History of Economics

1. History of Economics (Safe) History of the economy (Dangerous) History of thinking about the economy (Keyne’s scribblers)

2. John Maynard Keynes "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. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas…. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil…"

3. Nasty, brutish and short How does our present world economy come about? Why are things the way they are? Leviathan: The basic building blocks of a non-Hobbesian world: • Industry • Finance • Freedom from brigandism, force, and fraud • Limited liability: corporations, partnerships and sole proprietorships • Government and taxation, laws and regulation • Employment • Unions and other pressure groups

4. History of the Economy • Gathering and hunting • Farming - in caves, in villages, in towns, and then the advent of cities • From barter to money, the key to trade • From brigands to feudal lords • Entrepreneurship - the farm becomes the firrrrm • Mercantilism • From family enterprises to group enterprises to corporations • The firm, the market and the law (anti-trust and regulation) • Government economies (capitalism vs. socialism) • Welfare (Fabianism and social democracy)

5. History of Economics, Part 1 A list of dead white men (deal with it!): the classicalists: (this is a partial list) • Aristotle • Smith • Malthus • Rickardo • Bentham and Mill (Marx and Engels)

6. Marx and Engels Lenin Stalin Pigou Keynes and FDR Fabianism Cold war Korea and Vietnam Detente European social democracy Smith Marshall Coase and company Friedman “Reaganomics” Corporate globalization The Clinton compromise History of Economics, Part 2The 140 year war: socialism vs. capitalism 1944: Bretton Woods: The great compromise

7. History of Economics, Part 3Ecological Sustainability • Conservationism • Resource and environmental economics (growth implicit) • Georgescu-Reogen (entropy) • Daly (steady states) • Bruntland (sustainable development) • Agenda 21 and Kyoto (compromised sustainability) • …and we’re more or less up-to-date

8. Part 1: From Ancient Economics to Mercantilism and Industrial Technique Greece: • City states and country estates • Agriculture • Slavery • Democracy • Trade • Climate change

9. Ancient Economics Aristotle: • Chrematistics vs. oeconomics • Wealth getting vs. household economy (These are large households) Picture: www.philosophypages.com

10. Aristotelian Economics Property is a part of the household, and the art of acquiring property is a part of the art of managing the household; for no man can live well, or indeed live at all, unless he be provided with necessaries. And as in the arts which have a definite sphere the workers must have their own proper instruments for the accomplishment of their work, so it is in the management of a household. Now instruments are of various sorts; some are living, others lifeless; in the rudder, the pilot of a ship has a lifeless, in the look-out man, a living instrument; for in the arts the servant is a kind of instrument. Thus, too, a possession is an instrument for maintaining life. And so, in the arrangement of the family, a slave is a living possession, and property a number of such instruments; and the servant is himself an instrument which takes precedence of all other instruments.

11. Aristotelian Economics … Hence some persons are led to believe that getting wealth is the object of household management, and the whole idea of their lives is that they ought either to increase their money without limit, or at any rate not to lose it. The origin of this disposition in men is that they are intent upon living only, and not upon living well; and, as their desires are unlimited they also desire that the means of gratifying them should be without limit. …so, too, in this art of wealth-getting there is no limit of the end, which is riches of the spurious kind, and the acquisition of wealth. But the art of wealth-getting which consists in household management, on the other hand, has a limit; the unlimited acquisition of wealth is not its business.

12. Greeks, Romans, and then… • Greek city states • Roman slave empire • Chinese economies • http://www.pbs.org/wgbh/nova/sultan/media/expl_01q.html • Egyptians and later Arabs • Native American economies • The Dark Ages of Europe

13. The Dark Ages: Force and Fraud • It’s good to be a brigand • Feudal lords are institutional brigands • Robin Hood? A social brigand? • The king’s peace: protection of common farmers against brigands and thieves • Peace is productive • Calvin and Hobbes, Locke and Smith

14. After the Dark Ages… • Feudalism, particularly after Norman Conquest • The open field system of village agriculture under feudal lords (fiefs): • Commons • Fallow fields • Woodlands and grazings

15. An Open Field Village Source: Cloughall College, UK

16. Feudalism 101 • The Push-me: Exploit the land, get rich and powerful • The Pull-you: The peasants control production. You have to let them live.

17. The Baron’s way of life: A Norman Keep Castle Hedingham, Halstead, Essex.

18.   Castle Hedingham, Halstead, Essex

19. Magna Carta 101 • Barons have rights too • Protect the barons’ peasants against the king’s soldiers • Protect the means of production

20. King John: A weak and fearful man, but a tyrannical one Peter of Langtoft, 'Chronicle of England'. This manuscript was probably written and illuminated during the reign of Edward II (1307-1327).

