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Central European University

History of Economic Thought

Instructor: Professor Julius Horvath, Ph.D. Department of Economics Central European University Spring 2015, MA level Course, 2 credit, Course e-learning site: http://ceulearning.ceu.hu/ Office hours: after the class Course Description Master level class; no special pre-requisites are required; this course is accessible to anyone with an under-graduate background in social sciences or economics; this course presents review of the history of economic thinking and economic analysis; course covers the following topics: Introduction, Great Religions and the Origins of Economic Thought; Greek and Medieval Thought ; Transformation Period; Western Europe before Smith; Smith, Ricardo, Marx; Emergence of Macro-economics, Veblen, Keynes, Schumpeter; Friedman, Hayek; Non-Mainstream Thought Learning Outcomes The main goal of this course is to provide students with understanding of historical evolution of economic thought. In other words, this course tries to explain how economic thinking got to be where it is today. In addition students are also led to formulate their own research question in the topic of their interest. We will discuss to a certain extent economic history, since understanding what was going on in the economy in past helps to understand how people conceptualized the economy. The syllabus covers wide ranging areas. In this course students are able to understand some historically important articles and concepts of the political economy and economics. They acquire a broad understanding of the evolution of economic thinking in the period of more than two thousand years. The emphasis is on societal milieu however issues relevant to policy are also considered. By the end of this course student will be able to evaluate different streams of economic thinking as well some personalities who had an impact of history of economic thought. Course Requirements - 15% of the final grade; presence in the course - 20% of the final grade: a position paper on the article chosen by the instructor; not more than 1 page; position paper analyzes the article, evaluates the most important issue(s) in the article - 65% of the final grade; final paper, maximum 6 pages; 1.5 space, topic approved by the instructor

COURSE SCHEDULE Introduction

On Power of Ideas; Robbins-Schumpeter-Stigler on Teaching History of Thought; History of the Terms Oikonomike, Economics, Political Economy; To Whom Economists Speak To; Stories of Economists; History of Economic Thought as an Intellectual Discipline; How Important are Biographical and Context Elements in History of Economic Thought; Simplifications and Pedagogy; Collective Work and Individuals; Literature Robbins, Lionel, A History of Economic Thought, The LSE Lectures, edited by Steven G. Medema and

Warren J. Samuels, Princeton University Press1998, Chapter 1-2 Spiegel, Henri William, The Growth of Economic Thought, Duke University Press, Durham and London

1991, Third edition, Chapter 1 Backhouse, Roger, E. “Lives in Synopsis: The Production and Use of Short Biographies by Historians of

Economics,” History of Political Economy, 39, 2007, pp. 51-75

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O’Brien, D. P., History of Economic Thought as an Intellectual Discipline, Edward Elgar, 2007 Schumpeter, Joseph Alois "Science and Ideology", American Economic Review 39, 2, March, 1949 Dimand, Robert W., The Creation of Heroes and Villains as a Problem in the History of Economics, History

of Political Economy, 2007, 39, 76-95

Economic Aspects in Traditional Religions Rise of Civilization; Ancient Thought; Old Testament and New Testament on Work Ethics; Old Testament and New Testament on Ownership; Early Christian Attack on Wealth and Money; Old Testament and New Testament on Care for Poor; Old Testament and New Testament on Right and Just Price, On Specialization, On Interest; Literature Price, B. B. ed., Ancient Economic Thought, 1997 Gordon, Barry, The Economic Problem in Biblical and Patristic Thought, E. J. Brill, 1989, Henri William Spiegel The Growth of Economic Thought, Duke University Press, Durham and London 1991 Finley, M.I. The Ancient Economy, University of California Press, Berkeley and Los Angeles 1973

Greeks, Plato, Aristotle Greek Thinkers: Homer, Hesiod, Xenophon, Socrates; Plato’s Blueprint for an Ideal State; Plato’s Economics; Aristotle’s Economic Writings; Use and Exchange Value; Aristotle on Private Property; Natural and Just; Aristotle On Money, On Commerce and Justice; Aristotle on Acquisition of Wealth;

Literature Schumpeter, Joseph A., History of Economic Analysis, Edited from Manuscript by Elizabeth Boody

Schumpeter , New York, Oxford University Press, 1954, Fifth printing 1963, Chapter 1, Graeco-Roman Economics,

