EC0 42
History of Economic Thought
Professor Malamud
BEH 502
895 – 3294
Email: bernard.malamud@unlv.edu
Website: http://faculty.unlv.edu/bmalamud
Office Hours:MW 11:30 – 12:30 pm; 2:30 – 3:30 pm;
and by appointment
ECON 442 History of Economic Thought
Professor Malamud, BEH 502
course outline: http://faculty.unlv.edu/bmalamud/
• the ideas of economists and political philosophers, both
when they are right and when they are wrong, are more
powerful than is commonly understood. Indeed the world is
ruled by little else. Practical men, who believe themselves to be
quite exempt from any intellectual influences, are usually the
slaves of some defunct economist. Madmen in authority, who
hear voices in the air, are distilling their frenzy from some
academic scribbler of a few years back…the ideas which civil
servants and politicians and even agitators apply to current
events are not likely to be the newest. But, soon or late, it is
ideas, not vested interests, which are dangerous for good
or evil.
John Maynard Keynes, General Theory of Employment,
Interest, and Money (1936)
• In the short-run, it is true, ideas are unimportant and ineffective,
but in the long-run they can rule the world.
Lionell Robbins, The Great Depression (1934).
J.R. Stanfield, The Economic Thought of Karl Polanyi, 1986
• …the gearing of markets into a self-regulating system of tremendous
power was not the result of any inherent tendency of markets…but
rather of highly artificial stimulants administered…by state
intervention. (Polanyi, 1944)
Where did the ideas for intervention come from?
• Adam Smith…generalized the theory of market self-adjustment
operating effectively…throughout the economic cosmos
…domestically and internationally, micro-economically and macroeconomically. It was Smith’s grand synthesis which articulated
the self-regulating system of markets.*
• The Millian-Ricardian abstract method started from starkly
unqualified assumptions…led immediately and inevitably to sharply
laissez-faire doctrines. (Hutchison, 1978)
• [British economic advance] is a triumph of theory. We are governed by
philosophers and political economists. (Senior,1851)
• This London…is the greatest practical illustration…of those principles
which it is the business of the political economist to expound. (Cairnes,
1870)
The Course
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History of Economic Thought
History of Economic Doctrine
History of Economic Theory
History of Economics
Economic History
Some of Each
Contrasting World Views
Harmony
Chaos
Natural Law
Knowledge
Ignorance
Rationality
Animal Spirits
Laissez – faire
Authority
Progress
Stasis
Dominant Thoughts and Thinkers: Worldly Philosophers
Time Span
Individual Emphasis
Natural Law/ Laissez –
faire
1725 - 1750
1750 - 1775
{Richard Cantillon}
François Quesnay
1775 – 1800
Adam Smith
1800 – 1825
Ricardo - Malthus
1825 – 1850
John Stuart Mill
1850 – 1875
1875 – 1900
1900 – 1925
Karl Marx
Jevons/Walras/Marshall
Wicksell – Fisher
1925 – 1950
1950 – 1975
1975 – 2000
Community Emphasis
Instability/Social Role
John Maynard Keynes
Milton Friedman
Robert E. Lucas
Paul Samuelson
James B. Clark Medalists
(subsequent Nobel Awards)
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1947 Paul A. Samuelson (1970)
1949 Kenneth E. Boulding
1951 Milton Friedman (1976)
1953 No Award
1955 James Tobin (1981)
1957 Kenneth J. Arrow
– (1972, with John R. Hicks)
1959 Lawrence R. Klein (1980)
1961 Robert M. Solow (1987)
1963 Hendrik S. Houthakker
1965 Zvi Griliches
1967 Gary S. Becker (1992)
1969 Marc Leon Nerlove
1971 Dale W. Jorgenson
1973 Franklin M. Fisher
1975 Daniel McFadden
– (2000, with James J. Heckman)
1977 Martin S. Feldstein
1979 Joseph E. Stiglitz
– (2001, with George A. Akerlof
and A. Michael Spence)
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1981 A. Michael Spence
– (2001, with George A. Akerlof
and Joseph E. Stiglitz)
1983 James J. Heckman
– (2000, with Daniel McFadden)
1985 Jerry A. Hausman
1987 Sanford J. Grossman
1989 David M. Kreps
1991 Paul R. Krugman (2008)
1993 Lawrence H. Summers
1995 David Card
1997 Kevin M. Murphy
1999 Andrei Shleifer
2001 Matthew Rabin
2003 Steven Levitt
2005 Daron Acemoglu
2007 Susan Athey
2009 Emmanuel Saez
2010 Esther Duflo
2011 Jonathan Levin
Nobel Laureates in Economics:
http://en.wikipedia.org/wiki/The_Sveriges_Riksbank_Prize_in_Economic_Scien
ces_in_Memory_of_Alfred_Nobel
Nobel laureates in our course
• Paul Samuelson
• John Hicks
• Milton Friedman
• James Tobin
• Franco Modigliani
• Robert Solow
• Gary Becker
• Robert Lucas
• Finn Kydland/Edward Prescott
• Joseph Stiglitz...Paul Krugman
The Dismal Science as We Know It
Overarching Themes in Economic Thought
•Value prices  microeconomics
Distribution  factor prices
•Growth
•Macro-stability…and its discontents
•‘flation
•BOOM and bust
•Economic Organization
»Role of Market
»Role of State
Wisdom of the Ancients
• Oikonomia: run harmonious households&communities
Heraclitus (~535 – 475 bc)
Harmony thru conflict
 Self – regulating market
Pythagorus (~582 – 507 bc)
Harmony thru numbers
 Equilibrium
Democritus (~460 – 370 bc)
• Diminishing marginal utility
• Time preference  present value
Plato (~427 – 347 bc): preserve the status quo
“…the State is the soul writ large.”
First principles:
• Human inequalities  division of labor
{good}
 social stratification
{ scientific breeding}
• Private property  acquisitiveness
{bad}  turbulence
Wealth  corruption
Plato’s Ideal Republic: A stationary state
• The elite: Communal property/communal women
Society parallels the mind
– Philosophers
…the State is the soul writ large
– Soldiers
Thinking
• Shared Austerity
Philosophers
Soldiers
(Response to
scarcity)
Fighting
No incentive to advance
Workers
Merchants
Craving