Talk:History of economic thought/Draft

Article Checklist for "History of economic thought/Draft"

Workgroup category or categories	Economics Workgroup [Categories OK]
Article status	Developed article: complete or nearly so
Underlinked article?	No
Basic cleanup done?	Yes
Checklist last edited by	Larry Sanger 23:23, 9 April 2007 (CDT); JPRC 13:37, 28 March 2007 (CDT)

To learn how to fill out this checklist, please see CZ:The Article Checklist.

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Though this is an extremely long article, and what sections are developed seem well-developed, it has huge numbers of unfilled sections at present; for that reason, it can't be called "developed." --Larry Sanger 23:23, 9 April 2007 (CDT)

Agreed. I need HELP !!! J. R. Campos 23:32, 9 April 2007 (CDT)

I think it might be best to move the heavily detailed parts of the article to other articles/pages; even the list of subdisciplines might be placed on Economics subdisciplines or something like that. And then start over on the main article with something more introductory and tractable. --Larry Sanger 23:35, 9 April 2007 (CDT)

Done. No more empty sections. Economic editors please feel free to improve upon this "draft". J. R. Campos 11:03, 10 April 2007 (CDT)

My class handout

The following is a handout I gave to my students at Yukon College when I was teaching introductory economics. I think it would be useful for this article. Feel free to use, edit, change, improve my prose and remove my biases, etc. :-) Luigizanasi 12:22, 22 March 2007 (CDT)

SHORT NOTES ON THE HISTORY OF ECONOMICS

Definitions

Even the definition of economics is subject to controversy. The textbook definition talks about making choices in the face of scarcity. Many, if not most, economists view economics as the study of how scarce resources are allocated to satisfy alternative competing human wants. This is a "neo-classical" view first formulated by Lionel Robbins in 1935. It is repeated in most economics texts.

However, a more traditional view is that "Economics is the subject concerned with the material welfare of individuals and groups in society" (Asimakopoulos, 1978). or "The economic problem is the study of the process of providing for the material well-being of society. (Heilbroner), or the famous Alfred Marshall "Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing."

We can play with definitions, but my favourite remains the one proposed by a Canadian economist, Jacob Viner, as "Economics is what economists do".

A note on etymology

The word economy has its roots in the ancient Greek "oikonomia" (οί), from "oikos" – house, and "nomos" – manage. Thus economics was originally the science of household management, what we today call home economics. The famous ancient philosopher Aristotle did write a book entitled "Oikonomia", but he was concerned with the treatment of slaves rather than their supply or demand.

Economists first called their disciple "political economy" to show it dealt with the polity and not the household. However, the name changed to "economics" in the 20th century, presumably to make it sound more "scientific", using the same ending as the word physics.

SHORT HISTORY OF ECONOMICS

Adam Smith

Despite some predecessors, all economists agree that economics, or political economy, started in 1776 with the publication of Adam Smith's Enquiry into the Nature and Causes of the Wealth of Nations. The Scottish philosopher Adam Smith is considered the founder of economics, or political economy. The largest part of the book is devoted to explaining wages, profits and rents which were related to Labour, Capital, and Land (or natural resources). Smith explained prices through the cost of production, he had a purely supply side theory of value.

Smith is most famous for the idea of the "invisible hand" of the market resulting in the best solution for society. To quote a famous passage in the Wealth of Nations:

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ... By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. (Wealth of Nations, Cannan edition, p. 423)

This is a clear (at least in 18th century language) endorsement of "laissez-faire", and Smith believed that government intervention usually made things worse. However Smith was not a total advocate of free markets, he also keenly aware of monopoly power. In another passage contrasting this first statement:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Smith's theory of value is of particular importance. He distinguished between "real" price and "nominal" price. Real price was the price in terms of labour while the nominal price was in money terms. He viewed demand as possibly affecting the nominal market price temporarily, but it would eventually return to its natural price. Smith, then, clearly had a labour theory of value and under-estimated the importance of demand.