Aristotle, Politics, Book I, Parts I-XI, Book II Part V, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 5-13

Aristotle, Nicomachian Ethics, Book V, Part 5, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 14-15

Gordon, Barry, Aristotle and Hesiod: the Economic Problem in Greek Thought, Review of Social Economy, Vol LXIII, September 2005, 395-404

Meikle, Aristotle’s Economic Thought, 1995, Clarendon Press, Oxford Petrochilos, George A., Kalokagathia: The Ethical Basis of Hellenic Political Economy and Its Influence from

Plato to Ruskin and Sen, History of Political Economy, 34:4, 2008 Soudek, J. ‘Aristotle’s Theory of Exchange: an Inquiry into the Origin of Economic Analysis,” Proceedings of

the American Philosophical Society, 96, 1952, Finley, M. I., Aristotle and Economic Analysis, Past and Present, No. 47, 1970, May pp. 3-25

Medieval Economic Thinking The Early Christianity; Wealth, Beggary and Sufficiency: the Mendicant Solutions; Help the Poor: Get Rid of Superfluities; Private Property versus Communal Property; Scholastic Thought; Just Price in Scholastic Economics; St. Thomas Acquinas on Commerce, Property, Fraudulent Behavior, and Usury; Literature Schumpeter, Joseph A., History of Economic Analysis, Edited from Manuscript by Elizabeth Boody

Schumpeter , New York, Oxford University Press, 1954, Fifth printing 1963, Chapter 2, The Scholastic Doctors and the Philosophers of Natural Law,

Aquinas, Thomas, Summa Theologica, Second Part of the Second Part, Questions 77 and 78, 1267-1273, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 18-29

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Grice-Hutchinson, Majorie, Economic Thought in Spain, Edward Elgar, 1993; Chapter One: Contributions of the School of Salamanca to Monetary Theory as a Result of the Discovery of the New World, pp. 1-23

Murray, Gilbert, Stoic, Christian and Humanist, London: C.A. Watts & Co. , George Allen & Unwin, First published in 1940, Second edition 1950

Neves des, Joao Cesar, Aquinas and Aristotle’s Distinction on Wealth, History of Political Economy, 2000, 32:3,

Wood, Diana, Medieval Economic Thought, Cambridge University Press 2002 Ghazanfar, S.M. ed., Medieval Islamic Economic Thought, Routledge/Curzon, 2003 Lowrey, S.T. and B. Gordon eds. Ancient and Medieval Economic Ideas and Concepts of Social Justice,

1997 das Neves, Joao Cesar, Aquinas and Aristotle’s Distinction on Wealth, Historical of Political Economy,

2000, 32:3, 649-657

The Transformation Period Modernity Begins; The Principle of Countervailing Passions; Money Making and Commerce; The Role of Providence in Social and Economic Matters before Adam Smith; XVII-XVIII Century Providential Elements in Economics; Whether Providence Favors Trade among Nations; Providence and Observed Inequality;

Literature: Hirschman, Albert, The Passions and the Interests, Political Arguments for Capitalism before Its Triump,

Princeton University Press 1977, Third printing with corrections 1981 Viner, Jacob, The Role of Providence in the Social Order, An Essay in Intellectual History, Jayne Lectures

for 1966, the American Philosophical Society, Princeton, New Jersey, Princeton University Press

Mercantilists Political Economy Emerges; Eminent Mercantilists; Mercantilist Wage Theory; Jean Bodin; Mercantilist’ Monetary Theories; Reasons for Wanting More Bullion; Literature Viner, Jacob, Studies in the Theory of International Trade, 1937 Munn, Thomas, England’s Treasures by Forraign Trade or the Ballance of our Forraign Trade is the Rule of

our Treasure, 1664, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 32-44

Locke, John, Of Civil Government, 1690, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 59-77

Birth of Macroeconomics: Petty, Law, Cantillon, Hume, Turgot, Quesnay Petty’s Medical Beginnings; Idea of the Royal Society, Petty’s Work; Petty’s National Income Concept; John Law’s Life; Law’s Contribution to Macroeconomics; John Law and the Mississippi System; Cantillon’s Life; Beginning of Modeling; Cantillon’ Effect; Literature Murphy, Antoin E. The Genesis of Macroeconomics New Ideas from Sir William Petty to Henry Thornton

Oxford University Press 2009 Quesnay, Francois, Tableau Economique, in History of Economic Thought: A Reader, edited by Steven G.

