View source for History of economic thought

{{Short description|Study of the development of economic thought}}
{{for|the study of past economic situations|Economic history}}
{{globalize|date=January 2015}}
{{Use dmy dates|date=January 2025}}
{{Economics sidebar|history}}
The '''history of economic thought''' is the study of the philosophies of the different thinkers and theories in the subjects that later became [[political economy]] and [[economics]], from the [[ancient world]] to the present day.

This field encompasses many disparate [[schools of economic thought]]. Ancient Greek writers such as the philosopher [[Aristotle]] examined ideas about the art of wealth acquisition, and questioned whether property is best left in private or public hands. In the [[Middle Ages]], [[Thomas Aquinas]] argued that it was a [[Morality|moral]] obligation of businesses to sell goods at a [[just price]].<ref>{{Cite web |last=Jayabalan |first=Kishore |date=2019-03-19 |title=Thomas Aquinas on the Just Price |url=https://www.thepublicdiscourse.com/2019/03/49361/ |access-date=2023-07-28 |website=Public Discourse |language=en-US}}</ref>

In the Western world, economics was not a separate discipline, but part of [[Philosophy and economics|philosophy]] until the 18th–19th century [[Industrial Revolution]] and the 19th century [[Great Divergence]], which accelerated economic growth.<ref>{{Cite web |url=http://www.historyhaven.com/APWH/unit%204/Rise%20of%20Western%20Dominance.htm |title=historyhaven.com |access-date=2015-09-15 |archive-url=https://web.archive.org/web/20150930045855/http://www.historyhaven.com/APWH/unit%204/Rise%20of%20Western%20Dominance.htm |archive-date=2015-09-30 |url-status=live }}</ref>

==Ancient economic thought (before 500 AD)==
{{Main|Ancient economic thought}}

===Ancient Greece===
[[Hesiod]] active 750 to 650 BC, a [[Boeotian]] who wrote the earliest known work concerning the basic
origins of economic thought, contemporary with [[Homer]].<ref>{{Cite web |last=Robbins |first=Leslie |date=2023-07-01 |title=During What Time Period Was Homer and Hesiod Writing in Ancient Greece? |url=https://historydisclosure.com/during-what-time-period-was-homer-and-hesiod-writing-in-ancient-greece/ |access-date=2023-07-28 |website=HistoryDisclosure |language=en-US}}</ref> Of the 828 verses in his poem [[Works and Days]], the first 383 centered on the fundamental economic problem of scarce resources for the pursuit of numerous and abundant human ends and desires.

===China===
[[Fan Li]] (also known as Tao Zhu Gong) (born 517 BCE),<ref name=yinyang /> an adviser to King [[Goujian]] of Yue, wrote on economic issues and developed a set of "golden" business rules.<ref name=apb /> [[Discourses on Salt and Iron]] in 81 BCE was one of the first recorded debates of [[state intervention]] and [[laissez faire]].<ref>Nishijima 1986, pp. 587–588</ref>

===Ancient India===

Hindu texts [[Vedas]] (1700–1100 BC) contain economic ideas but [[Atharvaveda]] (1200 BC) is most vocal about such ideas.<ref>{{cite book|title=Kautilya Arthshastra and the Science of Management: Relevance for the Contemporary Society|page=48|author=S.D.Chamola|publisher=Hope India Publications}}</ref>

[[Chanakya]] (born 350 BC) of the [[Maurya Empire]], authored the ''[[Arthashastra]]'' along with several Indian sages, a treatise on statecraft, economic policy and military strategy.<ref>{{cite journal |journal=Journal of the American Oriental Society|author=I. W. Mabbett |title=The Date of the Arthaśāstra |volume=84 |date=1964 |issue=2 |pages=162–169|doi=10.2307/597102 |jstor=597102 }}</ref>

The Arthashastra posits the theory that there are four necessary fields of knowledge: the Vedas, the [[Anviksiki|Anvikshaki]] (philosophy of Samkhya, Yoga and [[Lokayata]]), the science of government, and the science of economics (Varta of agriculture, cattle, and trade). It is from these four that all other knowledge, wealth, and human prosperity is derived.<ref>{{citation | last=Olivelle | first = Patrick | author-link=Patrick Olivelle | title = King, Governance, and Law in Ancient India: Kauṭilya's Arthaśāstra | year=2013 | publisher = Oxford University Press | location = Oxford UK | isbn = 978-0199891825| url = https://books.google.com/books?id=6MlgU0oQb4sC |pages=66–69}}</ref>

===Greco-Roman world===
[[File:Sanzio 01 Plato Aristotle.jpg|thumb|upright=.8|[[Plato]] and his pupil [[Aristotle]] had an enduring effect on [[Western philosophy]].]]

[[Ancient Athens]], an advanced city-state civilisation and progressive society, developed an embryonic model of democracy.<ref>David Held, ''Models of Democracy'' (Polity, 2006) 3rd Ed., pp. 11 ff.</ref>

[[Xenophon]]'s (c. 430–354 BC) ''[[Oeconomicus]]'' (c. 360 BC) is a [[dialogue]] principally about household management and agriculture.

[[Plato]]'s dialogue ''[[The Republic (Plato)|The Republic]]'' (c. 380–360 BC) describing an ideal [[city-state]] run by philosopher-kings contained references to [[specialization of labor]] and to [[production (economics)|production]]. According to [[Joseph Schumpeter]], [[Plato]] was the first known advocate of a [[credit theory of money]] that is, money as a unit of account for debt.<ref>Chpt 1 Graeco-Roman Economics, ''History of Economic Analysis'', [[Joseph Schumpeter]], (1954)</ref> Plato also argued that collective ownership was necessary to promote common pursuit of the common interest, and to avoid the social divisiveness that would occur "when some grieve exceedingly and others rejoice at the same happenings."<ref>Republic, 462b-c</ref>

[[Aristotle]]'s ''[[Politics (Aristotle)|Politics]]'' (c. 350 BC) analyzed different forms of the state ([[monarchy]], [[aristocracy]], [[Constitution|constitutional government]], [[tyranny]], [[oligarchy]], and [[democracy]]) as a critique of Plato's model of rule by philosopher-kings. Of particular interest for economists, Plato provided a blueprint of a society based on common ownership of resources. Aristotle viewed this model as an oligarchical [[anathema]]. Though Aristotle did certainly advocate holding many things in common, he argued that not everything could be, simply because of the "wickedness of human nature".<ref name="Book II, Part V">Aristotle, ''Politics'' [http://classics.mit.edu/Aristotle/politics.html Book II, Part V] {{Webarchive|url=https://web.archive.org/web/20110629092123/http://classics.mit.edu//Aristotle/politics.html |date=2011-06-29 }}</ref>

"It is clearly better that property should be private", wrote Aristotle, "but the use of it common; and the special business of the legislator is to create in men this benevolent disposition." In ''Politics'' Book I, Aristotle discusses the general nature of households and market exchanges. For him there is a certain "art of acquisition" or "wealth-getting", which is necessary and honourable for one's household, while exchange on the retail trade for simply accumulation is "justly censured, for it is dishonorable".<ref>Aristotle ''Politics'' [http://classics.mit.edu/Aristotle/politics.html Book I, Part X] {{Webarchive|url=https://web.archive.org/web/20110629092123/http://classics.mit.edu//Aristotle/politics.html |date=2011-06-29 }}</ref> Writing of the people, Aristotle stated that they as a whole thought acquisition of wealth (''chrematistike'') as being either the same as, or a principle of ''oikonomia'' ("household management" – ''oikonomos''),<ref>Book I, Part III</ref><ref name="Vidal-Naquet">{{cite book |url= https://books.google.com/books?id=ekqCOGr1_NAC&q=household+management+-+Ancient+Greek&pg=PA162 |author1= M. M. Austin |last2= Vidal-Naquet |first2= Pierre |title= Economic and Social History of Ancient Greece| year= 1980|publisher= University of California Press | access-date= 2012-04-11 |isbn= 9780520042674}}</ref> with ''oikos'' meaning "house" and with (''themis'' meaning "custom") ''nomos'' meaning "law".<ref name="Amemiya">{{cite book |last= Amemiya |first= Takeshi |title=Economy and Economics of Ancient Greece|publisher=Taylor & Francis, 7 May 2007}}</ref> Aristotle himself highly disapproved of [[usury]] and cast scorn on making money through a [[monopoly]].<ref>Aristotle, ''Politics'' [http://classics.mit.edu/Aristotle/politics.html Book I, Part XI] {{Webarchive|url=https://web.archive.org/web/20110629092123/http://classics.mit.edu//Aristotle/politics.html |date=2011-06-29 }}</ref>

Aristotle discarded Plato's credit theory of money for [[metallism]], the theory that money derives its value from the purchasing power of the commodity upon which it is based:

{{blockquote|Indeed, riches is assumed by many to be only a quantity of coin, because the arts of getting wealth and retail trade are concerned with coin. Others maintain that coined money is a mere sham, a thing not natural, but conventional only, because, if the users substitute another commodity for it, it is worthless, and because it is not useful as a means to any of the necessities of life, and, indeed, he who is rich in coin may often be in want of necessary food. But how can that be wealth of which a man may have a great abundance and yet perish with hunger, like [[king Midas|Midas]] in the fable, whose insatiable prayer turned everything that was set before him into gold?.|Aristotle<ref>Aristotle, ''Politics'' [http://classics.mit.edu/Aristotle/politics.html Book I, Part IX] {{Webarchive|url=https://web.archive.org/web/20110629092123/http://classics.mit.edu//Aristotle/politics.html |date=2011-06-29 }}</ref>}}

==Middle Ages==
===Thomas Aquinas===
[[File:Gentile da Fabriano 052.jpg|thumb|upright=.7|[[Thomas Aquinas]] (1225–1274) taught that high prices in response to high [[demand]] is theft.]]

[[Thomas Aquinas]] (1225–74) was an Italian theologian and economic writer. He taught in both [[Cologne]] and Paris, and was part of a group of Catholic scholars known as the [[Schoolmen]], who moved their enquiries beyond theology to philosophical and scientific debates. In the treatise ''[[Summa Theologica]]'' Aquinas dealt with the concept of a [[just price]], which he considered necessary for the reproduction of the social order. Similar in many ways to the modern concept of [[long-run equilibrium]], a just price was just sufficient to cover the [[costs of production]], including the maintenance of a worker and his family. Aquinas argued it was immoral for sellers to raise their prices simply because buyers had a pressing need for a product.

Aquinas discusses a number of topics in the format of questions and replies, substantial tracts dealing with Aristotle's theory. Questions 77 and 78 concern economic issues, primarily what a [[just price]] might be, and the fairness of a seller dispensing faulty goods. Aquinas argued against any form of cheating and recommended always paying compensation in lieu of service obtained as it utilized resources. Whilst human laws might not impose sanctions for unfair dealing, [[divine law]] did, in his opinion.

===Duns Scotus===
One of Aquinas' main critics<ref name="Mochrie 2005 p.5">Mochrie (2005) p. 5</ref> was [[Duns Scotus]] (1265–1308), originally from [[Duns, Scottish Borders|Duns]] Scotland, who taught in Oxford, Cologne, and Paris.  In his work ''[[Sententiae]]'' (1295), he thought it possible to be more precise than Aquinas in calculating a just price, emphasizing the costs of labor and expenses, although he recognized that the latter might be inflated by exaggeration, because buyer and seller usually have different ideas of a just price. If people did not benefit from a transaction, in Scotus' view, they would not trade. Scotus said merchants perform a necessary and useful social role by transporting goods and making them available to the public.<ref name="Mochrie 2005 p.5"/>

===Jean Buridan===
[[Jean Buridan]] ({{IPA|fr|byʁidɑ̃|lang}}; [[Latin]] ''Johannes Buridanus''; c. 1300 – after 1358) was a [[French people|French]] [[priest (Catholic Church)|priest]]. Buridanus looked at money from two angles: its metal value and its purchasing power, which he acknowledged can vary. He argued that aggregated, not individual, [[demand]] and [[supply (economics)|supply]] determine market prices. Hence, for him a just price was what the society collectively and not just one individual is willing to pay.

===Ibn Khaldun===
{{See|History of Islamic economics}}
[[File:Ibn Khaldoun-Kassus.jpg|thumb|upright=.6|[[Ibn Khaldun]] (1332–1406)]]

{| class="toccolours" style="float: right; margin-left: 1em; margin-right: 1em; font-size: 85%; background:#c6dbf7; color:black; width:30em; max-width: 40%;" cellspacing="5"
| style="text-align: left;" | It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.<ref>Muqaddimah 2020 p 355</ref>
|-
| style="text-align: left;" | '''''Ibn Khaldun on [[taxes]] and the ideals of [[Governance]]'''''
|}
Until [[Joseph J. Spengler]]'s 1964 work "Economic Thought of Islam: Ibn Khaldun",<ref>
{{cite journal
| first=Joseph J.
| last=Spengler
| title=Economic Thought of Islam: Ibn Khaldun
| journal=Comparative Studies in Society and History
| volume=6
| issue=3
| series=Comparative Studies in Society and History vol 6 no. 3
| pages=268–306
| jstor=177577
| doi=10.1017/S0010417500002164
| date=April 1964  
| s2cid=143498971
}}</ref> [[Adam Smith]] (1723–1790) was considered the "Father of Economics". Spengler highlighted the work of Arab scholar [[Ibn Khaldun]] (1332–1406) of Tunisia, though what influence Khaldun had in the West is unclear. [[Arnold J. Toynbee|Arnold Toynbee]] called Ibn Khaldun a "genius" who "appears to have been inspired by no predecessors and to have found no kindred souls among his contemporaries...and yet, in the Prolegomena ([[Muqaddimah|Muqaddimat]]) to his Universal History he has conceived and formulated a philosophy of history which is undoubtedly the greatest work of its kind that has ever yet been created by any mind in any time or place."<ref>
{{cite book
| title=A Study of History
| volume=III
| first=Arnold J.
| last=Toynbee
| publisher=Royal Institute of International Affairs and Oxford University Press
| page=321
| asin=B000OF48G8
}}</ref> Ibn Khaldoun expressed a theory of the [[Biological life cycle|lifecycle]] of civilizations, the [[Division of labour|specialization]] of labor, and the value of money as a means of exchange rather than as a store of inherent value. His ideas on taxes were similar to [[supply-side economics]]' [[Laffer curve]], which posits that beyond a certain point higher [[taxes]] discourage [[production (economics)|production]] and actually cause revenues to fall.<ref name="lovewell">
{{cite web|
title=Advancing Economic Thought: Rise and Fall: Ibn Khaldun and the Effects of Taxation: Ibn Khaldun and his Influence |
url=http://www.ryerson.ca/~lovewell/khaldun.html |
archivedate=2003-06-08 |
first=Mark |
last=Lovewell
| via      = Wayback Machine
| archive-url    = https://web.archive.org/web/20030608172026/http://www.ryerson.ca/~lovewell/khaldun.html
| access-date    = 9 Apr 2015
| quote          = "This article, which is a supplement to Understanding Economics (McGraw-Hill Ryerson, 1998), describes the early Arab historian Ibn Khaldun's views of taxation, and their parallels with the modern-day Laffer Curve."
}}
</ref>

===Nicole Oresme===
[[File:Oresme.jpg|thumb|upright=.7|[[Nicole Oresme|Nicolas d'Oresme]] (1320–1382)]]

French philosopher and priest [[Nicole Oresme|Nicolas d'Oresme]] (1320–1382) wrote ''De origine, natura, jure et mutationibus monetarum'', about the origin, nature, law, and alterations of money. It is one of the earliest manuscripts on the concept of money. His treatise argues how money or currency belongs to the public, and that the government or sovereign of the economy has no right to control the value of the currency just so that they can profit from it.

===Antonin of Florence===
Saint [[Antoninus of Florence]] (1389–1459), [[Dominican Order|O.P.]], was an [[Italian people|Italian]] [[Dominican Order|Dominican]] [[friar]], who became [[Roman Catholic Archdiocese of Florence|Archbishop of Florence]]. Antoninus' writings address social and economic development and argued that the state has a duty to intervene in mercantile affairs for the common good, and an obligation to help the poor and needy. In his primary work, "summa theologica" he was mainly concerned about price, justice and [[capital (economics)|capital]] theory. Like [[Duns Scotus]], he distinguishes between the natural value of a [[good (economics)|good]] and its practical value. The latter is determined by its suitability to satisfy needs (virtuositas), its rarity (raritas) and its subjective value (complacibilitas). Due to this subjective component, there cannot only be one just price, but a bandwidth of more or less just prices.

==Mercantilism and international trade (16th to 18th century)==
[[File:Mirabeau père.jpg|upright=.7|thumb|[[Victor de Riqueti, marquis de Mirabeau|Marquis de Mirabeau]] (1715–1789)]]
{{Main|Mercantilism}}
{{Key people|Victor de Riqueti, marquis de Mirabeau|Jean Bodin|Nicolaus Copernicus|Edward Misselden|Gerard Malynes|Thomas Mun|William Petty|Philipp von Hörnigk|Charles Davenant|Josiah Child|Jean-Baptiste Colbert|Pierre Le Pesant, sieur de Boisguilbert|James Steuart (economist)|Leonardus Lessius}}
''Mercantilism'' dominated Europe from the 16th to the 18th century.<ref>"Mercantilism", Laura LaHaye ''[[The Concise Encyclopedia of Economics]]'' (2008)</ref> Despite the [[Localism (politics)|localism]] of the Middle Ages, the waning of [[feudalism]] saw new national economic frameworks begin to strengthen.  After the 15th century voyages of [[Christopher Columbus]] and other explorers opened up new opportunities for trade with the [[New World]] and Asia, newly-powerful monarchies wanted a more powerful military state to boost their status.  [[Mercantilism]] was a political movement and an economic theory that advocated the use of the state's military power to ensure that local markets and supply sources were protected, spawning [[protectionism]].

[[File:Lorrain.seaport.jpg|thumb|French seaport during the heyday of mercantilism]]
Mercantile theorists held that [[international trade]] could not benefit all countries at the same time. Money and precious metals were the only source of riches in their view, and limited resources must be allocated between countries, therefore [[tariff]]s should be used to encourage exports, which bring money into the country, and discourage imports which send it abroad.  In other words, a positive [[balance of trade]] ought to be maintained through a surplus of exports, often backed by military might. Despite the prevalence of the model, the term [[mercantilism]] was not coined until 1763, by [[Victor de Riqueti, marquis de Mirabeau]] (1715–1789), and popularized by [[Adam Smith]] in 1776, who vigorously opposed it.

