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HISTORY OF ECONOMIC THOUGHT

ASSIGNMENT

300LEVEL

1. Economics did not just come to be, it dates back to decades and centuries ago.
The history of economic thought is a branch of economics that focuses on the
evolution of economic ideas and theories over time. It examines how economic
thinking has developed and changed, offering insights into the foundation of
modern economic theories.

The history of economic thought explores the foundational ideas and concepts
that have shaped economic thinking.it details the works of people like Plato,
Aristotle, Aquinas, Adam smith, David Ricardo etc it also looks at different
thoughts like the Hebrew economic thought, the roman economic thought,
mercantilism, medieval economic thought etc.

Over the centuries these thoughts have developed into new and modern theories,
but with the knowledge of history of economic thought as a course, we can date
back these ideas as far back as Jewish time in the Old Testament. Some of the
modern theories are classical economics, neoclassical economics, Keynesian
economics, behavioral economics, ecological economics etc. it also takes into
account the political, social, and philosophical influences that shaped economic
thought.

The different theorist agree and disagree on some of their collogues opinons and
that can explain the reason for so many theories, not ignoring the fact that they
took into considerations some factors present at the time they made the theories.

2. Schumpeter described history of economic thought as the sum total of all the
opinions concerning economics especially with public policies of different time
and place. Economic thought and opinions didn’t just come to be, they have a
background.

Economics is always traced back to the Hebrew and Jewish time. We stated
seeing some features of modern economics from the old testament .the
institutions available at that time was money, division of labor, market and
exchange. They gave importance to religion and ethics, their lives were controlled
by a priest. The Hebrews detailed on some thoughts that guided their lives as a
people.

Interest: this was forbidden in their time, usury is the act of lending money at a
ridiculously high interest rate. They were both forbidden in the Mosaic Law, but
were permitted only for foreigners. This was so because they believed the reason
for borrowing is for consumption. King Solomon during his reign changed the rule;
he permitted usury as a punishment for failing to pay during the agreed time.

Just price: this basically detailed that prices are fair and just, and that both the
buyer and seller are comfortable with the prices. Therefore the sellers are not
making abnormal profit and the consumers are getting the worth of their money.

Price ceiling (profit ceiling) : there is a limit to the profit attainable by the sellers.
They had a ceiling, meaning that nobody is allowed to exceed it. Their ceiling
profit was 54%.

False weight: this means that the measure doesn’t conform to the standards
established. They tried as much as possible to create laws that prohibit it.

They also detailed that exports were not allowed and when there was scarcity
hoarding wasn’t allowed. They also saw agriculture as the main occupation,
people in trade were disregarded especially buying and selling, everyone was
advised to be great farmers. The seventh and jubilee year was also taken into
consideration. The seventh year stated that they should work for six years an d
rest on the seventh. The jubilee year was as important too, it stated that on the
50th year all land bought should be returned to the owner. Land acquisition was
the main source of wealth.
THE ROMAN ECONOMIC THOUGHT.

The main interest of the romans was jurisprudence and their writing was
influenced by the Greeks. Their idea was gathered from three sources, the jurists,
the philosophers and agricultural writers.

They spoke about agriculture, money and interest rate, commercial regulations,
labor, private property etc

They were fixated on improving agriculture.it was also considered their main
occupation.it was also seen as a stabilizer of domestic economy.

Trade by barter was the medium of exchange, but bimetallism was adopted(coins
of bronze and silver).they recognized the value of money as the medium of
exchange, however usury was forbidden but there was no active law to stop it.
The authorities were actively involved in trade. All goods were inspected and if

there is any fraudulent thing caught all the goods would be seized. The romans
also discarded the idea of communalism. Everyone had the right to own their
properties.

Value was one of the major things they emphasized on, they believe that utility
should be the criteria for value, meaning that it should be driven by the
satisfaction derived from the consumption of the commodity. They stated that
some goods have greater value than their price and vice versa.