Medema and Warren J. Samuels, Routledge, 2003, pp. 97-101 Turgot, Anne Robert Jacques, Reflections on the Formation and Distribution of Wealth, 1770, in History of

Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 104-116

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Petty, William, A Treatise of Taxes and Contributions, 1662, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 47-56

Cantillon, Richard, Essay on the Nature of Commerce in General, 1755, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 79-94

Hume, David, Political Discources, 1752, in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 135-152

Adam Smith

Life; Hume-Smith Friendship; Smith on Market; Smith on Government; Contribution to Political Philosophy; Smith on Value, Market and Competition; Productive and Unproductive Labor; Books of Wealth of Nations; Literature Heilbroner, Robert, The Worldly Philosophers, Sixth edition, Penguin Books, chapter 3 Butler, Eamonn, Adam Smith – a Primer, The Institute of Economic Affairs, 2007 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776, in History of

Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 156-179

Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Book I; Book II, especially chapters I, III, and V

Nathan Rosenberg, “Some Institutional Aspects of the Wealth of Nations,” Journal of Political Economy 68(6): 557-570 (December 1960)

Richardson, G.B. "Adam Smith on Competition and Increasing Returns," in Andrew S. Skinner and Thomas Wilson, eds., Essays on Adam Smith. Oxford: Clarendon Press, 1975

R.H. Campbell and A.S. Skinner, Adam Smith, Croom Helm, London and Canberra, 1982

Classical Economists, Ricardo, Malthus, Hume Ricardo’s Principles of Political Economy; Ricardo on Rent; Malthus on Population; Ricardo and Malthus on Under-Consumption; Hume’s Specie Flow Mechanism; Bullion Controversy; Say’s Law, Literature Malthus, Thomas Robert, An Essay on the Principle of Population, 1798, in History of Economic Thought: A

Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 196-207 Ricardo, David, The High Price of Bullion, 1810, in History of Economic Thought: A Reader, edited by

Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 237-244 Ricardo, David, On the Principles of Political Economy and Taxation, 1817, in History of Economic Thought:

A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 259-290 Rostow, W.W., Theorists of Economic Growth from David Hume to the Present Oxford University Press,

New York, Oxford 1990 David Ricardo, The Principles of Political Economy and Taxation, esp. chapters 1-8, 19-21, 26, 30-31. Dorfman, Robert, "Thomas Robert Malthus and David Ricardo," Journal of Economic Perspectives 3(3):

153-164 (1989) Baumol, William, J. Say’s Law, Journal of Economic Perspectives—Volume 13, Number 1—Winter 1999—

Pages 195–204

Utopians, Marx and Radicals Utopian Socialists; Marx’ Life; Communist Manifesto; Dialectical Materialism; Marx on Classical Economists; Struggle between Classes; Marx’ Tone of Writing; Das Kapital; Marx on Movement of the Capitalist Economy; Schumpeter’s Interpretation of Marx; Marx’ Interpretation of History;

Literature Heilbroner, Robert, The Worldly Philosophers, Sixth edition, Penguin Books, chapter 5

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Blaug, Marc, Economic Theory in Retrospect, Fifth edition, 1997, Cambridge University Press, Chapter 7 Marxian Economics

Heilbroner, Robert, The Worldly Philosophers, Sixth edition, Penguin Books, chapter 6 Marx, Karl, A Contribution to the Critique of Political Economy, 1859, in History of Economic Thought: A

Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 375-377 Marx, Karl, Das Kapital, 1867, in History of Economic Thought: A Reader, edited by Steven G. Medema and

Warren J. Samuels, Routledge, 2003, pp. 378-407 Schumpeter, Joseph A., Capitalism, Socialism and Democracy, Harper and Row Publishers, New York,

1942, third edition in 1950 Marx, Karl and Friedrich Engels, Communist Manifesto (1848), Sections 1 and 2 Lerner, A. P., Economic Theory and Socialist Economy, Review of Economic Studies, 1943, 51-61 Lerner, A.P. Economics of Control: Principles of Welfare Economics, New York, Macmillan, 1944 Dobb, Maurice, Economic Theory and Socialist Economy: a Reply, Review of Economic Studies, 2, 1943,