===School of Salamanca===
{{Main|School of Salamanca}}

In the 16th and 17th centuries the [[School of Salamanca]] in Spain developed economic theory, one of the earliest forms of a study in the economic tradition of the field of economics. Even if his doctrine was influenced by the [[thomism|philosophy of Thomas Aquinas]], it sometimes renew the economic thought to such an extent<ref>See for example {{cite journal|language=en|last1=Decock|first1=Wim|title=Lessius and the Breakdown of the Scholastic Paradigm|journal=Journal of the History of Economic Thought|volume=31|page=57–78|date=2009|doi=10.1017/S1053837209090051 |url=https://orbi.uliege.be/bitstream/2268/252887/1/JHET_Lessius_and_the_breakdown_of_the_scholastic_paradigm.pdf }}</ref> that it was defined as "pro-market, pro-hard money, anti-state in many ways, pro-property, and pro-merchant to a surprising extent."<ref>{{Cite journal |last=Jace |first=Clara |date=2019-04-13 |title=An economic theory of economic analysis: the case of the School of Salamanca |journal=Public Choice |language=en |volume=181 |issue=3–4 |pages=375–397 |doi=10.1007/s11127-019-00662-y |issn=1573-7101 |s2cid=159220971}}</ref><ref name=":02">{{Cite web |last=Grice-Hutchinson |first=Marjorie |date=1952 |title=The School of Salamanca |url=https://mises.org/library/school-salamanca |access-date=2022-01-02 |publisher=Mises Institute |language=en}}</ref> There was also the development of an early form of monetarism in response to the introduction of New World gold into the Spanish economy.

With their reflexions on Contract law and fairness in exchange,{{sfn|Decock|2013|p=507–624}} the members of the School of Salamanca were often confronted with the concept of value. Thus observing the effect of American silver and gold arrivals in Spain, namely lessening of their values and augmentation of prices, [[Martín de Azpilcueta]] established the idea of a value-scarcity, first form of the [[quantity theory of money]].<ref>{{cite book|language=en|last1=Decock|first1=Wim|chapter=Martin de Azpilcueta|title=Great Christian Jurists in Spanish History|series=Law and Christianity |editor1=R. Domingo|editor2=J. Martínez-Torrón|location=Cambridge|publisher=Cambridge University Press|date=2018|pages=126–127|isbn=978-1-108-44873-4 |url=https://www.cambridge.org/core/books/abs/great-christian-jurists-in-spanish-history/martin-de-azpilcueta/4149F4F31247E36DDB5DDAB4AF0C13E4|url-access=subscription}}</ref>

They also renewed the aquilian concept of [[just price]], which respects the principle of commutative justice but depends on many factors. The just price have a certain latitude{{sfn|Decock|2013|p=525}} because it's not the result of God's will or of [[Labor theory of value|labor]] but of the common estimation of the people (communis aestimatio hominum).{{sfn|Decock|2013|p=521}} On this [[Luis Saravia de la Calle]] wrote in 1544:
<blockquote>Those who measure the just price by the labour, costs, and risk incurred by the person who deals in the merchandise or produces it, or by the cost of transport or the expense of traveling...or by what he has to pay the factors for their industry, risk, and labour, are greatly in error.... For the just price arises from the abundance or scarcity of goods, merchants, and money...and not from costs, labour, and risk.... Why should a bale of linen brought overland from Brittany at great expense be worth more than one which is transported cheaply by sea?... Why should a book written out by hand be worth more than one which is printed, when the latter is better though it costs less to produce?... The just price is found not by counting the cost but by the common estimation.</blockquote>

However, as [[Friedrich Hayek]] has written,<ref name="Hayek">{{cite book|last=Hayek |first=Friedrich|author-link=Friedrich von Hayek| title=The Fortunes of Liberalism: Essays on Austrian Economics and the Ideal of Freedom| chapter=The Austrian School of Economics| publisher=University of Chicago Press| location=Chicago| year=1992| page=43| isbn=0-226-32064-2|chapter-url=https://books.google.com/books?id=AACwJ68vBukC&pg=PA43}}</ref> the school rarely followed this idea through systematically. His members thought that authorities were sometimes required to intervene and to [[Price controls|control prices]],{{sfn|Decock|2013|p=525}} especially in monopoly cases<ref>{{cite journal|language=en|last1=Decock|first1=Wim|title='Mercatores isti regulandi': Monopolies and Moral Regulation of the Market in Pedro de Oñate's 'De contractibus'|journal=Tijdschrift voor Rechtsgeschiedenis|volume=90|issue=3–4|date=2022|pages=462–488|doi=10.1163/15718190-20220017 |hdl=2268/297954 |url=https://brill.com/view/journals/lega/90/3-4/article-p462_7.xml|url-access=subscription|hdl-access=free}}</ref> or for staples.<ref name=D1>{{cite journal|language=en|last1=Decock|first1=Wim|title=Collaborative Legal Pluralism. Confessors as Law Enforcers in Mercado's Advices on Economic Governance (1571)|journal=Zeitschrift des Max-Planck-Instituts für europaïsche Rechtsgeschichte|volume=25|date=2018|pages=103–114}}</ref> The opportunity of an [[Market intervention|economic interventionnism]], called [[arbitrista|arbitrism]], wasn't unanimously accepted: if some thought that the prince concerned with public interest is more trustable that greedy merchants, like [[Domingo de Soto]] and [[Tomás de Mercado]], others like [[Luis de Molina]], [[Leonardus Lessius]] or [[Juan de Lugo]] considered that any intervention of the authorities is inopportune owing to the corruption and the clientelism that will be created.<ref name=D1/>

=== Notable contributors ===

==== Sir Thomas More ====
In 1516 English humanist Sir [[Thomas More]] (1478–1535) published ''[[Utopia (More book)|Utopia]]'', which describes an ideal society where land is owned in common and there is universal education and religious tolerance, inspiring the [[English poor laws|English Poor Laws]] (1587) and the communism-socialism movement.{{citation needed|date=April 2015}}

==== Nicolaus Copernicus ====
{{Main|Nicolaus Copernicus|Quantity theory of money}}
In 1517 Polish astronomer [[Nicolaus Copernicus]] (1473–1543) published the first known argument for the [[quantity theory of money]]. In 1519 he also published the first known form of [[Gresham's law]]: "Bad money drives out good".

==== Jean Bodin ====
In 1568 [[Jean Bodin]] (1530–1596) of [[France]] published ''Reply to Malestroit'', containing the first known analysis of [[economic inflation|inflation]], which he claimed was caused by importation of [[gold]] and [[silver]] from [[South America]], backing the [[Quantity Theory of Money|quantity theory of money]].

==== Barthélemy de Laffemas ====
[[File:Barthélemy de Laffemas.jpg|thumb|upright=.6|[[Barthélemy de Laffemas]] (1545–1612)]]
In 1598 French mercantilist economist [[Barthélemy de Laffemas]] (1545–1612) published {{Lang|fr|Les Trésors et richesses pour mettre l'Estat en splendeur}}, which blasted those who frowned on French silks because the industry created employment for the poor, the first known mention of [[Underconsumption|underconsumption theory]], which was later refined by [[John Maynard Keynes]].

==== Leonardus Lessius ====
In 1605 Flemish [[Jesuit]] theologian [[Leonardus Lessius]] (1554–1623) published ''On Justice and Law'', the deepest moral-theological study of economics since Aquinas, whose just price approach he claimed was no longer workable. After comparing money's growth via avarice to the propagation of hares, he made the first statement of the price of insurance as being based on risk.

==== Edward Misselden and Gerard Malynes ====
{{Main|Edward Misselden|Gerard Malynes}}

In 1622 English merchants [[Edward misselden|Edward Misselden]] and [[Gerard Malynes]] began a dispute over [[free trade]] and the desirability of [[government regulation]] of companies, with Malynes arguing against [[foreign exchange market|foreign exchange]] as under the control of bankers{{clarify|date=April 2015}}, and Misselden arguing that international money exchange and fluctuations in the exchange rate depend upon [[international trade]] and not bankers, and that the state should regulate trade to insure export surpluses.

==== Thomas Mun ====
English economist [[Thomas Mun]] (1571–1641) describes early mercantilist policy in his book ''England's Treasure by Foreign Trade'', which was not published until 1664, although it was widely circulated in manuscript form during his lifetime. A member of the [[East India Company]], he wrote about his experiences in ''A Discourse of Trade from England unto the East Indies'' (1621).

==== Sir William Petty ====
In 1662 English economist [[William Petty|Sir William Petty]] (1623–1687) began publishing short works applying the rational scientific tradition of [[Francis Bacon]] to economics, requiring that it only use measurable phenomena and seek quantitative precision, coining the term "political arithmetic", introducing statistical mathematics, and becoming the first scientific economist.

==== Philipp von Hörnigk ====
[[File:Österreich uber alles wann es nur will.jpg|thumb|upright=.7|The title page to [[Philipp von Hörnigk]]'s statement of mercantilist philosophy]]
[[Philipp von Hörnigk]] (1640–1712, sometimes spelt ''Hornick'' or ''Horneck'') was born in [[Frankfurt]] and became an Austrian civil servant writing in a time when his country was constantly threatened by [[Ottoman–Habsburg wars|Ottoman invasion]].  In {{Lang|de|Österreich Über Alles, Wann es Nur Will}} (1684, ''Austria Over All, If She Only Will'') he laid out one of the clearest statements of mercantile policy, listing nine principal rules of national economy:

{{blockquote|To inspect the country's soil with the greatest care, and not to leave the agricultural possibilities of a single corner or clod of earth unconsidered... All commodities found in a country, which cannot be used in their natural state, should be worked up within the country... Attention should be given to the population, that it may be as large as the country can support... gold and silver once in the country are under no circumstances to be taken out for any purpose... The inhabitants should make every effort to get along with their domestic products... [Foreign commodities] should be obtained not for gold or silver, but in exchange for other domestic wares... and should be imported in unfinished form, and worked up within the country... Opportunities should be sought night and day for selling the country's superfluous goods to these foreigners in manufactured form... No importation should be allowed under any circumstances of which there is a sufficient supply of suitable quality at home.}}

[[Nationalism]], self-sufficiency and national power were the basic policies proposed.<ref>Fusfeld (1994) p. 15</ref>

==== Jean-Baptiste Colbert and Pierre Le Pesant, Sieur de Boisguilbert ====
[[File:Pierre Le Pesant de Boisguilbert by Santerre.jpg|thumb|upright=.7|[[Pierre Le Pesant, sieur de Boisguilbert]] (1646–1714)]]

In 1665–1683 [[Jean-Baptiste Colbert]] (1619–1683) was minister of finance under King [[Louis XIV]] of France, and set up national [[guild]]s to regulate major industries.  [[Silk]], [[linen]], [[tapestry]], [[furniture]] manufacture and [[wine]] were examples of the [[crafts]] in which France specialized, all of which came to require membership in a guild to operate in until the [[French Revolution]]. According to Colbert, "It is simply and solely the abundance of money within a state [which] makes the difference in its grandeur and power."{{Citation needed|date=April 2010}}

In 1695 French economist [[Pierre Le Pesant, sieur de Boisguilbert]] (1646–1714) wrote a plea to Louis XIV to end Colbert's mercantilist program, containing the first notion of an economical [[market (economics)|market]], becoming the first economist to question mercantile [[economic policy]] and value the wealth of a country by its [[production (economics)|production]] and exchange of goods instead of its assets.

==== Charles Davenant ====
{{Main|Charles Davenant}}

In 1696 British mercantilist [[Tory]] [[Member of parliament]] [[Charles Davenant]] (1656–1714) published ''Essay on the East India Trade'', displaying the first understanding of [[consumer]] [[demand]] and perfect [[competition]].

==== Mughal Emperor Aurangzeb ====
Emperor [[Aurangzeb]] (r. 1658–1707), ruler of the [[Mughal India]], compiled the [[sharia]] based [[Fatawa-e-Alamgiri]] along several Muslim scholars which include [[Islamic economics]],<ref>''Islamic and European Expansion: The Forging of a Global Order'', [[Michael Adas]], Temple University Press (Philadelphia, PA), 1993.</ref><ref>{{cite book |last1=Chapra |first1=Muhammad Umer |title=Morality and Justice in Islamic Economics and Finance |date=2014 |publisher=Edward Elgar Publishing |isbn=9781783475728 |pages=62–63 |language=en}}</ref> whose policies eventually led to the period of [[Proto-industrialization]].<ref name="borocz">{{cite book |last=Böröcz |first=József |author-link=József Böröcz |url=https://books.google.com/books?id=d0SPAgAAQBAJ&pg=PA21 |title=The European Union and Global Social Change |date=2009-09-10 |publisher=[[Routledge]] |isbn=9781135255800 |page=21 |access-date=26 June 2017}}</ref><ref>{{cite book |last=Subrahmanyam |first=Sanjay |author-link=Sanjay Subrahmanyam |title=Money and the Market in India, 1100–1700 |publisher=Oxford University Press |year=1998 |isbn=9780521257589}}</ref> It lasted as South Asia's principal regulating body until the beginning of the 18th century.<ref name="jm">Jamal Malik (2008), Islam in South Asia: A Short History, Brill Academic, {{ISBN|978-9004168596}}, pp. 194–197</ref>

==== Sir James Steuart ====
[[File:Sir James Denham Steuart. 1713-1780.gif|thumb|upright=.7|[[Sir James Steuart]] (1713–1780)]]
In 1767 Scottish mercantilist economist [[Sir James Steuart]] (1713–1780) published ''An Inquiry into the Principles of Political Economy'', the first book in English with the term "political economy" in the title, and the first complete [[economics]] treatise.

==Pre-Classical (17th and 18th century)==
===The British Enlightenment===
{{See also|Age of Enlightenment|Scottish Enlightenment|Thomas Hobbes|William Petty}}

In the 17th century Britain went through troubling times, enduring not only political and religious division in the [[English Civil War]], King [[Charles I of England|Charles I's]] execution, and the [[Oliver Cromwell|Cromwellian dictatorship]], but also the [[Great Plague of London]] and [[Great Fire of London]]. The restoration of the monarchy under [[Charles II of England|Charles II]], who had [[Roman Catholic]] sympathies, led to turmoil and strife, and his Catholic-leaning successor [[James II of England|King James II]] was swiftly ousted. Invited in his place were Protestant [[William III of England|William of Orange]] and [[Mary II of England|Mary]], who assented to the [[Bill of Rights 1689]], ensuring that the [[Parliament of England|Parliament]] was dominant in what became known as the [[Glorious revolution|Glorious Revolution]].

The upheaval was accompanied by a number of major scientific advances, including [[Robert Boyle]]'s discovery of the [[Boyle's law|gas pressure constant]] (1660) and Sir [[Isaac Newton]]'s publication of ''[[Philosophiæ Naturalis Principia Mathematica|Philosophiae Naturalis Principia Mathematica]]'' (1687), which described [[Newton's laws of motion]] and his [[Newton's law of universal gravitation|universal law of gravitation]].

All these factors spurred the advancement of economic thought. For instance, [[Richard Cantillon]] (1680–1734) consciously imitated Newton's forces of [[inertia]] and [[gravity]] in the natural world with human reason and [[market competition]] in the economic world.<ref name="Fusfeld 1994 p.21">Fusfeld (1994) p. 21</ref> In his ''Essay on the Nature of Commerce in General'', he argued rational self-interest in a system of freely-adjusting markets would lead to order and mutually-compatible prices. Unlike the mercantilist thinkers however, wealth was found not in trade but in human [[Labour theory of value|labor]]. The first person to tie these ideas into a political framework was [[John Locke]].

====John Locke====
[[File:JohnLocke.png|upright=.7|thumb|[[John Locke]] (1632–1704) combined [[philosophy]], [[politics]] and [[economics]] into [[Philosophy, Politics, and Economics|one]] coherent framework.]]

[[John Locke]] (1632–1704) was born near [[Bristol]], and educated in [[London]] and [[Oxford]]. He is considered one of the most significant philosophers of his era mainly for his critique of [[Thomas Hobbes]]' defense of [[absolute monarchy|absolutism]] in ''[[Leviathan (Hobbes book)|Leviathan]]'' (1651) and of his [[social contract]] theory. Locke believed that people contracted into society, which was bound to protect their property rights.<ref>Locke (1689) [[s:Two Treatises of Government/The Second Treatise of Government: An Essay Concerning the True Origin, Extent, and End of Civil Government#2:9|Chapter 9, section 124]]</ref> He defined property broadly to include people's lives and liberties, as well as their wealth. When people combined their labor with their surroundings, that created property rights. In his words from his ''[[Two Treatises of Government|Second Treatise on Civil Government]]'' (1689):

{{blockquote|"God hath given the world to men in common... Yet every man has a property in his own person. The labour of his body and the work of his hands we may say are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property."<ref>Locke (1689) [[s:Two Treatises of Government/The Second Treatise of Government: An Essay Concerning the True Origin, Extent, and End of Civil Government#Chap. V. Of Property.|Chapter 5, sections 26–27]].</ref>}}

Locke argued that not only should the government cease interference with people's property (or their "lives, liberties and estates"), but also that it should positively work to ensure their protection. His views on [[price]] and [[money]] were laid out in a letter to a [[Member of Parliament]] in 1691 entitled ''Some Considerations on the Consequences of the Lowering of Interest and the Raising of the Value of Money'' (1691), arguing that the "price of any [[commodity]] rises or falls, by the proportion of the number of buyers and sellers", a rule which "holds universally in all things that are to be bought and sold."<ref>Locke (1691) ''Considerations'' Part I, Thirdly</ref>

====Dudley North====
[[File:Dudley North.jpg|thumb|upright=.7|[[Dudley North (economist)|Dudley North]] (1641–1691) argued that the results of mercantile policy are undesirable.]]

[[Dudley North (economist)|Dudley North]] (1641–1691) was a wealthy [[merchant]] and landowner who worked for [[Her Majesty's Treasury]] and opposed most mercantile policy. His ''Discourses upon trade'' (1691), published anonymously, argued against assuming a need for a favorable [[balance of trade]]. [[Trade]], he argued, benefits both sides, promotes specialization, [[division of labor]] and wealth for everyone. [[Regulation]] of trade interferes with these benefits, he said.

====David Hume====
[[File:David Hume.jpg|thumb|left|upright=.7|David Hume (1711–1776)]]
[[David Hume]] (1711–1776) agreed with North's philosophy and denounced [[Mercantilism|mercantilist]] assumptions. His contributions were set down in ''Political Discourses'' (1752), and later consolidated in his ''Essays, Moral, Political, Literary'' (1777). Adding to the argument that it was undesirable to strive for a favourable [[balance of trade]], Hume argued that it is, in any case, impossible.

Hume held that any surplus of [[export]]s would be paid for by imports of gold and silver. This would increase the [[money supply]], causing prices to rise. That in turn would cause a decline in exports until the balance with imports is restored.

