ECONOMICS 750
HISTORY OF ECONOMIC THOUGHT
FALL 2013
Professor Roger Frantz
Office: Adams Humanities 4196; Phone: 594-3718; e-mail: rfrantz@mail.sdsu.edu; Home Page:
www-rohan.sdsu.edu/~frantz
If you never study the history of economic thought then you might assume that economics has
always been what it is today, a lot of calculus, statistics, graphs, and more of the same. If you assume
this then you would be incorrect. There was a time when economists’ arguments were expressed in
sentences without an equation to be seen, a time when they spoke openly about God. There was a
time when economists wrote books which helped shape modern Western civilization, books which
helped separate the modern world from the Middle Ages, books which helped create great social
movements. This class thus necessarily includes economic, social, and intellectual history. Before the
1940’s most renowned economists came from Great Britain. Today many come from Boston,
Chicago, and California.
What did economists of the past think and write about? Balance of trade, economic growth,
distribution of income, monopoly power vs. competition, public vs. the private sector. The issues
haven’t changed much in 400 years. The tools of analysis have changed over time. There is a few
ways of categorizing individuals and schools of thought in the history of economic analysis. One is
chronological. This makes intuitive sense. You can learn which ideas preceded and which ideas
followed other ideas. Second, some individuals and schools believed in the idea of spontaneous
order, other did not. Spontaneous order means that social and economic institutions, for example
markets, and money arise spontaneously from individual behavior seeking their own advantage. The
“invisible hand” is an expression of spontaneous order. It also means that conscious design of
institutions by government to meet specific needs is not necessary. Bernard deMandeville, the
Physiocrats, Adam Smith, Karl Menger, the Austrian School and the Chicago School include those
who believe, to various degrees, of spontaneous order. On the other hand, the mercantilists, socialists
and Marx, the German Historical school, and the American Institutionalists to not maintain that the
idea of spontaneous order is an important idea. The same classification would occur if we divided
individuals and schools by those favoring private markets and those favoring (strict) limits on private
markets. Ironically, if you study the history of thought chronologically you would likely study a
“pro-market” group and then an “anti-market” group, and then a premarket and then an anti-market.
These two groups have almost “followed” each other since the late 18th century.
We will begin the class with the founding of the American Economic Association, the premier
organization for economists world wide, and the similarities and/or differences between Aristotle and
Gary Becker. We will also discuss the Nobel Prize in Economics, which is not “the” Nobel Prize, but
the The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
There are other important individuals an schools in the history of economic analysis including Robert
Malthus, a man who may be considered the first person to think like a modern economist, and who
developed a theory of population growth which continues to be debated today and one advocate who
is the chief science advisor for President Obama. David Ricardo who perfected the abstract deductive
method of economics and the person responsible for the term “Ricardian vice.” John Stuart Mill, the
person who first explicitly argued that economics be restricted to the study of “economic man.”
Alfred Marshall, the person who started the first independent economics department and wrote the
first micro theory textbook. These are but a few of the economists we will read about and talk about.
Economics used to be part of moral philosophy. Some believe that it still is. Economics used to be
tied with psychology. Then the tie was broken. The tie has returned under the banner “behavioral
economics” which is revolutionizing economics.
Student Learning Outcomes. By the end of the course students will be able to:
[1] Summarize the major characteristics of the different schools of thought.
[2] Compare and contrast the economic outlook of the different schools of thought.
[3] Illustrate the various “revolutions” and “forks in the road” which have occurred in the history of
economic thought.
[4] Profile the lives of 3 or 4 economists studied in the class.
[5] Appraise which economists made the largest contribution to economic thought.
Required Text: Agnar Sandmo. Economics Evolving: A History of Economic Thought
[Paperback, buy or rent]. Princeton Univ. Press, 2010. [Available at KB Books.]
Suggested Books on the History of Economic Thought:
Thinking, Fast and Slow, by Daniel Kahneman.
A Beautiful Mind, by Sylvia Nasar.
Grand Pursuit, by Sylvia Nasar.
New Ideas from Dead Economists, by Todd Buchholz;
Dr. Strangelove’s Game. A Brief History of Economic Genius, by Paul Strathern.
The Making of Modern Economics, by Mark Skousen
The Mind and the Market. Capitalism in Western Thought, by Jerry Muller.
Economics and Religion, by Robert Nelson.
Suggested Web Sites on the History of Economic Thought:
Nobel Prize Winners in Economics. http://almaz.com/nobel/nobel.html
History of Economics Society. http://www.eh.net/HE/; http://www.eh.net/HE/hes_list;
http://www.eh.net/HE/he_resources/
Japanese History of Economics Society http://society.cpm.ehime-u.ac.jp/shet/shet.html
European History of Economics Society http://www.ecn.bris.ac.uk/het1/links.htm
Topics and Readings
I. The Beginnings of the American Economic Association, and Economic “Revolutions.”. 1.
Richard Ely, Founder of the AEA, on the Early History of the AEA.
2. Sir John Hicks on “Revolutions in Economics.”
II. The First Modern Contributions to Economics.
1. Pre-Classical Economics – Ch 2
a. Gary Becker and Aristotle b. Milton Fridman and Mercantilism’s Quantity Theory of Money c.
Physiocracy 2. Classical Theory: Revolution # 1. Smith, Malthus, Ricardo, Mill – Chs 3-5.
III. Socialists and Marx – Ch 6
IV. 19th Century Marginalism & Neoclassical Economics
1. Marginalism. Revolution # 2. Chs 7-8.
2. Alfred Marshall and the Neoclassical Synthesis. Revolution # 3 – Chs 10-11.
V. The First American Contribution to Economics. 1. American Institutionalism and American
“Progressivism.” Text, Ch. 13
VI. John Maynard Keynes’ Macro Theory. Revolution # 4.– Ch 15
VII. Austrian School of Economics. So Close and Yet So Far From Chicago. – Ch 14. Mises,
Hayek, Schumpeter.
VIII. The Development of Econometrics, and Pioneers in Math. Econ. – Ch 16.
IX. 21st Century Revolution in Economics: Behavioral Economics. Revolution # 5
Research Paper. To be discussed in class.
Exams. To be discussed in class.