144-51 Dobb, Maurice, Economic Theory and the Problems of a Socialist Economy, Economic Journal, 43,

December 1933, 585-598 Lerner, A.P., A Rejoinder, Review of Economic Studies, 2, 1943, 152-154 Boyer, George R., The Historical Background of the Communist Manifesto, Journal of Economic

Perspectives—Volume 12, Number 4—Fall 1998—Pages 151–174

German Historical Thinking Johann Gottlieb Fichte, Friedrich List, Goethe’s Faust, Wilhelm Roscher; Older Historical school Karl Knies and Bruno Hildebrand; Gustav Schmoller; Caldwell, Bruce, Chapter 2 The German Historical School , in Bruce Caldwell, An Intellectual Biography of

F.A. Hayek, The University of Chicago Press, 2004 Gilles Campagnolo Criticism of Classical Political Economy, Menger, Austrian economics and the German

Historical School Routledge Studies in the History of Economics, 2010, Routledge Balabkins, N. 1988. Schmoller in Tsarist Russia. Journal of Institutional and Theoretical

Economics 144, 581–90. Barnett, V. 2004. Historical political economy in Russia, 1870–1913. European Journal of the History of

Economic Thought 11, 231–53. Dorfman, J. 1955. The role of the German Historical School in American economic thought. American

Economic Review 45, 17–28. Heinonen, V. 2002. The Influence of the German Historical School in Finnish economic thought around the

turn of the century. In Economic Thought and Policy in Less Developed Europe: The Nineteenth Century, ed. M. Psalidopoulos and M. Mata. London: Routledge.

Herbst, J. 1965. The German Historical School in American Scholarship: A Study in the Transfer of Culture. Ithaca: Cornell University Press.

Menger, Carl, “On the Origin of Money,” The Economic Journal 2(6): 239-255, June 1892 Arena, Richard and Sandye Gloria-Palermo, Menger and Walras on Money: A Comparative View, History

of Political Economy 40:2, 317-343, 2008 Hicks, John, “Revolutions” in Economics, in Method and Appraisal in Economics, edited by S. Latsis,

Cambridge University Press, 1976 Campagnolo, Gilles, Criticism of Classical Political Economy, Menger, Austrian Economics and the German

Historical School Routledge Studies in the History of Economics, 2010, Routledge

Keynes Keynes Life; On Communist Russia; On Depression; Intellectual and Human Characterization; Cambridge Civilization; Literature

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Marshall, Alfred, Principles of Economics, eighth edition, esp. Book I, chapters I and II; Book III; and Book IV; skim Book V., in History of Economic Thought: A Reader, edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 504-521

Heilbroner, Robert, The Worldly Philosophers, Sixth edition, Penguin Books, chapter 9. Keynes, John Maynard, "The General Theory of Employment," Quarterly Journal of Economics 51, May

1937 Eichengreen, Barry, “Still Fettered After All These Years,” Working Paper No. w9276, National Bureau of

Economic Research, October 2002. Hayek, Friedrich August, "The Keynes Centenary: The Austrian Critique," The Economist, June 11, 1983,

pp. 45-48, reprinted in Bruce J. Caldwell, ed., The Collected Works of F. A. Hayek: Volume IX: Contra Keynes and Cambridge: Essays, Correspondence. Chicago: Univesity of Chicago Press, 1995, pp. 247-255

Skidelsky, Robert, John Maynard Keynes, Volume One 1883-1920, Penguin Books 1994; First Published By MacMillan 1983

Internet Quotations from Bradford de Long Homepage

Schumpeter Life; First Books; Schumpeter and Keynes; Capitalism, Socialism and Democracy; Methodology; Literature: Swedberg, Richard, Joseph A. Schumpeter, His Life and Work , Polity Press 1991 Heilbroner, Robert, The Worldly Philosophers, Sixth edition, Penguin Books, chapter 8 and 10 Schumpeter, Joseph A. Capitalism, Socialism, and Democracy, London, Allen and Unwin 1943 Schumpeter, Joseph A., Science and Ideology, the American Economic Review, March 1949, Volume 39,