==== Bernard Mandeville ====
[[Bernard Mandeville]] (1670–1733) was an Anglo-Dutch philosopher, political economist and satirist. His main thesis is that the actions of men cannot be divided into lower and higher. The higher life of man is a mere fiction introduced by philosophers and rulers to simplify government and the relations of society. In fact, [[virtue]] (which he defined as "every performance by which man, contrary to the impulse of nature, should endeavour the benefit of others, or the conquest of his own passions, out of a [[Rationality|rational]] ambition of being good") is actually detrimental to the [[Sovereign state|state]] in its commercial and intellectual progress. This is because it is the [[vice]]s (i.e., the self-regarding actions of men) which alone, by means of inventions and the circulation of [[capital (economics)]] in connection with luxurious living, stimulate society into action and progress.

====Francis Hutcheson====
[[Francis Hutcheson (philosopher)|Francis Hutcheson]] (1694–1746), the teacher of [[Adam Smith]] from 1737 to 1740<ref>[[Murray N. Rothbard]] 
[https://mises.org/daily/4942 An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith (1995)] {{Webarchive|url=https://web.archive.org/web/20140914003136/https://mises.org/daily/4942 |date=2014-09-14 }}
Ludwig von Mises Institute Retrieved 2012-05-16</ref>
is considered the end of a long tradition of thought on economics as "household or family ([[Oikos|οἶκος]]) management",<ref>
[[Sarah B. Pomeroy]],
[[Xenophon|Xénophon]] –  [https://books.google.com/books?id=iLJzAAAAIAAJ Xenophon, Oeconomicus: a social and historical commentary] Clarendon Press, 1994 Retrieved 2012-05-16
</ref><ref>[http://concordances.org/greek/3624.htm Strong's Concordances] {{Webarchive|url=https://web.archive.org/web/20120625073933/http://concordances.org/greek/3624.htm |date=2012-06-25 }}''Biblos''  &  
[http://www.biblestudytools.com/lexicons/greek/nas/oikos.html  The NAS New Testament Greek Lexicon (Strong's Number: 3624)] {{Webarchive|url=https://web.archive.org/web/20120427020814/http://www.biblestudytools.com/lexicons/greek/nas/oikos.html |date=2012-04-27 }} Bible Study Tools – Retrieved 2012-05-16</ref><ref>[[Douglas Harper]]
[http://www.etymonline.com/index.php?allowed_in_frame=0&search=economics&searchmode=none Etymology online] {{Webarchive|url=https://web.archive.org/web/20140914004317/http://www.etymonline.com/index.php?allowed_in_frame=0&search=economics&searchmode=none |date=2014-09-14 }}
Retrieved 2012-05-16</ref>
stemming from Xenophon's work ''[[Oeconomicus]]''.<ref>
[[Moses I. Finley|M. I. Finley]] (was Professor of [[Ancient History]] and Master of Darwin College at Cambridge University)
[https://books.google.com/books?id=oMmyO465s9oC&q=history+of+ancient+economics The Ancient Economy]
University of California Press, 1 Jan 1989, Retrieved 2012-05-16
</ref><ref>Edwin Cannan (editor)
[https://books.google.com/books?id=ZaICGm2Pu5AC&dq=Francis+Hutheson+teacher+of+Adam+Smith&pg=PR25 Adam Smith – Lectures On Justice, Police, Revenue And Arms]
Kessinger Publishing, 30 April 2004 Retrieved 2012-05-16
</ref>

===The Physiocrats and the circular flow===
{{Main|Physiocracy}}
{{See also|John Law (economist)|Pierre le Pesant de Boisguilbert|Victor de Riqueti}}
Similarly disenchanted with regulation on trade inspired by mercantilism, the Frenchman [[Jacques Claude Marie Vincent de Gournay|Vincent de Gournay]] (1712–1759) reputedly asked why it was so hard to ''[[laissez faire]] ("let it be"), laissez passer'' ("let it pass"), advocating [[free enterprise]] and [[free trade]]. He was one of the early [[Physiocracy|physiocrats]], who regarded [[agriculture]] as the source of wealth. As historian [[David B. Danbom]] wrote, the Physiocrats "damned cities for their artificiality and praised more natural styles of living. They celebrated farmers."<ref>
Danbom (1997) ''Rural Development Perspectives'', vol. 12, no. 1
[http://www.ers.usda.gov/publications/rdp/rdp1096/rdp1096d.pdf p. 15] {{webarchive|url=https://web.archive.org/web/20070927032417/http://www.ers.usda.gov/publications/rdp/rdp1096/rdp1096d.pdf |date=2007-09-27 }} "[[Why Americans Value Rural Life]]"
by David B. Danbom
</ref>
Over the end of the seventeenth and beginning of the eighteenth century major advances in [[natural science]] and [[anatomy]] included the discovery of [[blood circulation]] through the human body – documented by [[William Harvey]] in 1628. This concept was mirrored in the physiocrats' economic theory, with the notion of a [[circular flow of income]] throughout an [[economy]].
[[File:Anne Robert Jacques Turgot.jpg|thumb|left|upright=.7|[[Anne Robert Jacques Turgot]] (1727–1781)]]

[[François Quesnay]] (1694–1774) served as the court physician to King [[Louis XV]] of France. He believed that trade and [[Industrial sector|industry]] were not sources of wealth, and instead in his book ''[[Tableau économique]]'' (1758, Economic Table) argued that agricultural surpluses, by flowing through the economy in the form of [[renting|rent]], [[wages]], and [[purchases]], were the real economic movers.<ref>{{Cite journal|last= Bertholet|first= Auguste|date= 2020|title= The intellectual origins of Mirabeau|journal= History of European Ideas |volume=47|pages=91–96|doi=10.1080/01916599.2020.1763745|s2cid=219747599}}</ref> Firstly, wrote Quesnay, [[regulation]] impedes the flow of [[income]] throughout all [[social classes]] and therefore [[economic development]]. Secondly, [[tax]]es on the productive [[class (social)|classes]], such as [[farmer]]s, should be reduced in favour of rises for unproductive classes, such as [[landowner]]s, since their luxurious way of life distorts the income flow. (Later, in the early 19th century, [[David Ricardo]] showed that taxes on land are non-transferable to [[tenants]] according to his [[Law of Rent]].{{citation needed|date=March 2023}})

[[Jacques Turgot]] (1727–1781) was born in Paris to an old [[Normans|Norman]] family. His best-known work, {{lang | fr | Réflexions sur la formation et la distribution des richesses}} (''Reflections on the Formation and Distribution of Wealth'') (1766) developed Quesnay's theory that [[land (economics)|land]] is the only source of [[wealth]]. Turgot viewed society in terms of three classes: the productive agricultural class, the salaried [[artisan]] class ({{lang | fr | classe stipendice}}) and the landowning class ({{lang | fr | classe disponible}}). He argued that only the net product of land should be taxed and advocated complete freedom of [[commerce]] and [[Industrial sector|industry]].

In August 1774 King [[Louis XVI]] appointed Turgot as [[Controller-General of Finances|minister of finance]], and in the space of two years he introduced many anti-mercantile and anti-feudal measures, supported by the king. His guiding principles, as given to the king, were "no [[bankruptcy]], no [[tax]] increases, no [[Debt|borrowing]]". Turgot's ultimate wish was to have a single tax on land and to abolish all other indirect taxes, but measures he introduced before that met with overwhelming opposition from landed interests. Two [[edict]]s in particular, one suppressing [[corvée]]s (forced-labour obligations due by peasants to landlords) and another renouncing privileges given to [[guilds]], inflamed influential opinion. He was forced from office in 1776.

==Classical (18th and 19th century)==
===Ferdinando Galiani and ''On Money''===
In 1751, [[Naples|Neapolitan]] philosopher [[Ferdinando Galiani]] published a nearly exhaustive treatise on money called ''[[Della Moneta]]'' (''On Money''), 25 years before Adam Smith's ''The Wealth of Nations'', and therefore is seen as possibly the first truly modern economic analysis. In its five sections, ''Della Moneta'' covered all modern aspects of [[monetary theory]], including the value and origin of money, its regulation, and inflation. This text remained cited by various economists for centuries, as wide-ranging a list as [[Karl Marx]] and [[Austrian economic school|Austrian economist]] [[Joseph Schumpeter]].

===Adam Smith and ''The Wealth of Nations''===
{{Main|Adam Smith|The Wealth of Nations}}
[[File:Adamsmithout.jpg|thumb|upright=.7|Adam Smith (1723–1790), father of modern [[political economy]]]]
Adam Smith (1723–1790) is popularly seen as the father of modern political economy. His 1776 publication ''[[An Inquiry Into the Nature and Causes of the Wealth of Nations]]'' happened to coincide not only with the [[American Revolution]], shortly before the Europe-wide upheavals of the [[French Revolution]], but also the dawn of a new [[industrial revolution]] that allowed more wealth to be created on a larger scale than ever before.

Smith was a Scottish moral philosopher, whose first book was ''[[The Theory of Moral Sentiments]]'' (1759). He argued in it that people's ethical systems develop through personal relations with other individuals, that right and wrong are sensed through others' reactions to one's behaviour. This gained Smith more popularity than his next work, ''[[The Wealth of Nations]]'', which the general public initially ignored.<ref name="Fusfeld 1994 p.24">Fusfeld (1994) p. 24</ref> Yet Smith's [[Political economy|political economic]] [[Masterpiece|magnum opus]] was successful in circles that mattered.

===Adam Smith's Invisible Hand===
{| class="toccolours" style="float: right; margin-left: 1em; margin-right: 2em; font-size: 85%; background:#c6dbf7; width:30em; max-width: 40%;" cellspacing="5"
| style="text-align: left;" | "It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."<ref>Smith (1776) Book I, Chapter 2, para 2</ref>
|-
| style="text-align: left;" | '''Adam Smith's famous statement on self-interest'''
|}
{{main|Invisible hand}}
Smith argued for a "system of natural liberty"<ref name="Smith 1776 p">Smith (1776) p. 533</ref> where individual effort was the producer of social good. Smith believed even the selfish within society were kept under restraint and worked for the good of all when acting in a competitive market. Prices are often unrepresentative of the true value of goods and services. Following [[John Locke]], Smith thought true value of things derived from the amount of labour invested in them.

{{blockquote|Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.|<ref>Smith (1776) Book I, Chapter 5, para 1</ref>}}

When the butchers, the brewers and the bakers acted under the restraint of an open market economy, their pursuit of self-interest, thought Smith, paradoxically drives the process to correct real life [[price]]s to their just values. His classic statement on competition goes as follows.

{{blockquote|When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay... cannot be supplied with the quantity which they want... Some of them will be willing to give more. A competition will begin among them, and the market price will rise... When the quantity brought to market exceeds the effectual demand, it cannot be all sold to those who are willing to pay the whole value of the rent, wages and profit, which must be paid to bring it thither... The market price will sink...<ref>Smith (1776) Book I, Chapter 7, para 9</ref>}}

====Limitations====
[[File:Wealth of Nations title.jpg|thumb|upright=.8|Adam Smith's title page of ''[[The Wealth of Nations]]'']]

Smith's vision of a free market economy, based on secure property, [[capital accumulation]], widening markets and a division of labour contrasted with the mercantilist tendency to attempt to "regulate all evil human actions."<ref name="Smith 1776 p"/> Smith believed there were precisely three legitimate functions of government. The third function was...

{{blockquote|...erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual or small number of individuals, to erect and maintain... Every system which endeavours... to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it... retards, instead of accelerating, the progress of the society toward real wealth and greatness.}}

In addition to the necessity of public leadership in certain sectors Smith argued, secondly, that [[cartel]]s were undesirable because of their potential to limit production and quality of goods and services.<ref>Smith (1776) Book I, Chapter 10, para 82</ref> Thirdly, Smith criticised government support of any kind of [[monopoly]] which always charges the highest price "which can be squeezed out of the buyers".<ref>Smith (1776) Book I, Chapter 7, para 26</ref> The existence of [[monopoly]] and the potential for [[cartel]]s, which would later form the core of [[competition law]] policy, could distort the benefits of free markets to the advantage of businesses at the expense of [[consumer sovereignty]].

===William Pitt the Younger===
[[Pitt the Younger|William Pitt the Younger]] (1759–1806), [[Tory]] [[Prime Minister of Great Britain|Prime Minister]] in 1783–1801 based his tax proposals on Smith's ideas, and advocated [[free trade]] as a devout disciple of ''[[The Wealth of Nations]]''.<ref>Hague (2004) pp. 187, 292</ref> Smith was appointed a commissioner of [[Her Majesty's Customs and Excise|customs]] and within twenty years Smith had a following of new generation writers who were intent on building the [[science]] of political economy.<ref name="Fusfeld 1994 p.24"/>

===Edmund Burke===
[[File:Edmund Burke2 c.jpg|thumb|left|upright=.6|Edmund Burke (1729–1797)]]

Adam Smith expressed an affinity to the opinions of Irish MP [[Edmund Burke]] (1729–1797), known widely as a political philosopher:

{{blockquote|"Burke is the only man I ever knew who thinks on economic subjects exactly as I do without any previous communication having passed between us."<ref>Stephen (1898) p. 8.</ref>}}

Burke was an established political economist himself, known for his book ''[[Thoughts and Details on Scarcity]]''. He was widely critical of liberal politics, and condemned the [[French Revolution]] which began in 1789. In ''Reflections on the Revolution in France'' (1790) he wrote that the "age of chivalry is dead, that of sophisters, economists and calculators has succeeded, and the glory of Europe is extinguished forever." Smith's contemporary influences included [[François Quesnay]] and [[Jacques Turgot]] whom he met on a visit to Paris, and [[David Hume]], his Scottish compatriot. The times produced a common need among thinkers to explain social upheavals of the [[Industrial Revolution]] taking place, and in the seeming chaos without the feudal and monarchical structures of Europe, show there was order still.

===Jeremy Bentham===
[[File:Jeremy Bentham by Henry William Pickersgill.jpg|thumb|upright=.7|Jeremy Bentham (1748–1832) believed in "the greatest good for the greatest number".]]
[[Jeremy Bentham]] (1748–1832) was perhaps the most radical thinker of his time, and developed the concept of [[utilitarianism]]. Bentham was an [[atheist]], a [[prison reform]]er, [[animal rights]] activist, believer in [[universal suffrage]], [[freedom of speech]], [[free trade]] and [[health insurance]] at a time when few dared to argue for any of these ideas. He was schooled rigorously from an early age, finishing university and being called to the bar at 18. His first book, ''A Fragment on Government'' (1776), published anonymously, was a trenchant critique of [[William Blackstone]]'s ''[[Commentaries on the Laws of England]]''. This gained wide success until it was found that the young Bentham, and not a revered Professor had penned it. In ''An Introduction to the Principles of Morals and Legislation'' (1789) Bentham set out his theory of [[utility]].<ref>Bentham (1791) Chapter I, para I</ref><ref name=newschool />

===Jean-Baptiste Say===
[[Jean-Baptiste Say]] (1767–1832) was a Frenchman born in [[Lyon]] who helped popularize Adam Smith's work in France.<ref>Fusfeld (1994) p. 47</ref> His book ''A Treatise on Political Economy'' (1803) contained a brief passage, which later became orthodoxy in political economics until the [[Great Depression]], now known as [[Say's law]] of markets. Say argued that there could never be a general deficiency of [[demand]] or a [[general glut]] of commodities in the whole [[economy]].  People produce things, to fulfill their own wants rather than those of others, therefore [[production (economics)|production]] is not a question of [[supply (economics)|supply]] but an indication of producers [[demand]]ing [[good (economics)|goods]].

Say agreed that a part of [[income]] is saved by households, but in the long term, [[saving]]s are invested. [[Investment (macroeconomics)|Investment]] and [[consumption (economics)|consumption]] are the two elements of [[demand]], so that production ''is'' demand, therefore it is impossible for production to outrun demand, or for there to be a "general glut" of supply.  Say also argued that [[money]] was neutral, because its sole role is to facilitate exchanges, therefore, people demand money only to buy commodities; "money is a veil".<ref name=newschool2 />

===David Ricardo===
[[File:Portrait of David Ricardo by Thomas Phillips.jpg|thumb|left|upright=.7|David Ricardo (1772–1823) is renowned for his law of [[comparative advantage]].]]
[[David Ricardo]] (1772–1823) was born in London. By the age of 26, he had become a wealthy stock market trader, and bought himself a constituency seat in Ireland to gain a platform in the [[Parliament of the United Kingdom|British parliament's]] [[British House of Commons|House of Commons]].<ref>[http://eh.net/encyclopedia/article/stead.ricardo ''David Ricardo''] {{webarchive|url=https://web.archive.org/web/20060502201750/http://eh.net/encyclopedia/article/stead.ricardo |date=2006-05-02 }}, Economic History Services</ref> Ricardo's best known work is ''[[On the Principles of Political Economy and Taxation]]'' (1817), which contains his critique of barriers to international trade and a description of the manner in which income is distributed in the population. Ricardo made a distinction between workers, who received a wage fixed to a level at which they could survive, the landowners, who earn a rent, and capitalists, who own capital and receive a profit, a residual part of the income.<ref>[http://www.victorianweb.org/economics/ric.html David Ricardo's Contributions to Economics] {{Webarchive|url=https://web.archive.org/web/20090223175309/http://www.victorianweb.org/economics/ric.html |date=2009-02-23 }}, The Victorian Web</ref>

If population grows, it becomes necessary to cultivate additional land, whose fertility is lower than that of already cultivated fields, because of the law of decreasing productivity. Therefore, the cost of the production of the wheat increases, as well as the price of the wheat: The rents increase also, the wages, indexed to inflation (because they must allow workers to survive) as well. Profits decrease, until the capitalists can no longer invest. The economy, Ricardo concluded, is bound to tend towards a [[Steady state economy|steady state]].<ref name=newschool2 />

===Jean Charles Léonard de Sismondi===
[[Jean Charles Léonard de Sismondi]] (1773–1842) was the earliest author of systemic [[Crisis theory]].

===John Stuart Mill===
{{Main|Principles of Political Economy}}
[[File:John-stuart-mill-sized.jpg|thumb|upright=.7|John Stuart Mill (1806–1873), educated in the philosophy of Jeremy Bentham, wrote the most authoritative economics text of his time.]]

