HISTORY OF ECONOMICS

Arauag, Maricar Q.
Malicad, Ma. Djocelle C.
Maggay, Alexandria
HISTORY DEVELOPMENT OF ECONOMICS

• Stone Age
• Agricultural Age
• Industrial Age
STONE AGE
STONE AGE
• Began with the emergence of the first
hominids in Africa about 5 million years
ago
• People lived in small bands as a hunter-
gatherers, with simple family/trible social
structure and little capital to improve
productivity.
• For stone age hunter-gatherers
everyone lived pretty much equally at
a subsistence level
• Violent death and starvation in the winter
were constant threat

• Remaining tribes relied to stone age

“technology” that only 2 to 4 hours per day
is required to obtain food and repair
simple shelters.
• Much of the rest of their time was taken
up by pursuits such as socializing, singing
and art.
• Population growth occurred primarily by
expansion to new territory.

• Evolution of technology ( bows, arrows and

flint knives) meant better exploitation of the
existing food supply, not increased
productivity.

• Homo sapiens displaced homo-erectus

because they are more efficient at hunting
and killing, gathering and storing food and
building shelter.
• The rising population pressure in long
settled lands overfilled with people may
have contributed in the development of
animal husbandry and plant cultivation to
feed the excess population initiating the
Agricultural Age.
AGRICULTURAL AGE
AGRICULTURAL AGE
• Population growth accelerated with the
development of agriculture, but only slowly at
first.

• Agriculture appears to have originated at around

10,000 B.C. to 7000 B.C. in the river valleys of
Tigris, the Euphrates and Nile and subsequently
developed in China and Peruvian highlands.
• People began to settle permanently in one
place.

• Irrigation canals were dug and roads were

built.

• The productivity increases that made

agriculture a stable way of life.
• Agricultural meant greater reliance on just one
or a few crops so there were less diversity in food
stuffs and nutrients, reducing health.

• Cultivation of a single food also exposed the

population of a village to a catastrophic declines
as drought or infestation caused crop failure.
• Although the population grew larger, life
expectancy declined.
• INVESTMENT AND TRADE
▫ Farming takes investment. Seed must be saved,
fields plowed, and animal pens erected.
▫ Many farm investments such as building a road or
a large coral were collective, benefiting the entire
village. The returns on investment became larger
when more people were involved.
▫ specialization, trade and division of labor arose.
Towns and cities were built.
▫ Trade between region became a regular part of
economic activity.
• The cities grew and the population split
into 2 classes: the peasants and rulers
• Taxes were collected and directed toward
appropriate public works and services to
maintain progress.
• THE RISE OF ECONOMICS
Only after exchange became standardized through
the use of money could regularities be observed
and statistical analysis be performed. The

Malthusian Hypothesis
 Thomas Malthus
 Increase in productivity could provide only a
temporary boost to the standard of living.
 Law of diminishing returns was a major intellectual
contribution to economics.
INDUSTRIAL AGE
THE INDUSTRIAL AGE
• Life was difficult at the start of industrial
Revolution and often got worse those who
moved into cities to work in factories.

• As the industrial revolution took hold

productivity increases caused the average person
the standard of living to improve.
• DEMOGRAPHIC TRANSITION
▫ The process of economic development is linked to
a dramatic change in national population known
as demographic transition.

▫ When societies are in the agricultural age many

children die before reaching adulthood. High rates
of mortality are matched with high rates of fertility
so the total number of people are stable or just
slowly increasing.
• DEMOGRAPHIC CHANGE, INCOME DISTRIBUTION,
AND RISE OF MIDDLE CLASSES
▫ The bulk of the population has to move into cities.
▫ Building factories and inventing new technologies
required decentralize entrepreneur who acted as
managers on their own.
▫ People who leave the land are no longer the
control of the lord and they enter into wage labor
contract with factories.
▫ The deficit that allows starvation to remain a
threat to people’s health is not a lack of knowledge
machinery or money for investments but a lack of
economic organization.
INFORMATION AGE
THE INFORMATION AGE
• The information age is marked by the
appearance of the television and the
computer.
• The labor force is concentrated in services
rather than agriculture or manufacturing.
Timeline: History, Population growth
and Medical Care