Classical Economists

Smith was the first of the classical economists. They also include Malthus, David Ricardo, Karl Marx and John Stuart Mill, who all expanded on Smith's work and continued with the labour theory of value.

Thomas Robert Malthus (1766-1834) is most famous for his "Essay on the Principle of Population" where he formulated the theory that population expanded at a geometric rate (or exponentially) while food production could only increase arithmetically. At a certain point, the population increase would outrun the food supply, and result in general misery. Malthus was one of the major inspirations for Darwin’s theory of Natural Selection, and his echoes can be found in today’s environmental literature that warn of depleting resources.

David Ricardo (1772-1823) was perhaps the most important of the 19th century political economists. He combined Smith's labour theory of value with Malthus's population dynamics in a system which showed that capitalist economies would eventually result in a steady state of universal misery.

Ricardo's system depended on the idea of the marginal product of land, and was the inventor of the "marginal" concept. His idea was that the value of agricultural products (and hence food) was based on the amount of labour required to produce on the least fertile parcel of land. Hence the "Law of diminishing marginal productivity". Landlords owning land that was more fertile, and who could produce more for a given amount of land, obtained "rents". His conclusion was that the future was in buying land. He, of course, did not predict the tremendous increase in technology and productive capacity brought about by the capitalist system.

Ricardo was also responsible for the idea of comparative advantage in international trade. His classic example was between wine and clothing and England and Portugal. Portugal was more efficient than England in producing both cloth and wine, but England had a comparative advantage in cloth production. He showed that it would be advantageous for Portugal to specialize in wine and England to specialize in cloth, and to trade with each other. This resulted in more wine and cloth all around.

Karl Marx is the most famous of Ricardo's followers (at least in economics, he is clearly little more than a follower of Ricardo and had little impact on the development of the discipline). His economics differed little from Ricardo's, but had different conclusions. He placed little emphasis on the diminishing marginal productivity of land, but more importance on the falling rate of profit. To Marx, capitalist competition would lead to the impoverishment of the "proletariat" or working class and a falling rate of profit. The ultimate resolution would be a communist revolution with the workers seizing power. Based on the failure of Marx's predictions, his followers added "monopoly capital" and "imperialism" as explanations for the relative prosperity of capitalist economies.

The marginalist revolution

By the second half of the 19th century, it became obvious that classical economics led to results that were quite revolutionary, since they were based on a labour theory of value. However, classical economics could not explain value in terms of the usefulness of things; e.g. why diamonds, which are practically useless, should be worth so much more than water, which is a basic necessity.

In the 1870's, three economists were responsible for what is called the "marginalist" revolution - William Stanley Jevons, Carl Menger and Léon Walras. They, independently of each other, developed a new theory of value based on utility. The three are responsible for the concept of marginal utility, and the derivation of a downward sloping demand curve. However, the most significant impact has been to move economics from a study of the material welfare of humanity to the study of the efficient allocation of scarce resource. Their ideas about demand were soon extended from the theory of consumption to the theory of production.

Their theory re-established the legitimacy of laissez-faire. These people and their successors, are who we call the neoclassicals and most economists today would be neo-classical

Alfred Marshall (1900-1920) was responsible for the combination of demand and supply, where demand was based marginal utility. He was responsible for developing numerous concepts still used in economics, including: demand and supply curves or schedules and their equilibrium, elasticity, consumer surplus, the distinction between short- and long-period, etc. Modern micro-economics is a continuation and elaboration of his work.

Marshall's work was only the beginning. His work was refined and further developed, and continues to be extended to this day. Neo-classical economists have built a truly astounding logical edifice that rival Newtonian mechanics in completeness and rigour. The basis of neo-classical economics is maximisation under constraint, and this constantly involves the "marginal concept". The tools developed by economists are even now beginning to be used by other social sciences such as anthropology, sociology and even psychology.

The Great Depression and Keynesianism

However, the edifice of neo-classical economics suffered a severe blow with the Great Depression of the 1930's. In competitive markets, unemployment is not supposed to occur. It can only be due to monopolistic forces preventing the demand and supply of labour from reaching equilibrium. This was clearly not the case in the 1930's.