[[John Stuart Mill]] (1806–1873) was the dominant figure of political economic thought of his time, as well as a [[Member of parliament]] for the seat of [[Westminster (UK Parliament constituency)|Westminster]], and a leading political philosopher. Mill was a child prodigy, reading Ancient Greek from the age of 3, and being vigorously schooled by his father [[James Mill]].<ref>[http://www.iep.utm.edu/m/milljs.htm John Stuart Mill: Overview] {{Webarchive|url=https://web.archive.org/web/20090413081000/http://www.iep.utm.edu/m/milljs.htm |date=2009-04-13 }}, The Internet Encyclopedia of Philosophy.</ref> [[Jeremy Bentham]] was a close mentor and family friend, and Mill was heavily influenced by [[David Ricardo]]. Mill's textbook, first published in 1848 and titled ''[[Principles of Political Economy]]'' was essentially a summary of the economic thought of the mid-nineteenth century.<ref>Pressman (2006) p. 44</ref>

''Principles of Political Economy'' (1848) was used as the standard text by most universities well into the beginning of the twentieth century.{{citation needed|date=April 2015}} On the question of [[economic growth]] Mill tried to find a middle ground between Adam Smith's view of ever-expanding opportunities for trade and technological innovation and [[Thomas Robert Malthus|Thomas Malthus]]' view of the inherent limits of population. In his fourth book Mill set out a number of possible future outcomes, rather than predicting one in particular.<ref name=newschool2 />

===Classical political economy===
{{Main|Classical economics}}
{{See also|Thomas Edward Cliffe Leslie|Walter Bagehot|Thorold Rogers}}

The classical economists were referred to as a group for the first time by [[Karl Marx]].<ref>Keynes (1936) Chapter 1, footnote</ref> One unifying part of their theories was the [[labour theory of value]], contrasting to value deriving from a [[general equilibrium theory]] of supply and demand. These economists had seen the first economic and social transformation brought by the Industrial Revolution: rural [[depopulation]], precariousness, poverty, apparition of a [[working class]].

They wondered about [[population growth]], because [[demographic transition]] had begun in Great Britain at that time. They also asked many fundamental questions, about the source of value, the causes of [[economic growth]] and the role of [[money]] in the [[economy]]. They supported a free-[[market economy]], arguing it was a natural system based upon freedom and [[property]]. However, these economists were divided and did not make up a unified current of thought.

A notable current within classical economics was [[underconsumption]] theory, as advanced by the [[Birmingham School (economics)|Birmingham School]] and [[Thomas Robert Malthus]] in the early 19th century. These argued for government action to mitigate [[unemployment]] and economic downturns, and were an intellectual predecessor of what later became [[Keynesian economics]] in the 1930s. Another notable school was [[Manchester capitalism]], which advocated [[free trade]], against the previous policy of [[mercantilism]].

=== Marxian critique of political economy ===
{{Main|Critique of political economy#Marx's critique of political economy}}
[[File:Marx_old.jpg|left|thumb|upright=.7|Karl Marx (1818–1883) published a critique of political economy.]]
{{Key people|Karl Marx|Friedrich Engels}}Marx wrote his magnum opus {{Lang|de|[[Das Kapital]]}} ''(Capital: A Critique of Political Economy)'' (1867) at the [[British Museum]]'s library in London. Karl Marx begins with the concept of [[commodities]], which he views as a historically specific phenomenon.<ref name=":0">{{Cite book |first=Moishe |last=Postone |url=http://worldcat.org/oclc/910250140 |title=Time, labor, and social domination : a reinterpretation of Marx's critical theory |year=1995 |publisher=Cambridge University Press |isbn=0-521-56540-5 |oclc=910250140}}</ref> He hence looks to history to state that before capital, production was based on [[slavery]] – in [[ancient Rome]] for example – then [[serfdom]] in the [[Feudalism|feudal]] societies of [[medieval Europe]]. Marx viewed the current mode of production as one which would ultimately produce an erratic and unstable situation allowing the conditions for [[revolution]] in the long term.

Marx uses the word commodity in an extensive [[Metaphysics|metaphysical]] discussion of the nature of material wealth, how the objects of wealth are perceived and how they can be used.<ref name=":1">''Kapitalet: Kritik av den politiska ekonomin. Första boken: kapitalets produktionsprocess.'' Bo cavefors bokförlag/Clarté. Första upplagan. Uddevalla 1969</ref> A commodity contrasts to objects of the natural world. When people mix their labor with an object it becomes a [[Commodification|commodity]]. In the natural world there are trees, [[diamond]]s, [[iron ore]] and people. In the world of the economists they become chairs, [[Ring (finger)|rings]], [[Factory|factories]] and workers. However, says Marx, commodities have a dual nature. He distinguishes the [[use value]] of a thing from its [[exchange value]].<ref name=":1" /> If commodities are considered absolutely isolated from their useful qualities the common property is ''human labor in the abstract''. A phenomenon unique to a specific historical configuration, which is dependent on certain social practices, most dominantly [[Wage labour|waged work]], executed en masse.<ref name=":0" /> Marx argued for critique by linking his ideas of [[surplus value]] and [[socially necessary labor time]] with the classical [[labor theory of value]] and [[Law of rent|theories of rent]].

Marx believed that a [[reserve army of the unemployed]] would grow and grow, fueling a downward pressure on wages as desperate people accepted work for less. But this would produce a deficit of [[demand]] as the people's [[Purchasing power|power to purchase]] products lagged. A glut of unsold products would result, production would be cut back, and profits decline until capital accumulation halted in an [[economic depression]]. When the glut cleared, the economy would again start to boom before the next cyclical bust begins. With every [[boom and bust]], with every capitalist crisis, thought Marx, tension and [[Class conflict|conflict]] between the increasingly polarized classes of capitalists and workers would heighten due to [[Tendency of the rate of profit to fall|the tendency of the rate of profit to fall]].

===Henry George and Georgism===
{{Main|Henry George|Georgism|geolibertarianism|land value tax|ecological economics|commons|economic rent}}
[[Image:Henry George.jpg|thumb|left|upright=.7|In 1879, Henry George published an explosively popular treatise on why poverty accompanies progress and boom follows bust.]]

Henry George (1839–1897) is popularly recognized as the intellectual inspiration for the economic philosophy now known as [[Georgism]].  George is said to be the last classical economist. During his life, George was one of the three most famous Americans, along with [[Henry Ford]] and [[Thomas Edison]]. George's first book, ''[[Progress and Poverty]]'', was one of the most widely printed books in English, selling between 3 and 6 million copies by the early 1900s.  ''Progress and Poverty'' sparked a worldwide reform movement and is sometimes marked as the beginning of the [[Progressive Era]].  Georgism declined in the second half of the 20th century as the [[Marxist]] and [[Austrian school|Austrian]] and [[Keynesian]] neoclassical schools gained popularity. However, there are still active Georgist organizations and land reform movements around the world.  George's ideas have been incorporated into the philosophies of [[socialism]], [[libertarianism]], and [[ecological economics]]. [[Paul Samuelson]] listed Henry George as one of only six "American saints" in classical economics.<ref>{{cite book | last = Samuelson | first = Paul | title = The collected scientific papers of Paul A. Samuelson | url = https://archive.org/details/collectedscienti0001samu | url-access = registration | publisher = M.I.T. Press | location = Cambridge, Mass | year = 1966 | isbn = 9780262190800 }}</ref>

===The London School of Economics===
{{Main|London School of Economics}}
[[File:Beatrice Webb, c1875.jpg|thumb|upright=.7|Beatrice Webb (1858–1943)]]

In 1895 the London School of Economics (LSE) was founded by [[Fabian Society]] members [[Sidney Webb]] (1859–1947), [[Beatrice Webb]] (1858–1943), and [[George Bernard Shaw]] (1856–1950), joining the [[University of London]] in 1900.

In the 1930s LSE member [[R.G.D. Allen|Sir Roy G.D. Allen]] (1906–1983) popularized the use of mathematics in economics.

==Neoclassical (19th and early 20th century)==
{{Main|Neoclassical economics|Marginalism|Mathematical economics}}
{{See also|Léon Walras|Alexander del Mar|John Bates Clark|Irving Fisher|William Ashley (economic historian)|Enrico Barone}}

Neoclassical economics developed in the 1870s. There were three main independent schools. The [[Neoclassical economics|Cambridge School]] was founded with the 1871 publication of Jevons' ''Theory of Political Economy'', developing theories of partial equilibrium and focusing on market failures. Its main representatives were [[Stanley Jevons]], [[Alfred Marshall]], and [[Arthur Pigou]]. The [[Austrian school|Austrian School of Economics]] was made up of Austrian economists [[Carl Menger]], [[Eugen von Böhm-Bawerk]], and [[Friedrich von Wieser]], who developed the theory of [[Capital (economics)|capital]] and tried to explain economic crises. It was founded with the 1871 publication of Menger's ''Principles of Economics''. The [[Lausanne school|Lausanne School]], led by [[Léon Walras]] and [[Vilfredo Pareto]], developed the theories of [[general equilibrium]] and [[Pareto efficiency]]. It was founded with the 1874 publication of Walras' ''Elements of Pure Economics''.

===Anglo-American neoclassical===
[[File:John Bates Clark.jpg|thumb|upright=.7|John Bates Clark (1847–1938)]]
American economist [[John Bates Clark]] (1847–1938) promoted the [[marginalist revolution]], publishing ''The Distribution of Wealth'' (1899), which proposed Clark's Law of Capitalism: "Given competition and homogeneous factors of production labor and capital, the repartition of the social product will be according to the productivity of the last physical input of units of labor and capital", also expressed as "What a social class gets is, under natural law, what it contributes to the general output of industry."  In 1947 the [[John Bates Clark Medal]] was established in his honor.<ref name=newschool />

====William Stanley Jevons====
[[File:PSM V11 D660 William Stanley Jevons.jpg|thumb|upright=.7|William Stanley Jevons (1835–1882) helped popularize [[marginal utility]] theory.]]
In 1871 Menger's English counterpart [[William Stanley Jevons|Stanley Jevons]] (1835–1882) independently published ''Theory of Political Economy'' (1871), stating that at the margin the satisfaction of goods and services decreases. An example of the [[Diminishing returns|Theory of Diminishing Marginal Utility]] is that for every orange one eats, one gets less pleasure until one stops eating oranges completely.<ref name=newschool />

====Alfred Marshall====
[[File:Alfred Marshall.jpg|thumb|left|upright=.7|Alfred Marshall (1842–1924) wrote the main alternative textbook to John Stuart Mill of the day, ''Principles of Economics'' (1890).]]
[[Alfred Marshall]] (1842–1924) is also credited with an attempt to put economics on a more mathematical footing.  The first professor of economics at the [[University of Cambridge]], his 1890 work ''[[Principles of Economics (Marshall)|Principles of Economics]]''<ref>''Principles of Economics'', by Alfred Marshall</ref> abandoned the term "[[political economy]]" for his favorite "[[economics]]". He viewed math as a way to simplify economic reasoning, although he had reservations as revealed in a letter to his student [[Arthur Cecil Pigou]]:<ref name=newschool /><ref>Buchholz (1989) p. 151</ref>

{{blockquote|(1) Use mathematics as shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you can't succeed in 4, burn 3. This I do often.}}

====New institutional schools====
{{Main|New institutional economics}}
In 1972 American economists [[Harold Demsetz]] (1930–2019) and [[Armen Alchian]] (1914–2013) published ''Production, Information Costs and Economic Organization'', founding [[New institutional economics|New Institutional Economics]], an updating of the works of [[Ronald Coase]] (1910–2013) with mainstream economics.<ref name=newschool />


===Continental neoclassical===
====Lausanne School====

The [[Lausanne School]] is named after [[University of Lausanne]] where [[Léon Walras]] and [[Vilfredo Pareto]] held professorships.

In 1874 working independently, French economist [[Léon Walras]] (1834–1910) generalized marginal theory across the economy in ''Elements of Pure Economics'': Small changes in people's preferences, for instance shifting from beef to mushrooms, would lead to a mushroom price rise, and beef price fall; this stimulates producers to shift production, increasing mushrooming investment, which would increase market supply and a new price equilibrium between the products, e.g. lowering the price of mushrooms to a level between the two first levels. For many products across the economy the same would happen if one assumes markets are competitive, people choose on the basis of self-interest, and there is no cost for shifting production.<ref name=newschool />

Similar to Walras,<ref>{{cite book|last1=Mirowski |first1=P. |last2=Cook |first2=P |date=1990 |chapter= Walras' "Economics and Mechanics": Translation, Commentary, Context | title=Economics As Discourse |pages=189–224 |editor-last1=Samuels |editor-first1=W.J. |publisher=Springer |location=Dordrecht |doi=10.1007/978-94-017-1377-1_7|isbn=978-90-481-5783-9 }}</ref> [[Vilfredo Pareto]] tried to sketch the mathematical description of economics in analogy to mechanics, explicitly linking pure (and applied) economics to pure (and applied) mechanics.<ref>{{cite book|last1=Pareto |first1=Vilfredo |title=Cours d'économie politique professé à l'Université de Lausanne |publisher = F. Rouge |location=Lausanne |date=1896}}</ref><ref>{{cite journal |last1=Glötzl |first1=Erhard |last2=Glötzl |first2=Florentin |last3=Richters |first3=Oliver |title=From constrained optimization to constrained dynamics: extending analogies between economics and mechanics |journal=Journal of Economic Interaction and Coordination |volume=14 |pages=623–642 |date=2019 |issue=3 |doi=10.1007/s11403-019-00252-7|hdl=10419/171974 }}</ref><ref>{{cite book |last1=McLure |first1=Michael |last2=Samuels |first2=Warren J. |date=2001 |title=Pareto, economics and society the mechanical analogy |publisher=Routledge |location=London}}</ref><ref>{{cite journal |last1=Donzelli |first1=Franco |title=Pareto's Mechanical Dream | journal = History of Economic Ideas |volume=5 |issue=3 |date=1997 |pages=127–178 |jstor=23722580}}</ref><ref>{{cite book |last1=Mirowski |first1=P. |date=1989 |title=More heat than light: economics as social physics, physics as nature's economics |publisher = Cambridge University Press |location = Cambridge}}</ref> Similar approaches were put forward by [[Irving Fisher]] in the United States in his 1892 dissertation.<ref>{{cite book| last1=Fisher |first1=Irving |title=Mathematical Investigations in the Theory of Value and Prices |chapter=Mechanical Analogies | url=https://fraser.stlouisfed.org/files/docs/publications/books/mathematical_fisher.pdf |pages=85–86}}</ref><ref name="edgeworth">{{cite journal |last1=Edgeworth |first1=F. Y. |title=Reviewed Work(s): Mathematical Investigations in the Theory of Value and Prices by Irving Fisher |journal=The Economic Journal |date=1893 |volume=3 |issue=9 |pages=108–112 |doi=10.2307/2956053 |jstor=2956053}}</ref><ref>{{cite journal |last1=Mouck |first1=Tom |title = Irving Fisher and the mechanistic character of twentieth century accounting thought | journal=The Accounting Historians Journal |volume=22 |issue=2 |date=1995 |pages=43–83 |doi=10.2308/0148-4184.22.2.43 |jstor=40698163}}</ref>

====The Austrian school of economics====
{{Main|Austrian school}}
While economics at the end of the nineteenth century and the beginning of the twentieth was dominated increasingly by mathematical analysis, the followers of [[Carl Menger]] (1840–1921) and his disciples [[Eugen von Böhm-Bawerk]] (1851–1914) and [[Friedrich von Wieser]] (1851–1926) (coiner of the term "marginal utility") followed a different route, advocating the use of deductive logic instead.  This group became known as the [[Austrian School|Austrian School of Economics]], reflecting the Austrian origin of many of the early adherents. [[Thorstein Veblen]] in ''The Preconceptions of Economic Science'' (1900) contrasted neoclassical [[marginalism|marginalists]] in the tradition of [[Alfred Marshall]] with the philosophies of the Austrian School.<ref>Veblen, Thorstein Bunde; "The Preconceptions of Economic Science" Pt III, ''Quarterly Journal of Economics'' v14 (1900).</ref><ref name="Colander" >Colander, David; ''The Death of Neoclassical Economics''.</ref>

=====Carl Menger=====
In 1871 Austrian School economist [[Carl Menger]] (1840–1921) restated the basic principles of [[marginal utility]] in {{Lang|de|Grundsätze der Volkswirtschaftslehre}}<ref>Menger, Carl (1871) ''Grundsätze der Volkswirtschaftslehre'',[https://www.mises.org/etexts/menger/principles.asp full text in html] {{Webarchive|url=https://web.archive.org/web/20140914004206/https://www.mises.org/etexts/menger/principles.asp |date=2014-09-14 }}</ref> (''[[Principles of Economics (Menger)|Principles of Economics]]''): Consumers act rationally by seeking to maximize satisfaction of all their preferences; people allocate their spending so that the last unit of a commodity bought creates no more satisfaction than a last unit bought of something else.<ref name=newschool />

====Francis Ysidro Edgeworth====
[[File:Edgeworth.jpeg|thumb|upright=.7|left|Francis Ysidro Edgeworth (1845–1926)]]
In 1881 Irish economist [[Francis Ysidro Edgeworth]] (1845–1926) published ''Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences'', which introduced indifference curves and the generalized utility function, along with [[Edgeworth's limit theorem|Edgeworth's Limit Theorem]], extending the Bertrand Model to handle capacity constraints, and proposing [[Edgeworth paradox|Edgeworth's Paradox]] for when there is no limit to what the firms can sell.<ref name=newschool />

====Friedrich Hayek====
[[File:Friedrich Hayek portrait.jpg|thumb|upright=.7|Friedrich Hayek (1899–1992)]]
In echoes of Smith's "system of natural liberty", Hayek argued that the market is a "spontaneous order" and actively disparaged the concept of "[[social justice]]".<ref>''[[Law, Legislation and Liberty]]'' (1973, 1976, 1979)</ref> [[Ludwig von Mises]]'s outspoken [[criticisms of socialism]] had a large influence on the economic thinking of Austrian School economist [[Friedrich Hayek]] (1899–1992), who, while initially sympathetic, became one of the leading academic critics of [[Collectivism and individualism|collectivism]] in the 20th century.<ref name="urlBiography of F. A. Hayek (1899–1992)">{{cite web |url=https://mises.org/about/3234 |title=Biography of F. A. Hayek (1899–1992) |date=August 2007 |access-date=2009-06-26 |archive-url=https://web.archive.org/web/20090630130226/http://mises.org/about/3234 |archive-date=2009-06-30 |url-status=live }}</ref> Hayek believed that all forms of collectivism (even those theoretically based on voluntary cooperation) could only be maintained by a central authority. But he argued that centralizing economic decision-making would lead not only to infringements of liberty but also to depressed standards of living because centralized experts could not gather and assess the knowledge required to allocate scarce resources efficiently or productively. In his book, ''[[The Road to Serfdom]]'' (1944) and in subsequent works, Hayek claimed that socialism required central economic planning and that such planning in turn would lead towards [[totalitarianism]]. Hayek attributed the birth of civilization to [[private property]] in his book ''[[The Fatal Conceit]]'' (1988). According to him, [[price signals]] are the only means of enabling each economic decision maker to communicate [[tacit knowledge]] or [[dispersed knowledge]] to each other, to solve the [[economic calculation problem]]. Along with his Socialist Swedish contemporary and opponent [[Gunnar Myrdal]] (1898–1987), Hayek was awarded the Nobel Prize in Economics in 1974.<ref name=newschool3 />

==Alternative schools (19th century)==
===Business cycle theory===
{{Main|Business cycle}}
[[File:Николай Кондратьев.JPG|thumb|upright=.7|Nikolai Kondratiev (1892–1938)]]
In the early 19th century German-born English astronomer Sir [[William Herschel]] (1738–1822) noted a connection between 11-year [[Solar cycle|sunspot cycles]] and wheat prices. In 1860 French economist [[Clément Juglar]] (1819–1905) posited [[business cycle]]s seven to eleven years long.  In 1925 the Soviet economist [[Nikolai Kondratiev]] (1892–1938) proposed the existence of [[Kondratiev wave]]s in Western capitalist economies fifty to sixty years long.