Lastly the Greeks had two main speakers, Aristotle and Plato

Plato was a Greek philosopher born in Athens. ‘The republic and the laws’ are the
most important of his economic thought. He emphasized on the state, he stated
that a state is formed through the needs of mankind, meaning that no man is self-
sufficient. He believes that there are two classes, the rulers (king and warriors)
and the ruled (artisans and unskilled workers). He believed that the ruling class
should be set apart and taught philosophy and arts of war so as to protect the
state. There are five types of government according to him: aristocracy,
timocracy, oligarchy, plutocracy, democracy.
Plato stood by division of labor, he believed labor should be divided in other to
make up a state.(a state should have a farmer, shoemaker, tailor, teacher etc). He
suggested that a state should consist of 5040 people and if it surpasses that new
colony should be formed. His view on money was very special, he understood it as
a medium of exchange but he didn’t like the fact that gold and silver were
common to men, he suggested the use of Hellenic currency. He also didn’t agree
with interest but allowed it as a punishment for delayed payment. He also
considered value as the quality of the commodity, therefore prices should be
based on the quality of the commodity.

Aristotle on the other hand laid the foundation of economics as a science. He was
the most important thinker. He provided the philosophical analysis of human
ends and means, means are instrument for production and they are valuable
because their end product is useful to people. He differed from Plato on critical
issues like the origin of the state, private property and communism.

He agreed that a state originates from the needs of mankind, but he sees it as an
enlarged household. He says a state is possible because we live together (we are
social animals). His opinion on private property is very reasonable, he detailed
that public property would not be looked after as carefully as private property. He
believes private property is superior to public property on five grounds ‘progress,
peace, pleasure and philanthropy’ .he detailed that communism is not conducive
‘any property that belongs to all belongs to none’. He also didn’t believe in price
ceiling for private sector.

3. The tenets of mercantilism can be described as the principles that form the
bases of mercantilism.

The first tenet is protectionism, refers to government policies that restrict

international trade to help domestic industries. Protectionist policies are usually
implemented with the goal to improve economic activity within a domestic
economy but can also be implemented for safety or quality concerns. This would
help to develop the economy by increasing the productivity of the domestic
industries. They can also foster this by charging high tariffs on imported goods, so
as to give local producers an upper hand.

Limiting wages, this helps to minimize the direct cost of labor and maximize the
pressure on workers to work. They believed people are lazy and need to be
coerced to work

Maximizing the use of domestic resources, it seeks to maximize the accumulation

of resources within the country and use those resources for one-sided trade.
When they import less goods due to high tariffs on imported goods or
protectionism, the use of domestic resources are going to be at its maximum.

Subsidizing exports, a sum of money granted by the state or a public body to help
an industry or business keep the price of a commodity or service low.
Governments sought to ensure that exports exceeded imports and to accumulate
wealth in the form of bullion. When export is subsidized the cost of exporting
goods e.g transportation would be relatively cheaper. This would mean the
economy would be buoyant since they export more than they import.

The events that led to the full take off of mercantilism are categorized into five
factors. Economic factor, at this time trade became very important and it changed
the foundation of socio economic set up of the middle age. It necessitated the use
of money which was available in the form of gold and silver.

Political factor, towards the end of the middle ages nationalism became a strong
force. Europe changed due to renaissance and there was a political change which
led to the emergence of powerful nations like England, france, spain etc. at this
point feudalism ended and kings became powerful which led to nations seeing
themselves as enemies.

Religious factors, a lot happened in this area that led to the reformation
movement against the Catholic Church. They faced corruption, simony, the
superiority of the pope, the fact that the bible was written in Latin etc.

Cultural factor, Europe as a whole was changing drastically, renaissance made

them see things differently, they came to a conclusion that the worldly life is
more important than the heavenly life. Money became a major factor in their
lives.

Scientific factor, great improvement and innovations were made. The discovery of
compass led to the uncovering of new locations and countries. This encouraged
the finding of several raw materials and market.

REBECCA.