Marshall's most famous disciple and pupil, John Maynard Keynes, attacked the neo-classical system with the publication of the General Theory of Employment, Interest and Money in 1936. Keynes showed that the depression was due to insufficient aggregate demand and advocated the need for government intervention to restore full employment. In the process, he created macro-economics.

Micro-economics is a continuation and elaboration of the work of the early neo-classicals. It deals with the behaviour of individuals and firms, and with individual markets. Other 1930's economists, Joan Robinson at Cambridge and Edwin Chamberlin in the U.S. developed the theory of imperfect competition. Joan Robinson was responsible for the idea that profit maximization involve the equation of marginal cost and marginal revenue, while Chamberlin was responsible for the idea of monopolistic competition and product differentiation.

Keynesianism became the orthodoxy in economics until well into the 1970's. In order not to abandon all the neo-classical economics that had been built up, the dominant economic ideology became the Keynesian-neo-classical synthesis. The basic idea was to let the government ensure full employment, and then neo-classical economics could be used to ensure the best allocations of resources. The Keynesian-neo-classical synthesis is generally associated with Paul Samuelson, who wrote the most influential ever textbook in economics. Most economics texts today are clones of Samuelson's text, generally following the same general outline. The 1950's and 60's were the heyday of Keynesian economics, when most economists believed that the judicious application of government intervention could smooth out the business cycle and ensure full employment without inflation.

The monetarist "counterrevolution"

While the Keynesian-neo-classical synthesis took over the profession, an unregenerate rearguard of neo-classical economists centred at the University of Chicago continued exist. They never accepted the idea of involuntary unemployment or government intervention to ensure full employment, and strongly believed in the virtues of markets and laissez-faire. The most famous economist of the Chicago School is Milton Friedman. He was mainly responsible for what is known as the Monetarist counterrevolution of the 1970's. Not only did they succeed in bringing the Keynesian theory down, but they considerably extended the scope of micro-economics to include even education and family formation.

With the perceived failure of Keynesian economics to explain and do anything about the "stagflation of the 1970's, the free market prescriptions of monetarism became much more popular, and were eventually espoused by many right wing governments in the 1980's (Reagan, Thatcher, Mulroney), and, perhaps more importantly, by the central banks of most industrialized countries.

Economics today and the Keynesian revival

However, the basic prescription of monetarism failed when it was attempted in the late 1970s and early 1980s. For some this meant moving to even more radical free market positions (Rational Expectations and Real Business Cycle theories), while others attempted to put Keynesian economics on a more sound microeconomic foundation (New Keynesian economics).

Economics today is in a state of crisis, with a number of contending schools and a whole lot of economists in between. The schools that can be distinguished include from left to right: Marxists, Neo-Ricardians, “Post Autistic”, Post Keynesians, New Keynesians, various degrees of Neo-classical-Keynesians, various degrees of Monetarists, Real Business Cycle, Rational Expectationist. They differ fundamentally about the amount and level of government intervention in the economy, ranging from almost total control for Marxists to complete libertarian laissez-faire for the Rational Expectationists.

However, a new dominant school or mainstream seems to be emerging: the "New Keynesians". They reject the simplistic laissez-faire of the monetarists, but recognize many of their criticisms as valid and see some limitations to the ability of governments to act to cure all economic ills. They are particularly preoccupied with creating a proper micro-economic foundation for Keynesian economics. They focus mainly on rigidities, market imperfections, and the economics of information, which result in the need for some kinds of government intervention, but without the unbridled faith in the ability of government to solve all problems that Keynesians had in the 1950's and 60's. The author of our textbook, Joe Stiglitz is one of the leading figures of this school. He won the Nobel prize in Economics in 2001.

Released under the CC-BY-SA-NC license, unless the Citizendium foundation decides otherwise. Luigizanasi 12:22, 22 March 2007 (CDT)

A comment

João, I'd just like to express my appreciation for all the excellent work on this article that you've done.