===German historical school of economics===
{{Main|Historical school of economics}}
In the mid-1840s German economist [[Wilhelm Roscher]] (1817–1894) founded the German [[historical school of economics]], which promoted the cyclical theory of nations—economies passing through youth, manhood, and senility—and spread through academia in Britain and the U.S., dominating it for the rest of the 19th century.<ref name=newschool />

===Thorstein Veblen and the American Way===
[[File:Veblen3a.jpg|thumb|left|upright=.7|Thorstein Veblen (1857–1929)]]

[[Thorstein Veblen]] (1857–1929), who came from rural midwestern America and worked at the [[University of Chicago]] is one of the best-known early critics of the "American Way". In ''[[The Theory of the Leisure Class]]'' (1899) he scorned [[Materialism|materialistic]] culture and wealthy people who [[Conspicuous consumption|conspicuously consumed]] their riches as a way of demonstrating success. In ''[[The Theory of Business Enterprise]]'' (1904) Veblen distinguished production for people to use things and production for pure profit, arguing that the former is often hindered because businesses pursue the latter. Output and technological advance are restricted by business practices and the creation of monopolies. Businesses protect their existing capital investments and employ excessive credit, leading to depressions and increasing military expenditure and war through business control of political power. These two books, focusing on criticism of [[consumerism]] and [[profiteering (business)|profiteering]] did not advocate change. However, in 1918 he moved to New York to begin work as an editor of a magazine called ''[[The Dial]]'', and then in 1919, along with [[Charles A. Beard]], [[James Harvey Robinson]], and [[John Dewey]] he helped found the New School for Social Research (known today as [[The New School]]). He was also part of the [[Technical Alliance]],<ref>Stabile, Donald R. "Veblen and the Political Economy of the Engineer: the radical thinker and engineering leaders came to technocratic ideas at the same time", ''American Journal of Economics and Sociology'' (45:1) 1986, 43–44.</ref> created in 1919 by [[Howard Scott (engineer)|Howard Scott]]. From 1919 through 1926 Veblen continued to write and to be involved in various activities at The New School. During this period he wrote ''[[The Engineers and the Price System]]'' (1921).<ref name=newschool /><ref>{{cite web |url=http://socserv2.mcmaster.ca/%7Eecon/ugcm/3ll3/veblen/Engineers.pdf |title=The Engineers and the Price System |access-date=2013-03-29 |archive-url=https://web.archive.org/web/20121113174207/http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/veblen/Engineers.pdf |archive-date=2012-11-13 |url-status=live }}</ref>

==The World Wars, Russian and German Revolutions, and Great Depression (early to mid 20th century)==
At the outbreak of [[World War I]] (1914 –1918), [[Alfred Marshall]] was still working on his last revisions of his ''[[Principles of Economics (Marshall)|Principles of Economics]]''. The 20th century's initial climate of optimism was soon violently dismembered in the trenches of the Western Front. During the war, production in Britain, Germany, and France was switched to the military.  In 1917 Russia crumbled into revolution led by [[Vladimir Lenin]] who promoted Marxist theory and collectivized the means of production.  Also in 1917, the United States of America entered the war on the side of the [[Allies of World War I|Allies (France and Britain)]], with President [[Woodrow Wilson]] claiming to be "making the world safe for democracy", devising a peace plan of [[Fourteen Points]].  In 1918 Germany launched a spring offensive which failed, and as the allies counterattacked and more millions were slaughtered, Germany slid into the [[German Revolution]], its interim government suing for peace on the basis of Wilson's Fourteen Points.  After the war, Europe lay in ruins, financially, physically, psychologically, and its future was dependent on the dictates of the [[Versailles conference|Versailles Conference]] in 1919.

After World War I, Europe and the Soviet Union lay in ruins, and the [[British Empire]] was nearing its end, leaving the United States as the preeminent global economic power.
Before World War II, American economists had played a minor role. During this time [[institutional economists]] had been largely critical of the "American Way" of life, especially the [[conspicuous consumption]] of the [[Roaring Twenties]] before the [[Wall Street crash of 1929]]. The most important development in economic thought during the [[Great Depression]] was the [[Keynesian revolution]], including the publication in 1936 of The [[General Theory of Employment, Interest, and Money]] by [[John Maynard Keynes]]. (See the discussion of [[Keynesianism]] below.) Subsequently, a more orthodox body of thought took root, reacting against the lucid debating style of Keynes, and remathematizing the profession. The orthodox center was also challenged by a more radical group of scholars based at the University of Chicago, who advocated "liberty" and "freedom", looking back to 19th century-style non-interventionist governments.{{Citation needed|date=March 2013}}

===Econometrics===
{{Main|Econometrics}}
[[File:Jan Tinbergen 1982.jpg|thumb|upright=.7|Jan Tinbergen (1903–1994)]]
[[File:Trygve Haavelmo.jpg|thumb|left|upright=.7|Trygve Haavelmo (1911–1999)]]

In the 1930s Norwegian economist [[Ragnar Frisch]] (1895–1973) and Dutch economist [[Jan Tinbergen]] (1903–1994) pioneered [[Econometrics]], receiving the first-ever Nobel Prize in Economics in 1969. In 1936 Russian-American economist [[Wassily Leontief]] (1905–1999) proposed the [[Input-output analysis|Input-Output Model]] of economics, which uses linear algebra and is ideally suited to computers, receiving the 1973 Nobel Economics Prize.  After World War II, [[Lawrence Klein]] (1920–2013) pioneered the use of computers in econometric modeling, receiving the 1980 Nobel Economics Prize. In 1963–1964 as [[John Tukey]] of Princeton University was developing the revolutionary [[fast Fourier transform]], which greatly speed up the calculation of Fourier Transforms, his British assistant Sir [[Clive Granger]] (1934–2009) pioneered the use of Fourier Transforms in economics, receiving the 2003 Nobel Economics Prize. Ragnar Frisch's assistant [[Trygve Haavelmo]] (1911–1999) received the 1989 Nobel Economics Prize for clarifying the probability foundations of econometrics and for analysis of simultaneous economic structures.

===Means and corporate governance===
{{Main|Adolf A. Berle|Gardiner C. Means}}
[[File:Adolf Augustus Berle NYWTS.jpg|thumb|upright=.7|Adolf Augustus Berle, Jr. (1895–1971) with [[Gardiner Means]] was a foundational figure of modern [[corporate governance]].]]

The [[Great Depression]] was a time of significant upheaval in the world economy. One of the most original contributions to understanding what went wrong came from [[Harvard University]] [[lawyer]] [[Adolf Berle]] (1895–1971), who like [[John Maynard Keynes]] had resigned from his diplomatic job at the [[Paris Peace Conference, 1919]] and was deeply disillusioned by the [[Versailles Treaty]]. In his book with American economist [[Gardiner C. Means]] (1896–1988) ''[[The Modern Corporation and Private Property]]'' (1932) he detailed the evolution in the contemporary economy of big business and argued that those who controlled big firms should be better held to account. [[Board of directors|Directors]] of companies are held to account to the [[shareholder]]s of companies, or not, by the rules found in [[company law]] statutes. This might include rights to elect and fire the management, requirements to hold regular general meetings, satisfy accounting standards, and so on. In 1930s America the typical company laws (e.g. in [[Delaware corporation|Delaware]]) did not clearly mandate such rights. Berle argued that the unaccountable directors of companies were therefore apt to funnel the fruits of enterprise profits into their own pockets, as well as manage in their own interests. The ability to do this was supported by the fact that the majority of shareholders in big [[public company|public companies]] were single individuals, with scant means of communication, in short, divided and conquered. Berle served in President [[Franklin Delano Roosevelt]]'s administration through the Great Depression as a key member of his [[Brain trust|Brain Trust]], developing many [[New Deal]] policies.

In 1967 Berle and Means issued a revised edition of their work, in which the preface added a new dimension. It was not only the separation of controllers of companies from the owners as shareholders at stake. They posed the question of what the corporate structure was really meant to achieve:

{{blockquote|"Stockholders toil not, neither do they spin, to earn [dividends and share price increases]. They are beneficiaries by position only. Justification for their inheritance... can be founded only upon social grounds... that justification turns on the distribution as well as the existence of wealth. Its force exists only in direct ratio to the number of individuals who hold such wealth. Justification for the stockholder's existence thus depends on increasing distribution within the American population. Ideally, the stockholder's position will be impregnable only when every American family has its fragment of that position and of the wealth by which the opportunity to develop individuality becomes fully actualized."<ref>Berle (1967) p. xxiii</ref>}}

===Industrial organization economics===
{{See|Industrial organization}}

In 1933 American economist [[Edward Chamberlin]] (1899–1967) published ''The Theory of Monopolistic Competition''. The same year British economist [[Joan Robinson]] (1903–1983) published ''[[The Economics of Imperfect Competition]]''. Together they founded Industrial Organization Economics. Chamberlin also founded [[Experimental economics|Experimental Economics]].

===Linear programming===
[[File:Leonid Kantorovich 1975.jpg|thumb|upright=.7|Leonid Kantorovich (1912–1986)]]
In 1939 Russian economist [[Leonid Kantorovich]] (1912–1986) developed [[Linear programming|Linear Programming]] for the optimal allocation of resources, receiving the 1975 Nobel Economics Prize.

===Ecology and energy===
By the twentieth century, the Industrial Revolution had led to an exponential increase in the human consumption of resources.  The increase in health, wealth and population was perceived as a simple path of progress. However, in the 1930s economists began developing models of [[non-renewable resource]] management (see [[Hotelling's rule]]) and the sustainability of welfare in an economy that uses non-renewable resources.

Concerns about the environmental and social impacts of industry had been expressed by some [[Age of Enlightenment|Enlightenment]] political economists and in the [[Romanticism|Romantic]] movement of the 1800s. Overpopulation had been discussed in an essay by [[Thomas Malthus]] (see [[Malthusian catastrophe]]), while [[John Stuart Mill]] foresaw the [[Steady-state economy#John Stuart Mill's concept|desirability of a ''stationary state'' economy]], thus anticipating concerns of the modern discipline of [[ecological economics]].<ref>Martinez-Alier, J. 1987. Ecological economics. Blackwell, Oxford.</ref><ref>[[Schumacher, E.F.]] 1973. ''[[Small Is Beautiful: A Study of Economics As If People Mattered]]''. Blond and Briggs, London.</ref><ref>Daly, H. 1991. ''Steady-State Economics'' (2nd ed.). Island Press, Washington, D.C.</ref><ref>Daly, H. E. 1999. ''Ecological Economics and the Ecology of Economics''. E Elgar Publications, Cheltenham.</ref><ref>Daly, H.E. and Cobb, J. B. 1989. For the Common.</ref>

====Ecological economics====
Ecological economics was founded in the works of [[Kenneth E. Boulding]], [[Nicholas Georgescu-Roegen]], [[Herman Daly]] and others.  The disciplinary field of ecological economics also bears some similarity to the topic of green economics.<ref>[[Robert C. Paehlke|Paehlke R.]] (1995). Conservation and Environmentalism: An Encyclopedia, [https://books.google.com/books?id=9WUqqgfrBHQC p. 315]. Taylor & Francis.</ref>

According to ecological economist Malte Faber, ecological economics is defined by its focus on nature, justice, and time. Issues of [[intergenerational equity]], [[irreversibility]] of [[human impact on the environment]], [[uncertainty]] of long-term outcomes, thermodynamics limits to growth, and [[sustainable development]] guide ecological economic analysis and valuation.<ref name=Faber2008>Malte Faber. (2008). How to be an ecological economist. ''Ecological Economics'' '''66'''(1):1–7. [https://ideas.repec.org/p/awi/wpaper/0454.html Preprint] {{Webarchive|url=https://web.archive.org/web/20150629234435/https://ideas.repec.org/p/awi/wpaper/0454.html |date=2015-06-29 }}.</ref>

====Energy accounting====
[[Energy accounting]] was proposed in the early 1930s as a scientific alternative to a [[price system]], or money method of regulating society.<ref>{{Cite web |url=http://ecen.com/eee9/ecoterme.htm |title=Economy and Thermodynamics |access-date=2014-09-05 |archive-url=https://web.archive.org/web/20141020032936/http://ecen.com/eee9/ecoterme.htm |archive-date=2014-10-20 |url-status=live }}</ref><ref>The Energy Certificate essay by Fezer. An article on Energy Accounting as proposed by Technocracy Inc. [https://web.archive.org/web/20070930043441/http://www.technocracy.org/Archives/The%20Energy%20Certificate-r.htm]</ref> [[Joseph Tainter]]<ref>Tainter, Joseph A. (1990). ''The Collapse of Complex Societies'' (1st paperback ed.). Cambridge: Cambridge University Press. {{ISBN|0-521-38673-X}}.</ref> suggests that a diminishing ratio of [[energy returned on energy invested]] is a chief cause of the collapse of complex societies.  Falling EROEI due to the depletion of non-renewable resources also poses a difficult challenge for industrial economies. [[Sustainability]] becomes an issue as survival is threatened due to climate change.

===Institutional economics===
{{Main|Institutional economics}}
In 1919 Yale economist [[Walton H. Hamilton]] coined the term "[[Institutional economics]]".
In 1934 [[John R. Commons]] (1862–1945), another economist from midwestern America published ''Institutional Economics'' (1934), based on the concept that the economy is a web of relationships between people with diverging interests, including monopolies, large corporations, labor disputes, and fluctuating business cycles.  They do however have an interest in resolving these disputes.  Government, thought Commons, ought to be the mediator between the conflicting groups.  Commons himself devoted much of his time to advisory and mediation work on government boards and industrial commissions.

===Arthur Cecil Pigou===
[[File:A.C. Pigou.jpg|thumb|upright=.7|[[Arthur Cecil Pigou]] (1877–1959)]]

In 1920 Alfred Marshall's student [[Arthur Cecil Pigou]] (1877–1959) published ''[[Wealth and Welfare]]'', which insisted on the possibility of [[market failure]]s, claiming that markets are inefficient in the case of [[externality|economic externalities]], and the state must interfere to prevent them. However, Pigou retained free market beliefs, and in 1933, in the face of the economic crisis, he explained in ''[[The Theory of Unemployment]]'' that the excessive intervention of the state in the labor market was the real cause of massive [[unemployment]] because the governments had established a minimal wage, which prevented wages from adjusting automatically.  This was to be the focus of attack from Keynes.  In 1943 Pigou published the paper ''The Classical Stationary State'', which popularized the [[Pigou effect|Pigou (Real Balance) Effect]], the stimulation of output and employment during deflation by increasing consumption due to a rise in wealth.

===Market socialism===
{{Main|Market socialism}}
In response to the [[Economic calculation problem|Economic Calculation Problem]] proposed by the Austrian School of Economics that disputes the efficiency of a state-run economy, the theory of [[Market socialism|Market Socialism]] was developed in the late 1920s and 1930s by economists [[Fred M. Taylor]] (1855–1932), [[Oskar R. Lange]] (1904–1965), [[Abba Lerner]] (1903–1982) et al., combining Marxian economics with neoclassical economics after dumping the labor theory of value. In 1938 [[Abram Bergson]] (1914–2003) defined the [[Social welfare function|Social Welfare Function]].

===The Stockholm school of economics===
{{Main|Stockholm school (economics)}}

[[File:Eli Heckscher.jpg|thumb|left|upright=.7|Eli Heckscher (1879–1952)]]
[[File:Gunnar Myrdal - Sveriges styresmän.jpg|thumb|left|upright=.7|Gunnar Myrdal (1898–1987)]]

In the 1930s the [[Stockholm school (economics)|Stockholm School of Economics]] was founded by [[Eli Heckscher]] (1879–1952), [[Bertil Ohlin]] (1899–1977), [[Gunnar Myrdal]] (1898–1987) et al. based on the works of [[John Maynard Keynes]] and [[Knut Wicksell]] (1851–1926), advising the founders of the Swedish Socialist welfare state.

In 1933 Ohlin and Heckscher proposed the [[Heckscher-ohlin model|Heckscher-Ohlin Model of International Trade]], which claims that countries will export products that use their abundant and cheap factors of production and import products that use their scarce factors of production. In 1977 Ohlin was awarded a share of the Nobel Economics Prize.

In 1957 Myrdal published his theory of [[Circular Cumulative Causation]], in which a change in one institution ripples through others.  In 1974 he received a share of the Nobel Economics Prize.

===French Regulation school===

This school includes economists like [[Michel Aglietta]] (1938), [[André Orléan]] (1950), {{ill|Robert Boyer (economist)|lt=Robert Boyer|fr|Robert Boyer}} (1943), [[Benjamin Coriat]] (1948) and [[Alain Lipietz]] (1947). It is one of the two heterodox schools in France, the other being ''l'école des conventions''. Their interests revolves around accounting for the regime of regulation of specific historic stage of capitalism. They have mainly analysed the fordist mode of regulation, who corresponds to the after war period. Production as organised scientifically and products were not diversified. This corresponds with a homogenous consumption of goods. The economy was production led, where firms first produce the optimal amount of a type of good in the cheapest manner possible, destined to be mass consumed. Their inquiry consists of explaining how a stable mode of regulation can emerge in a capitalist economy, which inherently contains crises. Whereas orthodox economists tend to explain the causes of crises and disequilibriums in a supposedly self-regulating economy.