Number 2, pp. 345-59

Hayek Family Background; Vienna, England in the 1930s; Anti-Socialist; Main Contribution; Money; Literature F. A. Hayek, "The Use of Knowledge in Society," American Economic Review 35(4): 519-530, 1945. Bruce Caldwell, “Hayek and Socialism,” Journal of Economic Literature 35: 1856-1890 December 1997 Ebenstein, Alan, Friedrich Hayek, A Biography, Palgrave, 2001 Ebeling, Richard, M. “The Life and Works of Ludwig von Mises,” The Independent Review, XIII, 1, Summer

20 Silk, Leonard, The Economists, Avon Books, New York, Basic Books 1976

Veblen

Life, Teacher, Reformer, Theory of Leisure Class, Literature Veblen, Thorstein B., The Theory of the Leisure Class, 1899, in History of Economic Thought: A Reader,

edited by Steven G. Medema and Warren J. Samuels, Routledge, 2003, pp. 613-645 Silk, Leonard, The Economists, Avon Books, New York, Basic Books 1976 Riesman, David, Thorstein Veblen, A Critical Study of an American Thinker of Wide Influence The Scribner

Library, 1953, Charles Scribner’s Sons

Friedman, Samuelson Literature Silk, Leonard, The Economists, Avon Books, New York, Basic Books 1976 Overtveldt, Johan van, The Chicago School, Agate Chicago, 2007 Hammond, J.D. 1999. The Legacy of Milton Friedman as Teacher. Cheltenham: Edward Elgar. Hammond, J.D. 2005. Theory and Measurement: Causality Issues in Milton Friedman's Monetary

Economics. Cambridge: Cambridge University Press.

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Wood, J. 1990. Milton Friedman; Critical Assessments. London: Routledge. Walters, Alan. "Friedman, Milton (1912–2006)." The New Palgrave Dictionary of Economics. Second

Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan 2012

Fischer, Stanley. "Samuelson, Paul Anthony (1915–2009) ." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan.

Non-Mainstream Economic Thought

Boulding, Dobb, Georgeschu-Roegen, Michael Polanyi, Kornai, Catholic Social Thought Literature Screpanti, Ernesto and Stefano Zamagni, An Outline of the History of Economic Thought, Clarendon Press,

Oxford 1993, translated by David Field, original title Profilo di storia del pensiero economico, chapter 11

Silk, Leonard, The Economists, Avon Books, New York, Basic Books 1976 Kornai, Janos, By Force of Thought, Irregular Memoirs of an Intellectual Journey, The MIT Press 2006 Almodovar, António and Pedro Teixeira, The Ascent and Decline of Catholic Economic Thought 1830-1950,

History of Political Economy 40 (annual suppl.) 63-87 Arestis, P., and M. Sawyer. 2001. A Biographical Dictionary of Dissenting Economists. 2nd ed. Cheltenham,

U.K.: Elgar Lee, Frederic S. "Heterodox Economics." The New Palgrave Dictionary of Economics. Second Edition. Eds.

Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan 2012

Stanford Philosophy of Economics (2008), First published Fri Sep 12, 2003, revisions Tue Feb 26 2008 Rosenberg, Alexander (1992), Economics – Mathematical Politics or Science of Diminishing Returns? The

University of Chicago Press 1992 Uhlig, Harald, How Empirical Evidence Does or Does Not Influence Economic Thinking and Theory, 2010,

INET Conference Paper, Lawson, Tony, Really Reorienting Modern Economics, INET Conference, King’s College, April 8-11, 2010 Fooley, Duncan K., “Mathematical Formalism and Political-Economic Content,” INET Conference, King’s

College, April 8-11, 2010

Thinking about Socialist Economies Socialist Calculation Debate, Interpretation of Socialist Economies; Interpretation of Transition Kornai, Janos, By Force of Thought, Irregular Memoirs of an Intellectual Journey, The MIT Press 2006 Stiglitz, Joseph E., Whither Socialism? The MIT Press 1994; second edition 1995, The Wicksell Lectures Rothbard, Murray N. Mises, Ludwig Edler von (1881–1973), The New Palgrave Dictionary of

Economics, Second Edition, 2008, Edited by Steven N. Durlauf and Lawrence E. Blume