I have an item of criticism, however. "Smith's book failed to anticipate the economic and social upheavals that industrial era was about to unleash; furthermore, it was a muddled and inconsistent book." Isn't this editorializing? See CZ:Neutrality Policy. --Larry Sanger 09:47, 24 March 2007 (CDT)

The phrase has been reworded so that it will not anymore hurt any touchy ears. But "muddled" and "inconsistent", important as this book might have been for Economics, it is. Try reading it... J. R. Campos 10:15, 20 April 2007 (CDT)

OK, agreed. Give some time to re-phrase. The point that must be made here is: as Smith was writing, based on his past experience - of course - the world was fastly changing in a way he and his work could not have antecipated. This added complexities to economic analysis Smith was not aware of and which the economists who came after him tried to understand.

David Ricardo is no more than a re-writing of Smith's book, re-adapting it to the new, more complex reality; in this sense Smith's, when read after 1789, and specially after Ricardo - no offense intended, was "a muddled and inconsistent book". Ricardo fixed those inconsistencies.

Guru2001 13:18, 24 March 2007 (CDT)

By the way, would it not be more accurate to title the article, at present history of economics or history of economic theory? It gives little information about economics per se, it seems--other than information about the history of economic thought. --Larry Sanger 09:49, 24 March 2007 (CDT).

By the way, "which" Economics' ???? !!

On this I do not agree at all. First, the article gives a lot of information on pure Economics and theorethical Economics, specially throught the links.(of course those begin mainly after the "Marginalist Revolution", which made almost everything else preceeding it obsolete) The most important books in Economics are not merely referred to; they are readable online, like The Wealth of the Nations, David Ricardo's, John Stuart Mill's, Alfred Marshall's and many others. This is the "whole" of Economics per se.

As the links are in public domain, free for all, there was no point trying to reproduce here formulas, graphs and theorems that are publicly available, in very good form, and that can be obtained by a single click of a mouse. If a serious student decides to imerse himself into all the details of Economics he can (almost) obtain his Economist degree just by following each and every of the links in this article. That was the original idea. I believe this to work in line with the concept and purpose of an Enciclopedia: to give some basic structural information on the subject and to offer a framework and a study plan, with the means to expand the kowledge indefinetly, as required by each reader.

Economics is a social science, undergoing constant change. An article in Economics that purpose to show it, let us say, as a portrait of what it is today is bound to become obsolete next year. Unlike physics, there is no such a thing like "single" Economics, or "correct" Economics, or "contemporary" Economics. The only proper way to describe Economics is by showing its historical perpesctive and permanent evolution, where one can see why and how theorems where developed, and which criticisms they immediately aroused, as always hapens. No one solved (yet..) the "Economics Law" as Newton solved the Law of Gravity or Einstein solved the Theory of Relativity. While its neutrality safe to write e=mc², if one wites in this article the most basic of the economic formulas, without placing it into perspective, one would be taking sides. One must keep this always in mind. (See the excellent contribution about "definition of economics". If economists do not agree even on the definition of their science, how could one dare to show "Economics" statically, in the same sense one shows "physics" or "mathematics", without necessarily taking sides ?)

I do not actually object to add History of the Economic Thought as a subtitle. But I would not remove Economics form the main title, as it would confuse people who are not yet so familiar with the particularities of Economics as a science. For me: "Economics: History of the Economic Thought" would be perfectly OK.

"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 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". Keynes, 1936.

Guru2001 13:18, 24 March 2007 (CDT)

Well, I'll say one thing anyway--it seems to me that there has to be, at the very least, some discussion of the subdisciplines of economics. --Larry Sanger 15:06, 30 March 2007 (CDT)

The Schumpeter's reply to the Larry Sanger critique (posthumous)...

Let us begin in a thoroughly common-sense manner. What distinguishes the 'scientific' economist from all the other people who think, talk, and write about economic topics is a command of techniques that we class under three heads: history, statistics, and 'theory'. The three together make up what we shall call Economic Analysis.

