History of Economics

1
History of Economics

• (Safe) History of the economy
• (Dangerous) History of thinking about the economy
• (Keynes scribblers)

2
John Maynard Keynes

• "The ideas of economists and political
  philosophers, both when they are right and when
  they are wrong, are more powerful than is
  commonly understood. Indeed, the world is ruled
  by little else. Practical men, who believe
  themselves to be quite exempt from any
  intellectual influences, are usually the slaves
  of some defunct economist. Madmen in authority,
  who hear voices in the air, are distilling their
  frenzy from some academic scribbler of a few
  years back. I am sure that the power of vested
  interests is vastly exaggerated compared with the
  gradual encroachment of ideas. But, soon or
  late, it is ideas, not vested interests, which
  are dangerous for good or evil"

3
Nasty, brutish and short

• How does our present world economy come about?
• Why are things the way they are?
• Leviathan The basic building blocks of a
  non-Hobbesian world
• Industry
• Finance
• Freedom from brigandism, force, and fraud
• Limited liability corporations, partnerships and
  sole proprietorships
• Government and taxation, laws and regulation
• Employment
• Unions and other pressure groups

4
History of the Economy

• Gathering and hunting
• Farming - in caves, in villages, in towns, and
  then the advent of cities
• From barter to money, the key to trade
• From brigands to feudal lords
• Entrepreneurship - the farm becomes the firrrrm
• Mercantilism
• From family enterprises to group enterprises to
  corporations
• The firm, the market and the law (anti-trust and
  regulation)
• Government economies (capitalism vs. socialism)
• Welfare (Fabianism and social democracy)

5
History of Economics, Part 1

• A list of dead white men (deal with it!) the
  classicalists
• (this is a partial list)
• Aristotle
• Smith
• Malthus
• Rickardo
• Bentham and Mill
• (Marx and Engels)

6
History of Economics, Part 2 The 140 year war
socialism vs. capitalism

• Marx and Engels
• Lenin
• Stalin
• Pigou
• Keynes and FDR
• Fabianism
• Cold war
• Korea and Vietnam
• Detente
• European social democracy

• Smith
• Marshall
• Coase and company
• Friedman
• Reaganomics
• Corporate globalization
• The Clinton compromise

1944 Bretton Woods The great compromise
7
History of Economics, Part 3Ecological
Sustainability

• Conservationism
• Resource and environmental economics (growth
  implicit)
• Georgescu-Reogen (entropy)
• Daly (steady states)
• Bruntland (sustainable development)
• Agenda 21 and Kyoto (compromised sustainability)
• and were more or less up-to-date

8
Part 1 From Ancient Economics to Mercantilism
and Industrial Technique

• Greece
• City states and country estates
• Agriculture
• Slavery
• Democracy
• Trade
• Climate change

9
Ancient Economics

• Aristotle
• Chrematistics vs. oeconomics
• Wealth getting vs. household economy
• (These are large households)

Picture www.philosophypages.com
10
Aristotelian Economics

• Property is a part of the household, and the art
  of acquiring property is a part of the art of
  managing the household for no man can live well,
  or indeed live at all, unless he be provided with
  necessaries. And as in the arts which have a
  definite sphere the workers must have their own
  proper instruments for the accomplishment of
  their work, so it is in the management of a
  household. Now instruments are of various sorts
  some are living, others lifeless in the rudder,
  the pilot of a ship has a lifeless, in the
  look-out man, a living instrument for in the
  arts the servant is a kind of instrument. Thus,
  too, a possession is an instrument for
  maintaining life. And so, in the arrangement of
  the family, a slave is a living possession, and
  property a number of such instruments and the
  servant is himself an instrument which takes
  precedence of all other instruments.

11
Aristotelian Economics

• Hence some persons are led to believe that
  getting wealth is the object of household
  management, and the whole idea of their lives is
  that they ought either to increase their money
  without limit, or at any rate not to lose it. The
  origin of this disposition in men is that they
  are intent upon living only, and not upon living
  well and, as their desires are unlimited they
  also desire that the means of gratifying them
  should be without limit.
• so, too, in this art of wealth-getting there is
  no limit of the end, which is riches of the
  spurious kind, and the acquisition of wealth. But
  the art of wealth-getting which consists in
  household management, on the other hand, has a
  limit the unlimited acquisition of wealth is not
  its business.

12
Greeks, Romans, and then

• Greek city states
• Roman slave empire
• Chinese economies
• http//www.pbs.org/wgbh/nova/sultan/media/expl_01q
  .html
• Egyptians and later Arabs
• Native American economies
• The Dark Ages of Europe

13
The Dark Ages Force and Fraud

• Its good to be a brigand
• Feudal lords are institutional brigands
• Robin Hood? A social brigand?
• The kings peace protection of common farmers
  against brigands and thieves
• Peace is productive
• Calvin and Hobbes, Locke and Smith

14
After the Dark Ages

• Feudalism, particularly after Norman Conquest
• The open field system of village agriculture
  under feudal lords (fiefs)
• Commons
• Fallow fields
• Woodlands and grazings

15
An Open Field Village Source Cloughall College,
UK
16

• Feudalism 101
• The Push-me Exploit the land, get rich and
  powerful
• The Pull-you The peasants control production.
  You have to let them live.