===The American Economic Association===
{{Main|American Economic Association|Richard T. Ely|Land economics}}
In 1885 the [[American Economic Association]] (AEA) was founded by [[Richard T. Ely]] (1854–1943) et al., publishing the ''[[American Economic Review]]'' starting in 1911. In 1918 Ely published ''Private Colonization of Land'', founding Lambda Alpha International in 1930 to promote [[Land economics|Land Economics]].<ref name=newschool />

==Keynesianism (20th century)==
{{Main|John Maynard Keynes|The Economic Consequences of the Peace}}
[[File:John Maynard Keynes.jpg|thumb|John Maynard Keynes (1883–1946) at the [[United Nations Monetary and Financial Conference|Bretton Woods Conference]]]]
[[John Maynard Keynes]] (1883–1946) was born in Cambridge, educated at [[Eton college|Eton]], and supervised by both [[A. C. Pigou]] and [[Alfred Marshall]] at [[Cambridge University]]. He began his career as a lecturer before working for the British government during the Great War, rising to be the British government's financial representative at the [[Versailles conference|Versailles Conference]], where he profoundly disagreed with the decisions made.  His observations were laid out in his book ''The Economic Consequences of the Peace''<ref>Keynes (1919) ''The Economic Consequences of the Peace''</ref> (1919), where he documented his outrage at the collapse of American adherence to the [[Fourteen Points]]<ref>Keynes (1919) Chapter III, para 20</ref> and the mood of vindictiveness that prevailed towards Germany.<ref>Keynes (1919) Chapter V, para 43</ref> He resigned from the conference, using extensive economic data provided by the conference records to argue that if the victors forced [[war reparations]] to be paid by the defeated [[Central Powers]], then a world [[financial crisis]] would ensue, leading to  [[World War II]].<ref>Keynes (1919) Chapter VI, para 4</ref> Keynes finished his treatise by advocating, first, a reduction in reparation payments by Germany to a realistically manageable level, increased intra-governmental management of continental coal production and a free trade union through the [[League of Nations]];<ref>Keynes (1919) Chapter VII, para 7</ref> second, an arrangement to set off debt repayments between the Allied countries;<ref>Keynes (1919) Chapter VII, para 30</ref> third, complete reform of international currency exchange and an international loan fund;<ref>Keynes (1919) Chapter VII, para 48</ref> and fourth, a reconciliation of trade relations with Russia and Eastern Europe.<ref>Keynes (1919) Chapter VII, para 58</ref>

The book was an enormous success, and though it was criticized for false predictions by a number of people,<ref>e.g. Etienne Mantioux (1946) ''The Carthaginian Peace, or the Economic Consequences of Mr. Keynes''</ref> without the changes he advocated, Keynes's dark forecasts matched the world's experience through the [[Great Depression]] which began in 1929, and the descent into [[World War II]] in 1939.  World War I had been touted as the "war to end all wars", and the absolute failure of the peace settlement generated an even greater determination to not repeat the same mistakes.  With the defeat of [[Fascism]], the [[Bretton Woods Conference]] was held in July 1944 to establish a new economic order, in which Keynes was again to play a leading role.<ref>See, e.g., [[Donald Markwell]], ''[[John Maynard Keynes]] and [[International Relations]]: Economic Paths to War and Peace'', Oxford University Press, 2006.</ref>

===The General Theory===
{{Main|The General Theory of Employment, Interest and Money}}

During the Great Depression, Keynes published his most important work, ''[[The General Theory of Employment, Interest and Money]]'' (1936). The Great Depression had been sparked by the [[Wall Street crash of 1929]], leading to massive rises in unemployment in the United States, leading to debts being recalled from European borrowers, and an economic domino effect across the world. Orthodox economics called for a tightening of spending, until business confidence and profit levels could be restored. Keynes by contrast, had argued in ''A Tract on Monetary Reform'' (1923) (which argues for a stable currency) that a variety of factors determined economic activity, and that it was not enough to wait for the long run market equilibrium to restore itself. As Keynes famously remarked:

{{blockquote|"...this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."<ref>Keynes (1923) Chapter 3</ref>}}

On top of the [[Money supply|supply of money]], Keynes identified the [[propensity to consume]], inducement to invest, marginal efficiency of capital, liquidity preference, and multiplier effect as variables which determine the level of the economy's output, employment, and price levels. Much of this esoteric terminology was invented by Keynes especially for his ''General Theory''. Keynes argued that if [[savings]] were being withheld from [[Investment (macroeconomics)|investment]], total spending falls, leading to reduced incomes and unemployment, which reduces savings again. This continues until the desire to save becomes equal to the desire to invest, which means a new "equilibrium" is reached and the spending decline halts. This new "equilibrium" is a depression, where people are investing less, have less to save and less to spend.

Keynes argued that employment depends on total spending, which is composed of [[consumer spending]] and business investment in the [[private sector]]. Consumers only spend "passively", or according to their income fluctuations. Businesses, on the other hand, are induced to invest by the expected rate of return on new investments (the benefit) and the rate of interest paid (the cost). So, said Keynes, if business expectations remained the same, and government reduces interest rates (the costs of borrowing), investment would increase, and would have a multiplied effect on total spending. [[Interest rate]]s, in turn, depend on the quantity of money and the desire to hold money in bank accounts (as opposed to investing). If not enough money is available to match how much people want to hold, interest rates rise until enough people are put off. So if the quantity of money were increased, while the desire to hold money remained stable, interest rates would fall, leading to increased investment, output and employment. For both these reasons, Keynes therefore advocated low interest rates and easy credit, to combat unemployment.

But Keynes believed in the 1930s, conditions necessitated [[public sector]] action. [[Deficit spending]], said Keynes, would kick-start economic activity. This he had advocated in an open letter to U.S. President [[Franklin D. Roosevelt]] in ''[[The New York Times]]'' (1933). The [[New Deal]] programme in the U.S. had been well underway by the publication of the ''General Theory''. It provided conceptual reinforcement for policies already pursued. Keynes also believed in a more egalitarian distribution of income, and taxation on [[unearned income]] arguing that high rates of savings (to which richer folk are prone) are not desirable in a developed economy. Keynes therefore advocated both monetary management and an active fiscal policy.

===The Cambridge Circus===
{{Main|Keynesian economics|Cambridge Circus (economics)|Joan Robinson|Alfred Eichner|Richard Kahn, Baron Kahn|Piero Sraffa|John Hicks}}

During World War II Keynes acted as adviser to [[HM Treasury]] again, negotiating major loans from the U.S., helping formulate the plans for the [[International Monetary Fund]], the [[World Bank]], and the [[International Trade Organisation]]<ref>This was not accepted by the United States Congress at the time, but arose later through the [[General Agreement on Tariffs and Trade]] of 1947 and the [[World Trade Organization]] of 1994</ref> at the 1944 [[United Nations Monetary and Financial Conference|Bretton Woods Conference]], a package designed to stabilize world economy fluctuations that had occurred in the 1920s and create a level trading field across the globe.  Keynes died little more than a year later, but his ideas had already shaped a new global economic order, and all Western governments followed the [[Keynesian economics]] program of deficit spending to avert crises and maintain full employment.

[[File:Joan Robinson Ramsey Muspratt.jpg|thumb|upright=.7|Joan Robinson (1903–1983)]]

One of Keynes's pupils at Cambridge was [[Joan Robinson]] (1903–1983), a member of Keynes's [[Cambridge Circus (economics)|Cambridge Circus]], who contributed to the notion that [[competition]] is seldom perfect in a market, an indictment of the theory of markets setting prices. In ''The Production Function and the Theory of Capital'' (1953) Robinson tackled what she saw to be some of the circularity in orthodox economics. Neoclassicists assert that a competitive market forces producers to minimize the costs of production. Robinson said that costs of production are merely the prices of inputs, like [[Capital (economics)|capital]]. Capital goods get their value from the final products.  And if the price of the final products determines the price of capital, then it is, argued Robinson, utterly circular to say that the price of capital determines the price of the final products. Goods cannot be priced until the costs of inputs are determined. This would not matter if everything in the economy happened instantaneously, but in the real world, price setting takes time – goods are priced before they are sold. Since capital cannot be adequately valued in independently measurable units, how can one show that capital earns a return equal to the contribution to production?

[[Alfred Eichner]] (1937–1988) was an American post-Keynesian economist who challenged the neoclassical price mechanism and asserted that prices are not set through supply and demand but rather through mark-up pricing.
Eichner is one of the founders of the post-Keynesian school of economics and was a professor at Rutgers University at the time of his death. Eichner's writings and advocacy of thought, differed with the theories of John Maynard Keynes, who was an advocate of government intervention in the free market and proponent of public spending to increase employment. Eichner argued that investment was the key to economic expansion. He was considered an advocate of the concept that government incomes policy should prevent inflationary wage and price settlements in connection to the customary fiscal and monetary means of regulating the economy.

[[Richard Kahn, Baron Kahn|Richard Kahn]] (1905–1989) was a member of the Cambridge Circus who in 1931 proposed the [[Multiplier (economics)|Multiplier]].

[[File:Sraffa.jpg|thumb|upright=.7|Piero Sraffa (1898–1983)]]

[[Piero Sraffa]] (1898–1983) came to England from [[Italian Empire|Fascist Italy]] in the 1920s, and became a member of the Cambridge Circus.  In 1960 he published a small book called ''Production of Commodities by Means of Commodities'', which explained how technological relationships are the basis for production of goods and services. Prices result from wage-profit tradeoffs, collective bargaining, labour and management conflict and the intervention of government planning. Like Robinson, Sraffa was showing how the major force for price setting in the economy was not necessarily market adjustments.

[[John Hicks]] (1904–1989) of England was a Keynesian who in 1937 proposed the [[IS/LM model|Investment Saving – Liquidity Preference Money Supply Model]], which treats the intersection of the IS and LM curves as the general equilibrium in both markets.

===New Keynesian macroeconomics===
{{Main|New Keynesian|Edmund Phelps|John B. Taylor|Sticky (economics)|George Akerlof|Janet Yellen|Huw Dixon|Michael Woodford (economist)|Julio Rotemberg}}

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In 1977 [[Edmund Phelps]] (1933–) (who was awarded the 2006 Nobel Economics Prize) and [[John B. Taylor]] (1946–) published a paper proving that [[Taylor Contracts (economics)|staggered setting of wages and prices]] gives monetary policy a role in stabilizing economic fluctuations if the wages/prices are [[Sticky (economics)|sticky]], even when all workers and firms have rational expectations, which caused Keynesian economics to make a comeback among mainstream economists with [[New Keynesian|New Keynesian Macroeconomics]]. Its central theme is the provision of a microeconomic foundation for Keynesian macroeconomics, obtained by identifying minimal deviations from the standard microeconomic assumptions which yield Keynesian macroeconomic conclusions, such as the possibility of significant welfare benefits from macroeconomic stabilization.<ref>Mankiw, 1655.</ref>

In 1985 [[George Akerlof]] (1940–) and [[Janet Yellen]] (1946–) published [[menu cost]]s arguments showing that, under imperfect competition, small deviations from rationality generate significant (in welfare terms) [[sticky (economics)|price stickiness]].<ref>Mankiw, 1657.</ref>

In 1987 British economist [[Huw Dixon]] (1958–) published ''A simple model of imperfect competition with Walrasian features'',<ref>Huw Dixon, A simple model of imperfect competition with Walrasian features, Oxford Economic Papers, 1987, 39, 134–60</ref> the first work to demonstrate in a simple general equilibrium model that the fiscal multiplier could be increasing with the degree of imperfect competition in the output market, helping develop [[New Keynesian economics]].  The reason for this is that [[imperfect competition]] in the output market tends to reduce the [[real wage]], leading to the household substituting away from [[Consumption (economics)|consumption]] towards [[leisure]]. When [[government spending]] is increased, the corresponding increase in [[Taxation|lump-sum taxation]] causes both leisure and consumption to decrease (assuming that they are both a normal good). The greater the degree of imperfect competition in the output market, the lower the [[real wage]] and hence the more the reduction falls on leisure (i.e. households work more) and less on consumption. Hence the [[fiscal multiplier]] is less than one, but increasing in the degree of imperfect competition in the output market.<ref>Costa L, Dixon H. (2011), "Fiscal Policy Under Imperfect Competition with Flexible Prices: An Overview and Survey", Economics: The Open-Access, Open-Assessment E-Journal, Vol. 5, 2011–3. {{doi|10.5018/economics-ejournal.ja.2011-3}}. [https://dx.doi.org/10.5018/economics-ejournal.ja.2011-3]</ref>

In 1997 American economist [[Michael Woodford (economist)|Michael Woodford]] (1955–) and Argentine economist [[Julio Rotemberg]] (1953–) published the first paper describing a microfounded DSGE New Keynesian macroeconomic model.

===Sidney Weintraub, Paul Davidson and Post-Keynesian economics===
In 1975 American economists [[Sidney Weintraub (economist born 1914 died 1983)|Sidney Weintraub]] (1914–1983) and [[Henry Wallich]] (1914–1988) published ''A Tax-Based Incomes Policy'', promoting [[Incomes policy|Tax-Based Incomes Policy (TIP)]], using the income tax mechanism to implement an anti-inflationary incomes policy. In 1978 Weintraub and American economist [[Paul Davidson (economist)|Paul Davidson]] (1930–) founded the ''Journal of Post Keynesian Economics''. This opened the door to many younger economists such as E. Ray Canterbery (1935–). Always Post Keynesian in his style and approach, Canterbery went on to make contributions outside traditional Post Keynesianism. His friend, [[John Kenneth Galbraith]], was a long-time influence.

===The credit theory of money===
{{Main|Alfred Mitchell-Innes|Credit theory of money}}

In 1913 English economist-diplomat [[Alfred Mitchell-Innes]] (1864–1950) published ''What is Money?'', which was reviewed favorably by [[John Maynard Keynes]], followed in 1914 by ''The Credit Theory of Money'', advocating the [[Credit theory of money|Credit Theory of Money]],
which economist L. Randall Wray called "The best pair of articles on the nature of money written in the twentieth century."<ref>{{cite book |editor=L. Randall Wray |title=Credit and State Theories of Money: The Contributions of A. Mitchell Innes |publisher=Edward Elgar Publishing |year=2004 |isbn=978-1-84376-513-4 }}</ref>

==Chicago school of economics (20th century)==
{{Main|Chicago school of economics|Law and economics|Monetarism}}
{{key people|Ronald Coase|Richard Posner|Frank Knight|Jacob Viner|Henry Calvert Simons|Milton Friedman|George Stigler|Robert Lucas, Jr.|Gary Becker}}
[[File:GaryBecker-May24-2008.jpg|thumb|upright=.7|Gary Becker (1930–2014)]]

The government-interventionist monetary and fiscal policies that the postwar Keynesian economists recommended came under attack by a group of theorists working at the [[University of Chicago]], which came in the 1950s to be known as the [[Chicago School (economics)|Chicago School of Economics]]. Before World War II, the Old Chicago School of strong Keynesians was founded by [[Frank Knight]] (1885–1972), [[Jacob Viner]] (1892–1970), and
[[Henry Calvert Simons]] (1899–1946). The second generation was known for a more conservative line of thought, reasserting a [[Libertarianism|libertarian]] view of market activity that people are best left to themselves to be free to choose how to conduct their own affairs.<ref name=newschool />

[[Ronald Coase]] (1910–2013) of the Chicago School of Economics was the most prominent economic analyst of law, and the 1991 [[Nobel Prize in Economics]] winner.  His first major article ''[[The Nature of the Firm]]'' (1937) argued that the reason for the existence of firms ([[company law|companies]], partnerships, etc.) is the existence of [[transaction cost]]s. [[Homo economicus]] trades through bilateral [[contract]]s on open markets until the costs of transactions make the use of corporations to produce things more cost-effective. His second major article ''[[The Problem of Social Cost]]'' (1960) argued that if we lived in a world without transaction costs, people would bargain with one another to create the same allocation of resources, regardless of the way a court might rule in property disputes. Coase used the example of an old [[Law|legal]] case about [[nuisance]] named ''[[Sturges v Bridgman]]'', where a noisy sweets maker and a quiet doctor were neighbors and went to court to see who should have to move.<ref>''[[Sturges v Bridgman]]'' (1879) 11 Ch D 852</ref> Coase said that regardless of whether the judge ruled that the sweets maker had to stop using his machinery, or that the doctor had to put up with it, they could strike a mutually beneficial [[bargaining|bargain]] about who moves house that reaches the same outcome of resource distribution. Only the existence of [[transaction costs]] may prevent this.<ref>Coase (1960) IV, 7</ref> So the law ought to preempt what ''would'' happen, and be guided by the most [[efficiency (economics)|efficient]] solution. The idea is that law and regulation are not as important or effective at helping people as lawyers and government planners believe.<ref>Coase (1960) V, 9</ref> Coase and others like him wanted a change of approach, to put the burden of proof for positive effects on a government that was intervening in the market, by analyzing the costs of action.<ref>Coase (1960) VIII, 23</ref>

In the 1960s [[Gary Becker]] (1930–2014) and [[Jacob Mincer]] (1922–2006) of the Chicago School of Economics founded ''[[New Home Economics]]'', which spawned [[Family Economics]].

In 1973 Coase disciple [[Richard Posner]] (1939–) published ''Economic Analysis of Law'', which became a standard textbook, causing him to become the most cited legal scholar of the 20th century. In 1981 he published ''The Economics of Justice'', which claimed that judges have been interpreting common law as it they were trying to maximize economic welfare.