Of these three fundamental fields, economic history -- which issues into and includes present day facts -- is by far the most important. I wish to state right now that if, starting my work in economics afresh, I were told that I could study only one of the three but have my choice, it would economic history that I would choose (emphasis added). And this on three grounds:

First the subject matter of economics is essentially a unique process in historic time. Nobody can hope to understand the economic phenomena of any epoch, including the present, who has not an adequate command of historical facts and an adequate amount of historical sense or of what may be described as historical experience.

Second, the historical report cannot be purely economic but must inevitably reflect also 'institutional' facts that are not purely economic: therefore it affords the best method for understanding how economic and non-economic facts are related to one another and how the various social sciences would be related to one another.

Third, it is, I believe, the fact that most of the fundamental errors currently committed in economic analysis are due to a lack of historical experience more often than to any other shortcoming of the economist's equipment.

• Joseph A. Schumpeter, History of Economic Analysis, edited from manuscript by Elizabeth Boody Schumpeter (Oxford and New York: Oxford University Press, 1954), Chapter 2: Interlude I: The Techniques of Economic Analysis: on pp. 12-13

Puzzled

Still puzzled by your coments, I went to see what Britannica have under Economics. After all, they began writing on Economics eight years before Adam Smith published his book...

Suprisingly (or not?) "Economics" in the Encyclopaedia Britannica, (founded 1768, 15th edition), is just a stub, which refer the readers to several exhaustive articles on the various aspects of Economics. It acts almost as an index, refering to articles such as Business Cycles, Consumption and Consumerism, Economic Forecasting, Inflation and Deflation, etc, etc. Dozens of titles.

When you say " It gives little information about 'Economics' per se" I believe you might be thinking of "Economic Theory" which, in Britannica, is a separate article and which should be a separate one here as well. This is the article where all the formulas and graphs go. However, here in the "Economics" article (which is not an "Economic Theory" article), I tried to make easily avaliable to those who might be interested in the mathematical aspects of pure economic theory (the abstract part of economics) that information at their fingertips. Just by following the links one will get in touch with more formulas and graphs than by reading Britannica's multi-page "Economic Theory. The benefits of the modern technology are used here.

Guru2001 19:34, 24 March 2007 (CDT)

An example

The early beginnings of growth theory derive from the basic model of Harrod and Domar, where there was a fixed capital-output ratio, a. With savings, s, a fixed fraction of output (income),Y,

I sY dK/dt (16.1)

where K is the capital stock, so the rate of growth of capital is

dln K/dt sY/K s/a. (16.2)

Moreover, as machines become more efficient, each machine requires less labor, so the number of jobs created goes up more slowly than the capital stock. If

L/Y b (16.3)

is the labor requirement per unit output, then b/a is the labor required per unit capital, and job growth is

dln L/dt s/a (16.4)

where

dln b/dt (16.5)

dln a/dt (16.6)

s/a was sometimes referred to as the warranted rate of growth, what the system would support. Once technological change was incorporated, the warranted rate of growth is modified to s/a (...)

etc, etc.

From:

STIGLITZ, Joseph E. Samuelson and the Factor Bias of Technological Change: Toward a Unified Theory of Growth and Unemployment. in: 17; Szenberg; Chap16; 13/07/06 03:35 PM; pp. 235-251.

Another example

From: Paretian system

Arguably, the greatest advantage of the Paretian system is its intuitive structure and amenability to simple diagrammatic exposition - and thus quite effective as a heuristic device. Graphical illustrations of the Paretian system inevitably require confinement to a simple "two-sector" economy - i.e. an economy with two outputs (and firms), two factors and two households - and thus is quite similar in structure to the "Hecksher-Ohlin" model of international trade. The nomenclature for the two-sector case is then the following:

• Households: A and B
• Factor endowments: K and L (factor returns are r and w respectively)*Produced Outputs (Firms): X and Y (output prices are pX and pY respectively).

