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The Evolution of Economics

The document summarizes the evolution of economics from ancient to modern times by highlighting the key contributions of influential economists throughout history. It discusses early philosophers like Plato and Aristotle and their theories on money, markets, and distribution. It then covers medieval economists including Thomas Aquinas and their work on lending and interest. Major classical economists such as Adam Smith, Jean-Baptiste Say, David Ricardo, John Stewart Mill, and Carl Menger are overviewed along with their theories on topics ranging from national wealth to price formation. Two giants of modern economics, John Maynard Keynes and Milton Friedman, are also summarized for their influential ideas including Keynesian economics and monetarism.

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Shena Mae Alicante
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94 views4 pages

The Evolution of Economics

The document summarizes the evolution of economics from ancient to modern times by highlighting the key contributions of influential economists throughout history. It discusses early philosophers like Plato and Aristotle and their theories on money, markets, and distribution. It then covers medieval economists including Thomas Aquinas and their work on lending and interest. Major classical economists such as Adam Smith, Jean-Baptiste Say, David Ricardo, John Stewart Mill, and Carl Menger are overviewed along with their theories on topics ranging from national wealth to price formation. Two giants of modern economics, John Maynard Keynes and Milton Friedman, are also summarized for their influential ideas including Keynesian economics and monetarism.

Uploaded by

Shena Mae Alicante
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The Evolution of Economics

The following are some economists who had major contributions to the development of
economics from the ancient to the modern times.

1. Ancient Period

Plato (427- 347 B.C.)

Plato, a Greek philosopher, was one of the most creative and influential thinkers
in Western Philosophy. Son of wealthy and influential Athenian parents, he began his
political career as a student of Socrates.
Plato’s writing were in dialogue form; philosophical ideas were advanced,
discussed, and criticized in the context of conversation or debate involving two or more
persons. He was concerned with the division of labor. Economic theories: Theory of
Money- According to Plato, money is used as a medium of exchange in buying goods
and services. Theory of Market – In this market theory, Plato proposed equal or just
distribution of opportunities to individuals. He was against the practice of usury due to the
social status of the people. According to him, the rich become richer and the poor
becomes poorer.

Aristotle (384 – 322 B.C.)

Aristotle treatment of economic topics is a mere footnote as compared to the scale


of his contributions to other subjects, but his fragmentary comments were destined to
have a major influence in later ages, and it can be argued that he was one of the first
thinkers. His main concern was to outline how one could live a moderate and virtuous life
in harmony with the interest of society.

Among his famous contributions include:


• Fairness in exchange
• Monopoly
• Use Value and exchange value

2. Medieval Period

Thomas Aquinas (1225 – 1274)

Thomas Aquinas was born in the Italian town of Aquino. He joined the
Dominican Order which along with the Franciscan Order represented a
revolutionary challenge to the well-established clerical system of early medieval
Europe.
In his writings, Aquinas combined the ideas of Aristotle with Christian laws,
thereby laying the groundwork for the religiously based medieval thought known
as scholasticism.
Among his contributions were:

• Lending and Interest


• The Just Price

3. Classical Period

Adam Smith (1723 – 1790)

Adam Smith was born in Kirkcaldy, Fife, Scotland and was educated at the
university Glasgow and Oxford. Smith was the Scottish political economist and
philosopher who became famous for his influential book.

Among his contributions were:

• Nation Wealth Individualism


• Subsistence Theory of Wages
• Taxation

Jean-Baptiste Say (1767 – 1832)

French economist J.B. Say is most commonly identified with Say’s Law, which
states that supply creates its own demand. Over the years Say’s Law has been embroiled
in two kinds of controversy. The first is over its authorship, the second over what it means,
and given its meaning, whether it is true.

David Ricardo (1772 – 1823)

David Ricardo, a British economist, was born in London, the third among 17
children of Dutch Jewish banker. He had little formal education because he was forced
to join parents’ business at the age of 14. Ricardo offered several theories based on
his studies of the long-range distribution of wealth. He feared increasing population
would lead to a shortage of productive land.
Among his principal theories can be summarized as follows:

• Classical theory of Capital


• Radical Economics
• View of Foreign Trade
• View of the Free Trade
• View of Subsistence Theory of Wages

John Stewart Mill (1806-1873)


John Stewart Mill, A British philosopher and political economist, was born in
Pentonville, London and was educated entirely by his father, James Mill. Mill worked for
the British East India Company, but he was also a Liberal Member of Parliament.

Among of his works and contributions in the field of economics are as follows:

• Utilitarianism
• Views on Capital
• Wage
• Capital

Carl Menger (1840-1921)

Carl Menger was born in Galicia, a part of Austria-Hungary (Southern Poland) on


February 28, 1840. Carl studied economics at the University of Prague and also at the
University of Vienna from 1859 – 1863. He later received a law degree in 1867 from the
University of Krakow.
Carl Menger was considered as the father of Austrian economics. He has
influenced Austrian and worldwide economic study in many ways. Menger’s theory of
value, price, and distribution is the best we have up to now. Here the Mengerian system
of price theory will be discussed since it is in this theory that constitutes the core of
Austrian economic theory. Schumpeter went on to say “Menger’s essential aim is to
discover the law of price formation. As soon as he succeeded in basing the solution of
the pricing problem, in both its demand and supply aspects, on an analysis of human
needs and on what Wieser has called the principle of marginal utility, the whole complex
mechanism of economic life suddenly appeared to be unexpected and transparently
simple.

4. Modern Period

John Menard Keynes (1883 – 1946)

Keynes was the son of an economist, John Neville Keynes. He studied Economics
and Mathematics at Eton College and the University of Cambridge. He began his
career in the India Office of the British government and wrote a highly regarded book,
Indian Currency and Finance (1913).
Keynes was the most influential as well as the most controversial economist of the
first half of the 20th century. During the worldwide depression in the 1930’s, he argued
that preservation of capitalism required a greater economic role of government,
including large public work programs financed by deficit spending. Some of his
proposals were adopted as part of President Franklin D. Roosevelt’s New Deal, but
he was criticized by conservative economist and politicians for he proposed that no
self-correcting mechanism to lift an economy out of depression which did not conform
to the then generally accepted notion that recessions were self-correcting. Since a
business investment necessarily fluctuated, it could not be depended on to maintain
a high level of employment and a steady flow of income through the economy. Keynes
proposed that government spending must compensate for insufficient business
investment in times of recession.

Keynes also expressed his economic view on:

• Capital
• Money Supply

Milton Friedman (1912 -)

Milton Friedman is the twentieth century’s most prominent economist advocate of


free markets. He was born in 1912 to Jewish Immigrants in New York City. He attended
Rutgers University, where he received his B.A. at the age of twenty, then went on to earn
his M.A. from the University of Chicago in 1933 and his Ph.D. from Columbia University
in 1946. In 1951 Friedman won the John Bates Clark Medal honoring economists under
age forty for outstanding achievement.
Friedman is popularly recognized for monetarism. Defying Keynes and most of the
academic establishment of the time, Friedman presented evidence to resurrect the
quantity theory of money – the idea that the price level is dependent upon the money
supply. Friedman stated that that in the long run, increased monetary growth increases
prices but has little or no effect on output.

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