[[File:Portrait of Milton Friedman.jpg|thumb|upright=.7|Milton Friedman (1912–2006)]]
[[Milton Friedman]] (1912–2006) of the Chicago School of Economics is one of the most influential economists of the late 20th century, receiving the Nobel Prize in Economics in 1976.  He is known for ''[[A Monetary History of the United States]]'' (1963), in which he argued that the [[Great Depression]] was caused by the policies of the [[Federal Reserve]]. Friedman argues that laissez-faire government policy is more desirable than government intervention in the economy. Governments should aim for a neutral monetary policy oriented toward long-run [[economic growth]], by gradual expansion of the money supply. He advocates the [[quantity theory of money]], that general prices are determined by money. Therefore, active monetary (e.g. easy credit) or fiscal (e.g. tax and spend) policy can have unintended negative effects. In ''[[Capitalism and Freedom]]'' (1962), Friedman wrote:

{{blockquote|"There is likely to be a lag between the need for action and government recognition of the need; a further lag between recognition of the need for action and the taking of action; and a still further lag between the action and its effects."<ref>Friedman (1967) p.</ref>}}

Friedman was also known for his work on the consumption function, the [[permanent income hypothesis|Permanent Income Hypothesis]] (1957), which Friedman referred to as his best scientific work.<ref>{{cite news|title=Charlie Rose Show|date=2005-12-26}}</ref> This work contended that rational consumers would spend a proportional amount of what they perceived to be their permanent income. Windfall gains would mostly be saved. Tax reductions likewise, as rational consumers would predict that taxes would have to rise later to balance public finances. Other important contributions include his critique of the [[Phillips curve|Phillips Curve]], and the concept of the [[natural rate of unemployment]] (1968).<ref name=newschool />

===New classical macroeconomics and synthesis===
{{Main|New Classical Economics|New Classical economics|Real business cycle theory|Dynamic stochastic general equilibrium|New neoclassical synthesis}}
[[File:La_Revolución_Industrial_Pasado_y_Futuro,_Robert_E._Lucas_Jr._screenshot_(cropped).jpg|thumb|upright=.7|Robert Lucas giving a lecture in 1996]]

In the early 1970s American Chicago School economist [[Robert Lucas, Jr.|Robert E. Lucas, Jr.]] (1937–) founded [[New Classical economics|New Classical Macroeconomics]] based on [[Milton Friedman]]'s monetarist critique of Keynesian macroeconomics, and the idea of [[rational expectations]],<ref>Mankiw, 1647–48.</ref> first proposed in 1961 by [[John Muth|John F. Muth]], opposing the idea that government intervention can or should stabilize the economy.<ref>Mankiw, N. Greg. "A Quick Refresher Course in Macroeconomics." ''Journal of Economic Literature, Vol. 28'', No. 4. (Dec. 1990), p. 1647.</ref> The [[Policy-ineffectiveness proposition|Policy-Ineffectiveness Proposition]] (1975)<ref>Mankiw, 1649.</ref> of [[Thomas J. Sargent]] (1943–) and [[Neil Wallace]] (1939–), which seemed to refute a basic assumption of Keynesian economics was also adopted. The [[Lucas aggregate supply function]] states that economic output is a function of money or price "surprise." Lucas was awarded the 1995 Nobel Economics Prize.

Lucas' model was superseded as the standard model of New Classical Macroeconomics by the [[real business cycle theory|Real Business Cycle Theory]], proposed in 1982 by [[Finn Kydland]] (1943–) and [[Edward C. Prescott]] (1940–), which seeks to explain observed fluctuations in output and employment in terms of real variables such as changes in technology and tastes. Assuming competitive markets, real business cycle theory implies that cyclical fluctuations are optimal responses to variability in technology and tastes, and that macroeconomic stabilization policies must reduce welfare.<ref>Mankiw, 1653.</ref>

In 1982 Kydland and Prescott also founded the theory of [[Dynamic stochastic general equilibrium|Dynamic Stochastic General Equilibrium]] (DSGE), large systems of microeconomic equations combined into models of the general economy, which became central to the [[New neoclassical synthesis|New Neoclassical Synthesis]], incorporating theoretical elements such as sticky prices from New Keynesian Macroeconomics. They shared the 2004 Nobel Economics Prize.<ref name=newschool />

===Efficient market hypothesis===
{{Main|Efficient-market hypothesis}}
In 1965 Chicago School economist [[Eugene Fama]] (1939–) published ''The Behavior of Stock Market Prices'', which found that stock market prices follow a random walk, proposing the Efficient Market Hypothesis, that randomness is characteristic of a perfectly functioning financial market. The same year [[Paul Samuelson]] published a paper concluding the same thing with a mathematical proof, sharing the credit. Earlier in 1948 [[Holbrook Working]] (1895–1985) published a paper saying the same thing, but not in a mathematical form. In 1970 Fama published ''Efficient Capital Markets: A Review of Theory and Empirical Work'', proposing that efficient markets can be strong, semi-strong, or weak, and also proposing the [[Joint hypothesis problem|Joint Hypothesis Problem]], that the idea of market efficiency can not be rejected without also rejecting the market mechanism.

==Games, evolution and growth (20th century)==
{{See also|Game theory|Evolutionary economics|Neoclassical growth model}}
{{Key people|John von Neumann|Oskar Morgenstern|Robert Solow|Trevor Swan}}

[[File:JohnvonNeumann-LosAlamos.gif|thumb|upright=.7|John von Neumann (1903–1957)]]
[[File:John Forbes Nash, Jr. by Peter Badge.jpg|thumb|left|upright=.7|John Forbes Nash Jr. (1928–2015)]]
[[File:Joseph Schumpeter ekonomialaria.jpg|right|thumb|upright=.7|Joseph Alois Schumpeter (1883–1950)]]
[[File:Robert Solow by Olaf Storbeck.jpg|thumb|left|upright=.7|Robert Solow (1924–2023)]]

In 1898 Thorstein Veblen published ''Why is Economics not an Evolutionary Science'', which coins the term [[Evolutionary economics]], making use of anthropology to deny that there is a universal human nature, emphasizing the conflict between "industrial" or instrumental and "pecuniary" or ceremonial values, which became known as the Ceremonial/Instrumental Dichotomy.<ref name=newschool />

[[Joseph Alois Schumpeter]] (1883–1950) was an Austrian School economist and political scientist best known for his works on [[business cycles]] and [[innovation]].  He insisted on the role of the entrepreneurs in an economy.  In ''Business Cycles: A theoretical, historical and statistical analysis of the Capitalist process'' (1939), Schumpeter synthesized the theories about business cycles, suggesting that they could explain the economic situations. According to Schumpeter, capitalism necessarily goes through long-term cycles because it is entirely based upon scientific inventions and innovations.  A phase of expansion is made possible by innovations, because they bring [[productivity|productivity gains]] and encourage entrepreneurs to invest.  However, when investors have no more opportunities to invest, the economy goes into recession, several firms collapse, closures and bankruptcy occur.  This phase lasts until new innovations bring a [[creative destruction]] process, i.e. they destroy old products, reduce the employment, but they allow the economy to start a new phase of growth, based upon new products and new [[factors of production]].<ref name=newschool /><ref>[[Alessandro Roncaglia]]. ''The wealth of ideas: a history of economic thought''. Cambridge University Press. 2005. {{ISBN|978-0-521-84337-9}}. p. 431</ref>

In 1944 Hungarian-American mathematician [[John von Neumann]] and [[Oskar Morgenstern]] published ''Theory of Games and Economic Behavior'', founding '''[[Game theory|Game Theory]]''', which was widely adopted by economists. In 1951 Princeton mathematician [[John Forbes Nash|John Forbes Nash Jr.]] published the article ''Non-Cooperative Games'', becoming the first to define a [[Nash equilibrium|Nash Equilibrium]] for non-zero-sum games.

In 1956 American economist [[Robert Solow]] (1924–2023) and Australian economist [[Trevor Swan]] (1918–1989) proposed the [[Solow–Swan model]], based on productivity, capital accumulation, population growth, and technological progress. In 1956 Swan also proposed the [[Swan diagram]] of the internal-external balance. In 1987 Solow was awarded the Nobel Economics Prize.<ref name=ohet />{{rp|440–41}}

==Post World War II and globalization (mid to late 20th century)==
{{Main|Globalization|Neoclassical synthesis|Positive economics}}
{{Key people|John Kenneth Galbraith|Paul Samuelson|Kenneth Arrow|Gérard Debreu}}

The globalization era began with the end of World War II and the rise of the U.S. as the world's leading economic power, along with the [[United Nations]]. To prevent another global depression, the victorious allies countries forgave Germany its war debts and used its surpluses to rebuild Europe and encourage reindustrialization of Germany and Japan. In the 1960s it changed its role to recycling global surpluses.<ref>{{cite news | last= Varoufakis | first= Yanis | author-link= Yanis Varoufakis | title= Is Europe's Complacency America's Fault? | url= https://www.theglobalist.com/is-europes-complacency-americas-fault/ | access-date= 27 March 2017 | publisher= the globalist | date= 30 July 2013 | archive-url= https://web.archive.org/web/20170328195240/https://www.theglobalist.com/is-europes-complacency-americas-fault/ | archive-date= 28 March 2017 | url-status= live }}</ref>
[[File:JohnKennethGalbraithOWI.jpg|upright=.7|thumb|left|John K. Galbraith (1908–2006) worked under the New Deal administration of [[Franklin Delano Roosevelt]].]]

After World War II, Canadian-born [[John Kenneth Galbraith]] (1908–2006) became one of the standard bearers for pro-active government and liberal-democrat politics. In ''[[The Affluent Society]]'' (1958), Galbraith argued that voters reaching a certain material wealth begin to vote against the common good. He also argued that the "[[conventional wisdom]]" of the conservative consensus was not enough to solve the problems of social inequality.<ref>Galbraith (1958) Chapter 2; n.b. though Galbraith claimed to coin the phrase "conventional wisdom", the phrase is used several times in [[Thorstein Veblen]]'s book ''The Instinct of Workmanship''.</ref> In an age of big business, he argued, it is unrealistic to think of markets of the classical kind. They set prices and use [[advertising]] to create [[artificial demand]] for their own products, distorting people's real preferences. Consumer preferences actually come to reflect those of corporations – a "dependence effect" – and the economy as a whole is geared to irrational goals.<ref>Galbraith (1958) Chapter 11</ref> In ''[[The New Industrial State]]'' Galbraith argued that economic decisions are planned by a private-bureaucracy, a [[technostructure]] of experts who manipulate [[marketing]] and [[public relations]] channels. This hierarchy is self-serving, profits are no longer the prime motivator, and even managers are not in control. Because they are the new planners, corporations detest risk, require steady economic and stable markets. They recruit governments to serve their interests with fiscal and monetary policy, for instance adhering to monetarist policies which enrich money-lenders in the City through increases in interest rates. While the goals of an affluent society and complicit government serve the irrational technostructure, public space is simultaneously impoverished. Galbraith paints the picture of stepping from penthouse villas onto unpaved streets, from landscaped gardens to unkempt public parks. In ''[[Economics and the Public Purpose]]'' (1973) Galbraith advocates a "new socialism" as the solution, [[Nationalization|nationalising]] military production and public services such as [[health care]], introducing disciplined salary and price controls to reduce inequality.<ref>{{cite web |url=https://www.youtube.com/watch?v=jNgfIH5pyxg |title=Conversations with History: John Kenneth Galbraith |via=YouTube |date=2008-06-12 |access-date=2013-03-29 |archive-url=https://web.archive.org/web/20131009030101/http://www.youtube.com/watch?v=jNgfIH5pyxg |archive-date=2013-10-09 |url-status=live }}</ref>

In contrast to Galbraith's linguistic style, the post-war economics profession began to synthesize much of [[John Maynard Keynes|Keynes]]' work with mathematical representations. Introductory university economics courses began to present economic theory as a unified whole in what is referred to as the [[neoclassical synthesis]]. "'''[[Positive economics]]'''" became the term created to describe certain trends and "laws" of economics that could be objectively observed and described in a value-free way, separate from "'''[[Normative economics|normative economic]]'''" evaluations and judgments.

[[File:Paul Samuelson.gif|thumb|left|upright=.7|Paul Samuelson (1915–2009) wrote the best selling economics texts.]]
The [[Paul Samuelson]]'s (1915–2009) ''[[Foundations of Economic Analysis]]'' published in 1947 was an attempt to show that mathematical methods could [[mathematical problem|represent]] a core of testable economic theory. Samuelson started with two assumptions. First, people and firms will act to [[rational choice theory|maximize]] their self-interested goals. Second, markets tend towards an [[market equilibrium|equilibrium]] of prices, where demand matches supply. He extended the mathematics to describe equilibrating behavior of [[economic system]]s, including that of the then new [[macroeconomic theory]] of [[John Maynard Keynes]]. Whilst [[Richard Cantillon]] had imitated [[Isaac Newton]]'s mechanical physics of inertia and gravity in competition and the market,<ref name="Fusfeld 1994 p.21"/> the [[physiocrats]] had copied the body's blood system into circular flow of income models, [[William Jevons]] had found growth cycles to match the periodicity of [[sunspot]]s, Samuelson adapted [[thermodynamics]] formulae to economic theory. Reasserting economics as a hard science was being done in the United Kingdom also, and one celebrated "discovery", of [[A. W. Phillips]], was of a correlative relationship between inflation and unemployment. The workable policy conclusion was that securing full employment could be traded-off against higher inflation. Samuelson incorporated the idea of the [[Phillips curve]] into his work. His introductory textbook [[Economics (textbook)|''Economics'']] was influential and widely adopted. It became the most successful economics text ever. Paul Samuelson was awarded the new [[Nobel Memorial Prize in Economic Sciences|Nobel Prize in Economics]] in 1970 for his merging of mathematics and political economy.
[[File:Kenneth Arrow, Stanford University.jpg|thumb|upright=.7|Kenneth Arrow (1921–2017)]]

American economist [[Kenneth Arrow]]'s (1921–2017) published ''[[Social Choice and Individual Values]]'' in 1951. It consider connections between economics and political theory. It gave rise to ''[[social choice theory]]'' with the introduction of his "[[Arrow's impossibility theorem|Possibility Theorem]]". This sparked widespread discussion over how to interpret the different conditions of the theorem and what implications it had for democracy and voting. Most controversial of his four (1963) or five (1950/1951) conditions is the [[independence of irrelevant alternatives]].<ref>{{cite web |url=https://www.youtube.com/watch?v=muUjNWIeDZg |title=What can be done to improve the current situation? Regulation vs deregulation and lessons learnt from previous financial crisis |via=YouTube |date=2009-01-13 |access-date=2013-03-29 |archive-url=https://web.archive.org/web/20130801005505/http://www.youtube.com/watch?v=muUjNWIeDZg |archive-date=2013-08-01 |url-status=live }}</ref>

In the 1950s Kenneth Arrow and [[Gérard Debreu]] (1921–2004) developed the [[Arrow–Debreu model]] of [[General equilibrium|general equilibria]]. In 1963 Arrow published a paper which founded [[Health economics|Health Economics]].{{Citation needed|date=March 2015}}

In 1971 Arrow and [[Frank Hahn]] published ''General Competitive Analysis'' (1971), which reasserted a theory of general equilibrium of prices through the economy.  In 1971, US President [[Richard Nixon]]'s had declared that "[[We are all Keynesians now]]", announcing wage and price controls. He lifted this from a comment by [[Milton Friedman]] in 1965 which formed a ''[[Time (magazine)|Time]]''.<ref>{{Cite web |url=http://www.time.com/time/magazine/article/0,9171,842353-3,00.html |title="We Are All Keynesians Now" – TIME |access-date=2007-09-30 |archive-url=https://web.archive.org/web/20071104150655/http://www.time.com/time/magazine/article/0,9171,842353-3,00.html |archive-date=2007-11-04 |url-status=dead }}</ref>

===International economics===
{{Main|International economics}}
[[File:Paul Krugman-press conference Dec 07th, 2008-8.jpg|thumb|left|upright=.7|Paul Krugman (1953–)]]

In 1951 English economist [[James Meade]] (1907–1995) published ''The Balance of Payments'', volume 1 of "The Theory of International Economic Policy", which proposed the theory of domestic divergence (internal and external balance), and promoted policy tools for governments.  In 1955 he published volume 2 ''Trade and Welfare'', which proposed the theory of the "second-best", and promoted protectionism.  He shared the 1977 Nobel Economic Prize with Bertil Ohlin.

In 1979 American economist [[Paul Krugman]] (1953–) published a paper founding [[New trade theory]], which attempts to explain the role of increasing returns to scale and network effects in international trade. In 1991 he published a paper founding [[New economic geography]]. His textbook ''International Economics'' (2007) appears on many undergraduate reading lists.  He was awarded the Nobel Prize in Economics in 2008.

===Development economics===
{{Main|Development economics}}
[[File:Amartya Sen NIH.jpg|thumb|upright=.7|Amartya Sen (1933–)]]

In 1954 Saint Lucian economist [[Sir Arthur Lewis]] (1915–1991) proposed the [[Dual sector model|Dual Sector Model]] of [[Development economics|Development Economics]], which claims that capitalism expands by making use of an unlimited supply of labor from the backward non-capitalist "subsistence sector" until it reaches the Lewisian breaking point where wages begin to rise, receiving the 1979 Nobel Economics Prize.

In 1955 Russian-born American economist [[Simon Kuznets]] (1901–1985), who introduced the concept of [[Gross domestic product]] (GDP) in 1934 published an article revealing an inverted U-shaped relation between income inequality and economic growth, meaning that economic growth increases income disparity between rich and poor in poor countries, but decreases it in wealthy countries.  In 1971 he received the Nobel Economics Prize.

Indian economist [[Amartya Sen]] (1933–) expressed considerable skepticism about the validity of neoclassical assumptions, and was highly critical of [[rational expectations]] theory, devoting his work to [[Development economics|Development Economics]] and human rights.

In 1981, Sen published ''Poverty and Famines: An Essay on Entitlement and Deprivation'' (1981), a book in which he argued that famine occurs not only from a lack of food, but from inequalities built into mechanisms for distributing food. Sen also argued that the Bengal famine was caused by an urban economic boom that raised food prices, thereby causing millions of rural workers to starve to death when their wages did not keep up.<ref name=Time>{{cite news | last= Sachs | first= Jeffrey | author-link= Jeffrey Sachs | title= The real causes of famine: a Nobel laureate blames authoritarian rulers | url= http://content.time.com/time/magazine/article/0,9171,989405,00.html | access-date= 16 June 2014 | magazine= Time | date= 26 October 1998 | archive-url= https://web.archive.org/web/20140715015828/http://content.time.com/time/magazine/article/0,9171,989405,00.html | archive-date= 15 July 2014 | url-status= live }}</ref>

In addition to his important work on the causes of famines, Sen's work in the field of development economics has had considerable influence in the formulation of the "[[Human Development Report]]",<ref name=UNDP /> published by the [[United Nations Development Programme]].<ref name=key /> This annual publication that ranks countries on a variety of economic and social indicators owes much to the contributions by Sen among other social choice theorists in the area of economic measurement of poverty and inequality.  Sen was awarded the [[Nobel Memorial Prize in Economic Sciences|Nobel Prize in Economics]] in 1998.

===New Economic History (Cliometrics)===
{{Main|New economic history}}

In 1958 American economists [[Alfred H. Conrad]] (1924–1970) and [[John R. Meyer]] (1927–2009) founded [[New economic history|New Economic History]], which in 1960 was called Cliometrics by American economist [[Stanley Reiter]] (1925–2014) after [[Clio]], the muse of history.  It uses neoclassical economic theory to reinterpret historical data, spreading throughout academia, causing economic historians untrained in economics to disappear from history departments.  American cliometric economists [[Douglass North|Douglass Cecil North]] (1920–2015) and [[Robert William Fogel]] (1926–2013) were awarded the 1993 Nobel Economics Prize.

