Having Fun with History of Economic Ideas

Description

This is an entry level text (popular science) in history of economic thought for readers aged 15-99. It is the authors’ responsibility if you do not follow each chapter smoothly. As such, some basic economics knowledge would be helpful, but not required. We have three aims in mind for this book: to be interesting, entertaining, and thought-provoking. In some cases, we are opinionated, but intentionally so in order to alert readers to form their own views. History of ideas does not make us smarter nor richer, but it can reduce our ignorance and the “banality of evil” - a term Hannah Arendt referred to people who lack self-reflection, “He did his duty...; he not only obeyed orders, he also obeyed the law.” What is our basic mentality behind writing this book? We invite Isaac Newton to speak on our behalf: “I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.” Yes, the great (expanding) ocean of truth in history of economic ideas lays undiscovered before all of us: the sea gets deeper as you go further into it, according to a Venetian proverb. This book is free of charge, it is meant to share knowledge with wider audience. Bon appétit! To readers 2 About the authors 3 Acknowledgements 4 I Fun and useful 1 Welcome! 8 2 Dead men’s wrong ideas? 18 II Pioneers and contenders 3 Wealth and power: mercantilism 30 4 The physiocrats and law of nature 39 III Classical school 5 Adam Smith and the invisible hand of the market mechanism 47 6 Thomas Malthus and effectual demand 56 7 David Ricardo and differential rent 66 8 John Stuart Mill and the peak time of the classic school 77 IV Socialism and the old historical school 9 Antagonists to the classic school and the rise of socialism 86 10 Karl Marx and the collapse of capitalism 92 11 The German historical school and protectionism 99 6 V Marginal analysis and the neo-classical school 12 The marginal school in France 110 13 The marginal school in Germany, Austria, and the U.K. 120 14 Application and extension of the marginal school 128 15 Alfred Marshall and the foundation of the neo-classical school 136 16 The Lausanne school: Léon Walras and Vilfredo Pareto 145 17 Theories of imperfect competition 154 VI Contemporary trends 18 Bourgeoning of mathematical economics 162 19 The institutional school 170 20 Keynes and Keynesian economics 179 21 Early Austrian school 189 22 The rise of the Chicago school 198 Epilogue: Economic ideas in retrospect 206 Appendices A Further readings 210 B Nobel Prize in economics, 1969-2020 213