Agents possess factor endowments and desire outputs. In order to present this diagramatically, we shall ignore factor supply functions and thus assume that agents are "forced" to place all their factors on the marketplace, i.e. K and L are supplied inelastically by agents. As a result, we can capture the consumer's decision as follows. Let UA(XA, YA) is the utility function of agent A which increases with the acquisition of produced goods (XA, YA) and let endowment of agent A be eA = (KA, LA). Obviously, for B, we have UB(XB, YB) and eB = (KB, LB). Together, consumers cannot demand more outputs than are available, thus feasibility requires that:

XA + XB £ X

YA + YB £ Y

where X and Y are the total amounts of goods X and Y produced. Utility functions are assumed differentiable. Thus, given prices, pX, pY, r, w, consumer A faces the following optimization problem:

max UA(XA, YA)

s.t.

pXXA + pYYA £ rKA + wLA

The first order conditions for a maximum are then:

¶UA/¶XA = lApX

¶UA/¶YA = lApY

pXXA + pYYA = rKA + wLA

where lA is the Lagrangian multiplier for agent A (or his "marginal utility of income"). Letting UAX = ¶UA/¶XA represent the A's marginal utility of good X and the same for the other goods and factors, then the consumer will choose to demand outputs until:

UAX/UAY = pX/pY

the ratio of marginal utilities between outputs (also known as the "marginal rate of substitution between X and Y", or simply MRSAXY) is equal to the price ratio, pX/pY. This is the familar condition for a tangency between the budget constraint (with slope equal to - pX/pY and pinned down by the income from the sale of endowments) and the highest indifference curve (with slope equal to - MRSAXY). This is obvious in Figure 1 to be at point E = (XA, YA) which yields utility UA(XA, YA) Bundle G, which yields utility UA¢ ¢ is unattainable given the budget constraint. Conversely, bundles F and H, both of which yield utility UA¢ , are attainable but suboptimal for agent A.

pareto1.gif (3098 bytes)

Figure 1 - Household Utility-Maximization (Graph of the above)

(...continues...) etc, etc, etc...

Guru2001 08:58, 25 March 2007 (CDT)

More than one mouse click

I think it's a bit of an exaggeration to say that those equations can be found with a single click of the mouse. At best, they can be found with one click plus some scrolling down through many paragraphs of text. And one needs to know which link to follow to get to the equations one is interested in. I think an article on economic theory would be useful as a guide. --Catherine Woodgold 17:41, 9 April 2007 (CDT)

Well, take "one mouse click" on a broad, literary sense. But two mouse clicks and some scrolling down is still better than total darkness.

And about "I think an article on economic theory would be useful as a guide", BRAVO !!!

I am BEGGING for someone to write it !

J. R. Campos 20:22, 9 April 2007 (CDT)

Furthermore...

I am not the (right) person to write the Economic Theory article; I do not have the tools. This is the article were all the formulas and graphs go, (preferably some animated graphs, as we can see elsewhere in 'state of the art' [1] Economics articles all over the Net) and this requires an editor who can master those editing techniques; it is not my case. J. R. Campos 23:16, 9 April 2007 (CDT)

Disappointment

Sorry to disappoint some of you...

"My own view may disappoint those of you who have come to this course with practical motivations. In my view, economic theory is no more than an arena for the investigation of concepts we use in thinkingabout economics in real life. What makes a theoretical model “economics” is that the concepts we are analyzing are taken from real-life reasoning about economic issues. Through the investigation of these concepts we indeed try to understand reality better, and the models provide a language that enables us to think about economic interactions in a systematic way. But I do not view economic models as an attempt to describe the world or to provide tools for predicting the future. I object to looking for an ultimate truth in economic theory, and I do not expect it to be the foundation for any policy recommendation. Nothing is “holy” in economic theory and everything is the creation of people like yourself".

RUBINSTEIN, Ariel. Lecture notes in microeconomic theory : the economic agent. Princeton: Princeton University Press, 2006.

Guru2001 11:21, 25 March 2007 (CDT)

Economics is not mathematics...

"Although we will be studying formal concepts and models, they will always be given an interpretation. An economic model differs substantially from a purely mathematical model in that it is a combination of a mathematical model and its interpretation" (...)