===Public choice theory and constitutional economics===
[[File:BuchananTullock.jpg|thumb|right|James Buchanan (1919–2013), Gordon Tullock (1922–2014)]]
{{Main|James M. Buchanan|Gordon Tullock|Public choice theory|Constitutional economics}}
In 1962 American economists [[James M. Buchanan]] (1919–2013) and [[Gordon Tullock]] (1922–2014) published ''[[The Calculus of Consent]]'', which revived [[Public choice theory|Public Choice Theory]] by differentiating politics (the rules of the game) from public policy (the strategies to adopt within the rules), founding [[Constitutional economics|Constitutional Economics]], the economic analysis of constitutional law. Buchanan was awarded the 1986 Nobel Economics Prize.

===Impossible trinity===
{{Main|Marcus Fleming|Robert Mundell}}
In 1962–1963 Scottish economist [[Marcus Fleming]] (1911–1976) and Canadian economist [[Robert Mundell]] (1932–) published the [[Mundell–Fleming model|Mundell–Fleming Model of the Economy]], an extension of the IS–LM Model to an open economy, proposing the Impossible Trinity of fixed exchange rate, free capital movement, and an independent monetary policy, only two of which can be maintained simultaneously. Mundell received the 1999 Nobel Economics Prize.

===Market for corporate control===
In 1965 American economist [[Henry Manne|Henry G. Manne]] (1928–2015) published ''Mergers and the Market for Corporate Control'' in ''Journal of Political Economy'', which claims that changes in the price of a share of stock in the stock market will occur more rapidly when insider trading is prohibited than when it is permitted, founding the theory of [[market for corporate control]].

===Information economics===
[[File:Akerlofstiglitz Page 1.jpg|thumb|right|George Akerlof (1940–), Joseph Stiglitz (1943–)]]
{{Main|Joseph Stiglitz|George Akerlof|Information economics}}
In 1970 [[George Akerlof]] (1940–) published the paper ''[[The Market for Lemons]]'', founding the theory of [[information economics|Information Economics]], receiving the 2001 Nobel Economics Prize.

[[Joseph Stiglitz|Joseph E. Stiglitz]] (1943–) also received the Nobel Economics Prize in 2001 for his work in [[information economics|Information Economics]].  He has served as chairman of President Clinton's Council of Economic Advisers, and as chief economist for the [[World Bank]]. Stiglitz has taught at many universities, including Columbia, Stanford, Oxford, Manchester, Yale, and MIT.  In recent years he has become an outspoken critic of global economic institutions. In ''[[Making Globalization Work]]'' (2007) he offers an account of his perspectives on issues of international economics:

{{blockquote|"The fundamental problem with the neoclassical model and the corresponding model under market socialism is that they fail to take into account a variety of problems that arise from the absence of perfect information and the costs of acquiring information, as well as the absence or imperfections in certain key risk and capital markets. The absence or imperfection can, in turn, to a large extent be explained by problems of information."<ref>Stiglitz (1996) p. 5</ref>}}

Stiglitz talks about his book ''Making Globalization Work'' here.<ref>{{cite web |url=https://www.youtube.com/watch?v=UzhD7KVs-R4 |title=Authors@Google: Joseph Stiglitz |via=YouTube |date=2006-10-13 |access-date=2013-03-29 |archive-url=https://web.archive.org/web/20130215143356/http://www.youtube.com/watch?v=UzhD7KVs-R4 |archive-date=2013-02-15 |url-status=live }}</ref>

===Market design theory===
{{Main|Leonid Hurwicz|Eric Maskin|Roger Myerson|Market design}}
[[File:Maskin and Myerson.jpg|thumb|right|Eric Maskin (1950–), Roger Myerson (1951–)]]

In 1973 Russian-American mathematician-economist [[Leonid Hurwicz]] (1917–2008) founded [[Market design|Market (Mechanism) Design Theory]], a.k.a. Reverse Game Theory, which allows people to distinguish situations in which markets work well from those in which they do not, aiding the identification of efficient trading mechanisms, regulation schemes, and voting procedures; he developed the theory with [[Eric Maskin]] (1950–) and [[Roger Myerson]] (1951–), sharing the 2007 Nobel Economics Prize with them.

===The Laffer curve and Reaganomics===
{{Main|Arthur Laffer|Laffer curve}}

In 1974 American economist [[Arthur Laffer]] formulated the [[Laffer curve]], which postulates that no tax revenue will be raised at the extreme tax rates of 0% and 100%, and that there must be at least one rate where tax revenue would be a non-zero maximum.  This concept was adopted by U.S. President [[Ronald Reagan]] in the early 1980s, becoming the cornerstone of [[Reaganomics]], which was co-founded by American economist [[Paul Craig Roberts]].

===Market regulation===
In 1986, French economist [[Jean Tirole]] (1953–) published "Dynamic Models of Oligopoly", followed by "The Theory of Industrial Organization" (1988), launching his quest to understand market power and regulation, resulting in the 2014 Nobel Economics Prize.

==21st century==
{{update section|date=September 2020}}
{{See also|2008–2009 Keynesian resurgence|Great Recession|European debt crisis}}
[[File:Oliver Blanchard, IMF 98BlanchardWEO1 lg.jpg|thumb|left|upright=.7|Olivier Blanchard (1948–)]]

The [[2008 financial crisis]] led to the [[Great Recession]]. This prompted some macroeconomists and Financial Economists to question the current orthodoxy.<ref>{{Cite news |last=Fox |first=Justin |date=2013-11-01 |title=What We've Learned from the Financial Crisis |work=Harvard Business Review |url=https://hbr.org/2013/11/what-weve-learned-from-the-financial-crisis |access-date=2023-07-28 |issn=0017-8012}}</ref><ref>{{Cite web |work=The Wall Street Journal |title=How The World Has Changed Since 2008 Financial Crisis |url=http://graphics.wsj.com/how-the-world-has-changed-since-2008-financial-crisis/ |access-date=2023-07-28 |language=en}}</ref>

One response was the [[2008–2009 Keynesian resurgence|Keynesian resurgence]]. This emerged as a consensus among some policy makers and economists for Keynesian solutions.{{explain|what is a keynesian solution and how does it differ from the orthodoxy, which is explicitly keynesian|date=September 2020}} Figures in this school included [[Dominique Strauss-Kahn]], [[Olivier Blanchard]], [[Gordon Brown]], [[Paul Krugman]], and [[Martin Wolf]].<ref name=post1 /><ref name = "rise and fall" /><ref name = "resurgence" />
[[Austerity]] was another response, the policy of reducing [[government budget deficits]]. Austerity policies may include spending cuts, tax increases, or a mixture of both.<ref name="ft_lexicon" /><ref name="Traynor" /> Two influential academic papers support this position. The first was ''Large Changes in Fiscal Policy: Taxes Versus Spending'', published in October 2009 by [[Alberto Alesina]] and Silvia Ardagna.  It asserted that fiscal austerity measures did not hurt economies, and actually helped their recovery.<ref name=post2 /> The second ''[[Growth in a Time of Debt]]'', published in 2010 by [[Carmen Reinhart]] and [[Kenneth Rogoff]]. It analyzed public debt and GDP growth among 20 advanced economies and claimed that high debt countries grew at −0.1% since WWII. In April 2013 the [[International Monetary Fund|IMF]] and the [[Roosevelt Institute]] exposed basic calculation flaws in the Reinhart-Rogoff paper, claiming that when the flaws were corrected, the growth of the "high debt" countries was +2.2%, much higher than the original paper predicted. Following this, on 6 June 2013, [[Paul Krugman]] published ''How the Case for Austerity Has Crumbled'' in ''The New York Review of Books'', arguing that the case for austerity was fundamentally flawed, and calling for an end to austerity measures.<ref name=post3 />

==See also==
{{col div|small=no|colwidth=20em}}
* [[Corporate law]]
* [[Economic history]]
* [[Energy economics]]
* [[Index of international trade topics]]
* [[Labour law]]
* [[List of economics journals]]
* [[List of economists]]
* [[List of important publications in economics]]
* [[Outline of economics]]
* [[Perspectives on capitalism]]
* [[Timeline of international trade]]
{{col div end}}
{{Portal bar|Business and economics}}

==References==
{{Reflist|20em|refs=
<ref name=apb>{{cite web|title=Golden Rules-Tao Zhu Gong's Art of Business|url=http://www.asiapacbooks.com/index.php/edu-comics/golden-rules-tao-zhu-gong-s-art-of-business-detail|publisher=Asiapac Books|access-date=12 April 2015|archive-url=https://web.archive.org/web/20150829201253/http://www.asiapacbooks.com/index.php/edu-comics/golden-rules-tao-zhu-gong-s-art-of-business-detail|archive-date=29 August 2015|url-status=dead}}</ref>

<ref name=key>{{Citation
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 | editor1-last = Hubbard   | editor1-first = Phil
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}} [http://www.simonbatterbury.net/pubs/Senlongversion.htm Draft] {{Webarchive|url=https://web.archive.org/web/20160304053501/http://www.simonbatterbury.net/pubs/Senlongversion.htm |date=2016-03-04 }}</ref>

<ref name=ohet>{{cite book|last1=Screpanti|last2=Ernesto|last3=Zamagni|last4=Stefano|title=An Outline of the History of Economic Thought'|date=2005|publisher=Oxford University Press|edition=2nd}}</ref>

<ref name=post1>{{cite book
|author1=Bateman, Bradley |author2=Toshiaki, Hirai |author3=Marcuzzo, Maria Cristina | year=2010 | title= The Return to Keynes | publisher=[[Harvard University Press]] | isbn=978-0-674-03538-6 |ref = CITEREFBateman2010 }}
</ref>

<ref name=post2>{{cite journal|url=http://www.nber.org/papers/w15438|title=Large Changes in Fiscal Policy: Taxes Versus Spending|journal=NBER|year=2009|doi=10.3386/w15438|access-date=24 March 2015|archive-url=https://web.archive.org/web/20150403060626/http://www.nber.org/papers/w15438|archive-date=3 April 2015|url-status=live|last1=Alesina|first1=Alberto|last2=Ardagna|first2=Silvia|series=Working Paper Series |doi-access=free}}</ref>

<ref name=post3>{{cite journal|url=http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/?pagination=false|title=How the Case for Austerity Has Crumbled by Paul Krugman|access-date=24 March 2015|archive-url=https://web.archive.org/web/20150328145851/http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/?pagination=false|archive-date=28 March 2015|url-status=live|last1=Krugman|first1=Paul|journal=The New York Review of Books |date=6 June 2013 |volume=60 |issue=10 }}</ref>

<ref name="rise and fall">
{{cite web
 |url         = http://www.cedes.uerj.br/documentos/artigos/Consensus%20Dissensus%20and%20Economic%20Ideas%20The%20Rise%20and%20Fall%20of%20Keynesianism%20during%20the%20economic%20crisis.pdf
 |title       = Consensus, Dissensus and Economic Ideas: The Rise and Fall of Keynesianism During the Economic Crisis
 |publisher   = The Center for the Study of Development Strategies
 |author      = [[Henry Farrell (political scientist)|Henry Farrell]] and [[John Quiggin]]
 |date        = March 2012
 |access-date  = 2012-05-29
 |url-status     = dead
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 |archive-date = 2013-08-25
}}
</ref>

<ref name="resurgence">{{cite news |url= http://www.ft.com/cms/s/0/c4cf37f4-d611-11dd-a9cc-000077b07658.html |title= The undeniable shift to Keynes |newspaper=[[Financial Times]]|last1= Giles |first1= Chris |last2= Atkins |first2= Ralph |last3= Guha |first3= Krishna |access-date= 2009-01-23 |archive-url= https://web.archive.org/web/20090527144547/http://www.ft.com/cms/s/0/c4cf37f4-d611-11dd-a9cc-000077b07658.html |archive-date= 2009-05-27 |url-status= live }}</ref>

<ref name="ft_lexicon">{{cite web|url=http://lexicon.ft.com/Term?term=austerity-measure|title=Austerity measure|work=Financial Times Lexicon|access-date=1 March 2013|archive-url=https://web.archive.org/web/20130322221836/http://lexicon.ft.com/Term?term=austerity-measure|archive-date=22 March 2013|url-status=dead}}</ref>

<ref name="Traynor">{{cite news|url=https://www.theguardian.com/business/2010/jun/11/europe-deficit-crisis-austerity-budgets|title=Austerity Europe: who faces the cuts|last1=Traynor|first1=Ian|last2=Allen|first2=Katie|date=11 June 2010|work=The Guardian|access-date=29 September 2010|location=London|archive-url=https://web.archive.org/web/20130915003106/http://www.theguardian.com/business/2010/jun/11/europe-deficit-crisis-austerity-budgets|archive-date=15 September 2013|url-status=live}}</ref>

<ref name=newschool>{{cite web|title=SCHOOLS OF THOUGHT |url=http://www.newschool.edu/nssr/het/ |publisher=New School |access-date=23 March 2015 |url-status=dead |archive-url=https://web.archive.org/web/20110629230810/http://www.newschool.edu/nssr/het/ |archive-date=29 June 2011 }}</ref>

<ref name=newschool2>{{cite web|title=The Classical School |url=http://www.newschool.edu/nssr/het/ |publisher=New School |access-date=23 March 2015 |url-status=dead |archive-url=https://web.archive.org/web/20110629230810/http://www.newschool.edu/nssr/het/ |archive-date=29 June 2011 }}</ref>

<ref name=newschool3>{{cite web|title=The Austrian School |url=http://www.newschool.edu/nssr/het/schools/austrian.htm |publisher=New School |access-date=23 March 2015 |url-status=dead |archive-url=https://web.archive.org/web/20110723180031/http://www.newschool.edu/nssr/het/schools/austrian.htm |archive-date=23 July 2011 }}</ref>

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<ref name=workingclass>{{cite web|url=http://www.marxists.org/archive/marx/works/1845/condition-working-class/index.htm|title=Conditions of the Working-Class in England Index|last=Engels|first=Frederick|access-date=24 March 2015|archive-url=https://web.archive.org/web/20150420000950/https://www.marxists.org/archive/marx/works/1845/condition-working-class/index.htm|archive-date=20 April 2015|url-status=live}}</ref>
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<ref name=UNDP>{{cite book | contribution = Overview &#124; Celebrating 20 years of human development | editor-last = United Nations Development Programme | editor-first = UNDP | editor-link = United Nations Development Programme | title = Human Development Report 2010 &#124; 20th anniversary edition &#124; the real wealth of nations: pathways to human development | page = 2 | publisher = United Nations Development Programme | location = New York, NY | year = 2010 | isbn = 9780230284456 | quote = ...the first HDR called for a different approach to economics and development - one that put people at the centre. The approach was anchored in a new vision of development, inspired by the creative passion and vision of Mahbub ul Haq, the lead author of the early HDRs, and the ground-breaking work of Amartya Sen. }} [http://hdr.undp.org/sites/default/files/reports/270/hdr_2010_en_complete_reprint.pdf Pdf version.] {{Webarchive|url=https://web.archive.org/web/20160722055435/http://hdr.undp.org/sites/default/files/reports/270/hdr_2010_en_complete_reprint.pdf |date=2016-07-22 }}</ref>

<ref name=yinyang>{{cite book|last1=Wang|first1=Robin R.|title=Yinyang: The Way of Heaven and Earth in Chinese Thought and Culture|url=https://books.google.com/books?id=I7YhAwAAQBAJ&pg=PT181|access-date=12 April 2015|isbn=9781139536219|date=2012-09-24|publisher=Cambridge University Press }}</ref>
}}

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{{col div|small=yes|colwidth=20em}}
<!--Please put in alphabetical order-->
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{{col div end}}

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::[http://www.dictionaryofeconomics.com/article?id=pde2008_U000071&edition=current&q=united%20states&topicid=&result_number=4 "United States, economics in (1776–1885)]" by Stephen Meardon.
::"[http://www.dictionaryofeconomics.com/article?id=pde2008_U000069&edition=current&q=united%20states&topicid=&result_number=8 United States, economics in (1885–1945)]" by Bradley W. Bateman.
::[http://www.dictionaryofeconomics.com/article?id=pde2008_U000076&edition=current&q=united%20states&topicid=&result_number=5 "United States, economics in (1945 to present)]" by [[Roger E. Backhouse]].
::"[http://www.dictionaryofeconomics.com/article?id=pde2008_A000215&edition=current&q=american%20exceptionalism&topicid=&result_number=1 American exceptionalism]" by Louise C. Keely.
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* Screpanti, Ernesto and Zamagni, Stefano (2005). ''An Outline of the History of Economic Thought'', 2nd ed. Oxford University Press. [https://books.google.com/books?id=S6KZVx8rcXAC Description] & ch.-preview links, pp. [https://books.google.com/books?id=S6KZVx8rcXAC xi]-[https://books.google.com/books?id=S6KZVx8rcXAC&pg=PR18 xviii.]
* [[Joseph Schumpeter|Schumpeter, Joseph]] (1954). ''History of Economic Analysis'', [https://books.google.com/books?id=pTylUAXE-toC Description.] Chapter-preview links for Parts [https://books.google.com/books?id=pTylUAXE-toC I]-[https://books.google.com/books?id=pTylUAXE-toC&pg=PP7 V] (arrow-page searchable). Routledge Ed. 1994, {{ISBN|0-415-10892-6}}
* [[Joseph J. Spengler|Spengler, Joseph J.]], and William R. Allen, ed. (1960). ''Essays in Economic Thought: Aristotle to Marshall''. Rand McNally.
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* [[Leslie Stephen|Stephen, Leslie]] (1898). {{DNB Cite|wstitle=Smith, Adam}}
* [[George Stigler|Stigler, George J.]] (1965). ''Essays in the History of Economics''. University of Chicago Press.
* [[E. Roy Weintraub|Weintraub, E. Roy]] (1999). "How Should We Write the History of Twentieth-Century Economics?" ''Oxford Review of Economic Policy'', 15(4), pp. [https://web.archive.org/web/20120415115548/http://public.econ.duke.edu/~erw/190/HowShouldWeWrite.pdf 139–52].
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{{col div end}}

==External links==
{{Sister project links}}
* [https://www.hetwebsite.net/het/home.htm The History of Economic Thought]. By Gonçalo L. Fonseca.
* [https://socialsciences.mcmaster.ca/econ/ugcm/3ll3/ Archive for the History of Economic Thought]
* [http://www.cee-portal.at/Econ/poster.pdf  "Family tree" of economics] poster from the 16th century on.
* [http://www2.lse.ac.uk/researchAndExpertise/PioneersOfTheSocialSciences/PioneersOfTheSocialSciences.aspx Pioneers of the social sciences London School of Economics and Political Science] {{Webarchive|url=https://web.archive.org/web/20160726081025/http://www2.lse.ac.uk/researchAndExpertise/PioneersOfTheSocialSciences/PioneersOfTheSocialSciences.aspx |date=26 July 2016 }}

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