17
The Barons way of life A Norman Keep Castle
Hedingham, Halstead, Essex.
18
  Castle Hedingham, Halstead, Essex
19

• Magna Carta 101
• Barons have rights too
• Protect the barons peasants against the kings
  soldiers
• Protect the means of production

20
King John A weak and fearful man, but a
tyrannical one Peter of Langtoft, 'Chronicle of
England'. This manuscript was probably written
and illuminated during the reign of Edward II
(1307-1327).
21
From Magna Carta 28. No constable or other
bailiff of ours shall take corn or other
provisions from anyone without immediately
tendering money therefor, unless he can have
postponement thereof by permission of the seller.
30. No sheriff or bailiff of ours, or other
person, shall take the horses or carts of any
freeman for transport duty, against the will of
the said freeman. 31. Neither we nor our
bailiffs shall take, for our castles or for any
other work of ours, wood which is not ours,
against the will of the owner of that wood.
22
More from Magna Carta 36. Nothing in future
shall be given or taken for awrit of inquisition
of life or limbs, but freely it shall be granted,
and never denied. 39. No freemen shall be taken
or imprisoned or disseised or exiled or in any
way destroyed, nor will we go upon him nor send
upon him, except by the lawful judgment of his
peers or by the law of the land. 40. To no one
will we sell, to no one will we refuse or delay,
right or justice.
23
Pre industrial landscape change from open fields
and commons, to enclosures

• Called the Open or strip field system
• See Domesday (Doomsday) Book, 1086
• Village rule of elders, with taxation by lords
• Black Death (1350)
• Rise of privatized wool industry
• Enclosure

24
The Great Plague the Black Death

• Kills over 1/3 of Europe around 1350
• Sporadic outbreaks after, including 1688 in
  London, and in Native America after first contact
• Empties villages

25
Medieval woodcut doctor lances a plague buboe
on a patient, providing an element of relief. Of
course, this is very dangerous for the physician
26
Open fields after enclosure Source
Northumberland and Durham county councils
27
Reconstructed medieval house, West Stow, Suffolk
28
Hundreds of English villages were abandoned
during the Black Death. This is the village of
Middle Ditchford in Gloucestershire. You can see
the outlines of the buildings.
http//passmoreshistory.homestead.com/files/Unit_3
_Lesson__7_sheet_edited.ppt.
29
Medieval Enclosures and Previous Field
System Source Aerial Archeology in Essex
30
Early Industry C 1300-1600

• Cottage industry, primarily based on enclosed
  fields used as sheep farms
• Trucking from house to house
• Carding
• Spinning
• Weaving
• Transport
• Marketing
• English Wool, the first industrial commodity
• Allows growing strength of the merchants

31
Source Stephen Butt Great Glen website
32
Mercantilism

• Calvin and the Reformation
• Hobbes
• The Civil War (not the one you think)
• northern industrialists and their conscripted
  workers vs. southern aristocrats and their
  conscripted slaves and workers
• The Merchant Empire

33

• Author Kevin Phillips The Cousins Wars are
  actually One Big Long War
• The English Civil War The protestant North, for
  the merchant middle class and against feudal
  slavery versus the aristocratic South, for the
  aristocrats and to protect feudal rights
• The Revolutionary War The protestant North and
  the aristocratic South, for self-government and
  against monarchical control
• 3) The America Civil War The protestant North,
  for the industrial owner classes and against
  slavery versus the aristocratic South, for the
  plantation holders and to protect states rights

34
The Economic Importance of Calvin and Hobbes
35
The Economic Importance of Calvin and Hobbes
Actually, no.
36
Calvinism

• Predestination
• Work redeems the day
• Duty
• Thriftiness in consumption
• Weakening of established hierarchy
• The church of the merchants and manufacturers
• The Pilgrims
• Todays Baptists, Methodists, etc

37
Hobbes

• Leviathan the state as giant
• The Prince and his people
• Protect the commonwealth
• Protection from force and fraud
• The masses subscribe to his rule because that is
  what protects the peace and thereby production
• Not originally Calvinistic, but as time goes by

38
Hobbes

• (Frontispiece to
• Leviathan, 1651)

39
From Old Ashburn Scenes, Ashburnweb.com
40
Early Industry C 1600 to 1800

• Cottage industry locates on-site
• Creates Industrial hamlets
• Site specific advantages
• Mining
• Water or wind power
• Workforce
• Better transportation on good roads, then canals
• Iron, the source of early military power,
  ironworks key strategic resource
• Case study Sheffield, Yorkshire

41
Source Abbeydale Industrial Hamlet Sheffield,
Yorkshire The Tilt Forge Wheel
42
Source Shepherd Wheel Sheffield, Yorkshire The
Grinding Workshop
43
Forge sites on Sheffield rivers
44
Coal Mining

• Sea Coal from Newcastle
• Driven by deforestation of England, 1600s, 1700s
• Required energy to pump water from deep shafts
• Required centralized, organized labor force
  capitalism, unions

45
Sea Coal Photo Glen Smart
46
From the author of Robinson Crusoe

• This town of Sheffield is very populous and
  large, the streets narrow, and the houses dark
  and black, occasioned by the continued smoke of
  the forges which are always at work.
• Here they make all sorts of cutlery-ware, but
  especially that of edge tools, knives, razors,
  axes etc. and nails and here the only mill of
  the sort, which was in use in England for some
  time, was set up, for turning their grindstones.
• The manufacture of hard ware is ... much
  increased... and they talk of 30000 men employed
  in the whole.
• from A Tour Through the Whole Island of Great
  Britain by Daniel Defoe published in 1724