RUBINSTEIN, Ariel. Lecture notes in microeconomic theory : the economic agent. Princeton: Princeton University Press, 2006.Introduction, pag 6

Guru2001 11:55, 25 March 2007 (CDT)

On the Economics per se issue...

A previous Nobel Memorial Prize winner in economic science gives a more critical report:

"Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions.....Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail their formal properties; and the econometricians fit algebraic functions of all possible shapes to essentially the same sets of data without being able to advance, in any perceptible way, a systematic understanding of the structure and the operations of a real economic system (...)"

(Wassily Leontief, 1982, p. 104).

Guru2001 08:00, 27 March 2007 (CDT)

A useful warning...

I found some excerpts from Dr. Roger A. McCain (Professor of Economics at the Department of Economics, LeBow College of Business, Drexel University) introduction to his course, which I believe are very useful here:

Because we call it economics, with an "ics" ending like physics, that might suggest that economics is "scientific" as physics is scientific. But sometimes we have more in common with geography.

For example, we can say that a law of physics, such as the law of universal gravitation, is either true or false. It makes perfectly good sense to say that the law of gravitation is true. But, in geography, would it make sense to say that a map of the state of Pennsylvania is true or false? Of course, a map has to have a lot of truth in it. A map that would show Philadelphia in the west and Pittsburgh in the east would not represent Pennsylvania as it is, and at best could cause confusion and make the map useless. But, on the other hand, no map is perfectly accurate. Most road and street maps show the roads and streets much wider than they are in proportion to the other objects on the map -- we couldn't see the roads and streets if they were shown in proportion, and then the map would be useless. On the other hand, every map leaves out some detail. If the map is on a fairly large scale, it will leave out a lot of detail. If you want to go find covered bridges (I do that, sometimes, on pretty winter days) you will need a local or county map. Covered bridges are mostly on minor rural roads, and you won't find those roads on a map of the whole state of Pennsylvania. On the other hand, if you want to drive from Philadelphia to Pittsburgh, you need a map of the whole state -- you wouldn't find the detailed county maps very useful for that purpose. And contour maps show little lines where the elevation is 100 or 200 meters above sea level. There aren't really any lines like that on the ground. These maps have a lot of falsehood in them. But maps are designed to be useful, not to be true. To be useful, they have to have a mixture of truth and falsehood -- and just what needs to be true, and what needs to be false, depends on what you want to use the map for.

Many (not all) economic models are like that, especially in Macroeconomics. They are designed to be useful to help you find your way around the economic system, and to help you anticipate where it is going and where you are going with it. To do that, they need a lot of truth, but also a bit of carefully chosen falsehood. Like a map on a large scale, they leave out a lot of detail -- and 'macroeconomics' is on the largest scale, so it leaves out the most detail. Dr. Roger A. McCain, Professor of Economics, Department of Economics, LeBow College of Business, Drexel University.

comment:

Renaming Political Economy as Economics was a misguided attemp, around the turn of the 19th/20th centuries, to remodel the discipline to follow the natural sciences.

The attempt did a great disservice to its ability to provide society with guidance that stays in line with reality. I think this should be recognised and the study of economic realities should be given a more appropriate name or it should re-adopt its original label.

Janos Abel 10:22, 20 April 2007 (CDT)

This article is designed to build up a workable map of "Economics". In doing this, we will need to draw on a number of different traditions in economic thought -- some of them quite opposed to one another. JPRC 13:37, 28 March 2007 (CDT)

I didn't realize that you had given such a complete justification of your approach here. Well, I won't argue with you! After all, Biology and Philosophy also take historical approaches, but what they have which your article doesn't have, yet, is some pointers to subdisciplines. --Larry Sanger 15:10, 30 March 2007 (CDT)

I am trying to put pointers, but there are no articles to poin to. I have put already some ones which are pointing to blank spaces.

