealth of Nations (1776).
Adam Smith
5 page Gross Domestic Product
(GDP).
The ideas in "The Wealth of Nations," provided
the genesis for the concept of gross domestic
product (GDP) and transformed the importing
and exporting business. Prior to the publication
of the "The Wealth of Nations," countries
declared their wealth based on the value of
their gold and silver deposits. However, Smith
was highly critical of mercantilism; he argued
that countries should be evaluated based on
their levels of production and commerce.

Classical Economics I
Jeremy Bentham was a philosopher,
economist, jurist, and legal reformer
and the founder of modern
utilitarianism, an
ethical theory holding that actions
are morally right if they tend to
promote happiness or pleasure (and
morally wrong if they tend to
promote unhappiness or pain)
among all those affected by them Jeremy Bentham

Malthus was an English cleric,

scholar and influential
economist in the fields of
Tomas Robert Malthus(February political economy and
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1766 – 23 December 1834) demography.
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The Classical Period Part II

Ricardian System and its

Critics
David Ricardo, an English classical economist,
first developed a theory in 1817 to explain the
origin and nature of economic rent. Ricardo
used the economic and rent to analyse a
particular question. In the Napoleonic wars
(18.05-1815) there were large rise in corn and
land prices.

1.    The Classical Doctrine of

Land Rent
Explanation of the Theory:

  Did the rise in land prices force up the price

2.    The Labor Theory of of corn, or did the high price of corn increase
Value the demand for land and so push up land
prices? Ricardo defined rent as, “that portion
The labor theory as an explanation for
of the produce of the earth which is paid to the
value contrasts with the subjective theory of
value, which says that value of a good is not landlord for the use of the original and
determined by how much labor was put into it but indestructible powers of the soil.” In his
by its usefulness in satisfying a want and its theory, rent is nothing but the producer’s
scarcity. Ricardo's labor theory of value is not surplus or differential gain, and it is found in
a normative theory, as are some later forms of land only.
the labor theory, such as claims that it
is immoral for an individual to be paid less for his
labor than the total revenue that comes from the
sales of all the goods he produces.
3. The Iron Law of Wages
Ricardo’s “Iron Law of Wages, which stated
that all attempts to improve the real income
of workers were futile and that wages
perforce remained near the subsistence
level.”

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4.  The Ricardian Theory of
Gerald Odonis
Growth
Model of Growth.
Gerald Economic growth takes
Odonis
place due to capital accumulation. Capital
accumulation is by capitalists, through
investment. Investment comes from profits.
As growth takes place, demand for food
increases, and intensive and extensive
margins of land increases. Total rents and
wages increases. This squeezes out profits, 5. The Machinery Question
which eventually falls to zero. This point is The machinery question consists of two parts:
called the “Stationary State.”.
a.    Is it possible for technical improvement
to reduce the demand for labour in the
economy as a whole?
b.    Can this technical improvement also
lower real output?
Ricardo answered yes to both questions but
noted that the conditions that would lead to
this decline in employment and in real output
6. The Theory of Comparative might be unlikely to occur. Ricardo was
concerned about the impact of technological
Advantage change on labour in the short-term. 

Between 1500 and 1750 most economists

advocated Mercantilism which promoted the
idea of international trade for the purpose of
earning bullion by running a trade surplus
with other countries. Ricardo challenged the
idea that the purpose of trade was merely to
accumulate gold or silver. With "comparative
advantage" Ricardo argued in favour of
industry specialisation and free trade. He
suggested that industry specialization 7. The Ricardo-Malthus
combined with free international trade always
produces positive results. This theory
Correspondence
expanded
During on
the 1820s, the concept
there took place of absolute
a setpiece
advantage. discussion among the exponents
intellectual
of political economy, often called the
Malthus–Ricardo debate after its leading
figures, Malthus and theorist of free
trade David Ricardo, both of whom had
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written books with the title Principles of
Political Economy. Under examination were
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The Classical Period Part III

John Stuart Mill was the most influential

John Stuart Mill (1806–73)
English language philosopher of the
nineteenth century. He was a naturalist, a
utilitarian, and a liberal, whose work explores
the consequences of a thoroughgoing
empiricist outlook. In doing so, he sought to
combine the best of eighteenth-century
Enlightenment thinking with newly emerging
currents of nineteenth-century Romantic and
historical philosophy. His most important
works include System of Logic (1843), On
Liberty (1859), Utilitarianism (1861) and An
Examination of Sir William Hamilton’s

1.    Mill’s Intellectual
Transition
One cannot properly appreciate the
development of Mill’s moral and
political philosophy without some
understanding of his intellectual
background. Mill was raised in the
tradition of Philosophical Radicalism,
made famous by Jeremy Bentham
(1748–1832), John Austin (1790–
1859), and his father James Mill
(1773–1836), which applied utilitarian
principles in a self-conscious and
systematic way to issues of
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institutional design and social reform.
 A. Economics and its
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History
Timeline

Ancient Greeks
Greeks view the human person as the
center of the universe. He is the ruler of
the world, therefore, he has obligations to
fulfill towards other human beings and his
environment .

He was a Greek philosopher, soldier,

historian, memoirist, and the author of
numerous practical treatises on subjects
ranging from horsemanship to taxation.
His three major works are the
following: Oeconomicus, Ways and Means,
and Hiero . Xenophon.

He was an Athenian philosopher during

the Classical period in Ancient Greece. He
was the founder of the Platonist school of
thought, and the Academy, the first
institution of higher learning in the
Western world. Plato.

He was a Greek philosopher and

polymath during the Classical period in
Ancient Greece. Taught by Plato, he was
the founder of the Lyceum, the
Peripatetic school of philosophy, and the
Aristotelian
10 | P a g tradition. Aristotle.