João, thanks for your ongoing work on this. Three stylistic points now. Your paragraphs are too short, I think; quotations are not standardly italicized in either American or British English;

Please elaborate, they are italicized. Aren't they ? JPRC 14:04, 31 March 2007 (CDT)

and the article is simply getting too long. :-) --Larry Sanger 10:51, 31 March 2007 (CDT)

And a fourth point. You still have links to external articles. The rule is now official: CZ:Article Mechanics. Moreover, there are very, very few links to other CZ articles, whether existent or nonexistent. The result of that will be to stymie development of further articles on economics. For a good example of the sheer quantity (not necessarily the choice) of internal links we'd typically expect in an article, you can't do much worse than Wikipedia's economics article.

Well, I did not expect do the whole aricle all by myself; this has been a suprise to me. I have been removing the external links, which were placed there before the CZ:Article Mechanics rule came into effect, as time permits. Anyone is welcome to help me on that job. The only thing I would recommend is that the very useful existing references be tranposed to "External Links", not simply erased, and so lost.

As to the over-extension of the article I agree. I was going to propose a break-up into two or three sections, I welcome suggestions. I was thinking of moving the "Ancients" to another titel, perhaps "Origins of Economics", leaving the main "Economics" article to begin in the "Classical Period (1871-today)". Comments welcome.

JPRC 14:04, 31 March 2007 (CDT)

Microeconomics, an immersion (free) course

Those interested ind doing an immersion course in microeconomics can do so at :

• MICROECONOMICS: Most important concepts explained in detail. Text, graphs and workable problems. WARNING: Internet Explorer will not work! Get "Firefox" or "Netscape" for free. Requires "Adobe Acrobat Reader" as a helper to your web browser. You will need "Excel 97" or higher running on your computer to use the spreadsheets.

JPRC 14:04, 31 March 2007 (CDT)

Spliting this article

I already divided this article, which was getting more than "enourmous", into two: Economics and History of Ancient Economics. But I think it still should be split once more; I am not sure exactly WHERE. Suggestions are welcome.

J. R. Campos 17:27, 1 April 2007 (CDT)

I've no answer for you, but I did want to say that "abrangent" isn't an English word (as far as I know). --Larry Sanger 16:05, 5 April 2007 (CDT)

oopsss...! J. R. Campos 20:24, 9 April 2007 (CDT)

Subheadings

I see that some subheadings, such as "the monetarist counter-revolution" within the "Introduction" section, are formatted with bold type only, not with the triple equals signs that would get them included into the table of contents. Is this intentional, or is it OK to format them as true subheadings? --Catherine Woodgold 17:50, 9 April 2007 (CDT)

In the "Introduction" there is a smal brief on each of the schools, very basic. The same schools will be analysed individually and fully after the "Introduction" ends; than they are "triple-equalled" for the table of contents.

J. R. Campos 20:28, 9 April 2007 (CDT)

Repetition

At least the first two paragraphs of the section "The Classical School ("Ricardians")" seem to be a slightly modified copy of text already given earlier. --Catherine Woodgold 17:55, 9 April 2007 (CDT)

As I said on your previous question the "Introduction" gives a small briefing on each of the schools; its purpose is to act as a guide, or a "map". When each scholl is subsequently analysed fully in their own section there might be some overlaping information already written in the "Introduction's" briefing. If you find any of it too repetitious or excessive, please feel free to edit to your satisfaction.

J. R. Campos 20:36, 9 April 2007 (CDT)

To understand the basic principles of Economics

• ECONOMICS 100 ONLINE. Department of Economics at the University of Toronto<copyright K.J. Rea, 2000-2003 all rights reserved>. (A great "primer" to understanding the basic principles of Economics).

The article Economic Theory which should deal with those topics is not yet written on CZ. To understand the basic principles of Economics, meanwhile, I suggest the reading of ECONOMICS 100 ONLINE by the Department of Economics at the University of Toronto. It is a great "primer" for helping anyone understand Economics. (contents copyright K.J. Rea, 2000-2003 all rights reserved)

J. R. Campos 21:56, 9 April 2007 (CDT)