21. From Magna Carta: 28. No constable or other bailiff of ours shall take corn or other provisions from anyone without immediately tendering money therefor, unless he can have postponement thereof by permission of the seller. 30. No sheriff or bailiff of ours, or other person, shall take the horses or carts of any freeman for transport duty, against the will of the said freeman. 31. Neither we nor our bailiffs shall take, for our castles or for any other work of ours, wood which is not ours, against the will of the owner of that wood.

22. More from Magna Carta: 36. Nothing in future shall be given or taken for awrit of inquisition of life or limbs, but freely it shall be granted, and never denied. 39. No freemen shall be taken or imprisoned or disseised or exiled or in any way destroyed, nor will we go upon him nor send upon him, except by the lawful judgment of his peers or by the law of the land. 40. To no one will we sell, to no one will we refuse or delay, right or justice.

23. Pre industrial landscape change: from open fields and commons, to enclosures • Called the “Open” or “strip” field system • See Domesday (Doomsday) Book, 1086 • Village rule of elders, with taxation by lords • Black Death (1350) • Rise of privatized wool industry • Enclosure

24. The Great Plague: the “Black Death” • Kills over 1/3 of Europe around 1350 • Sporadic outbreaks after, including 1688 in London, and in Native America after first contact • Empties villages

25. Medieval woodcut: doctor lances a plague “buboe” on a patient, providing an element of relief. Of course, this is very dangerous for the physician

26. Open fields after enclosure: Source: Northumberland and Durham county councils

27. Reconstructed medieval house, West Stow, Suffolk

28. “Hundreds of English villages were abandoned during the Black Death. This is the village of Middle Ditchford in Gloucestershire. You can see the outlines of the buildings.” http://passmoreshistory.homestead.com/files/Unit_3_Lesson__7_sheet_edited.ppt.

29. Medieval Enclosures and Previous Field System Source: Aerial Archeology in Essex

30. Early Industry C 1300-1600 • “Cottage” industry, primarily based on enclosed fields used as sheep farms • “Trucking” from house to house • Carding • Spinning • Weaving • Transport • Marketing • English Wool, the first industrial commodity • Allows growing strength of the merchants

31. Source: Stephen Butt Great Glen website

32. Mercantilism • Calvin and the Reformation • Hobbes • The Civil War (not the one you think): …northern industrialists and their conscripted workers vs. southern aristocrats and their conscripted slaves and workers • The Merchant Empire

33. Author Kevin Phillips: The “Cousin’s Wars” are actually One Big Long War The English Civil War; The protestant North, for the merchant middle class and against feudal slavery versus the aristocratic South, for the aristocrats and to protect feudal rights The Revolutionary War; The protestant North and thearistocratic South, for self-government and against monarchical control 3) The America Civil War: The protestant North, for the industrial owner classes and against slavery versus thearistocratic South, for the plantation holders and to protect state’s rights

34. The Economic Importance of Calvin and Hobbes

35. The Economic Importance of Calvin and Hobbes Actually, no….

36. Calvinism • Predestination • Work redeems the day • Duty • Thriftiness in consumption • Weakening of established hierarchy • The church of the merchants and manufacturers • The Pilgrims • Today’s Baptists, Methodists, etc

37. Hobbes • Leviathan: the state as giant • The Prince and his people • Protect the commonwealth • Protection from force and fraud • The masses subscribe to his rule because that is what protects the peace and thereby production • Not originally Calvinistic, but as time goes by…

38. Hobbes (Frontispiece to Leviathan, 1651)

39. From Old Ashburn Scenes, Ashburnweb.com

40. Early Industry C 1600 to 1800 • Cottage industry locates “on-site” • Creates “Industrial hamlets” • Site specific advantages: • Mining • Water or wind power • Workforce • Better transportation on good roads, then canals • Iron, the source of early military power, ironworks key strategic resource • Case study: Sheffield, Yorkshire

41. Source: Abbeydale Industrial Hamlet: Sheffield, Yorkshire The Tilt Forge Wheel

42. Source: Shepherd Wheel: Sheffield, Yorkshire The Grinding Workshop

43. Forge sites on Sheffield rivers

44. Coal Mining • “Sea Coal” from Newcastle • Driven by deforestation of England, 1600s, 1700s • Required energy to pump water from deep shafts • Required centralized, organized labor force: capitalism, unions

45. “Sea Coal” Photo: Glen Smart

46. From the author of Robinson Crusoe This town of Sheffield is very populous and large, the streets narrow, and the houses dark and black, occasioned by the continued smoke of the forges which are always at work. Here they make all sorts of cutlery-ware, but especially that of edge tools, knives, razors, axes etc. and nails; and here the only mill of the sort, which was in use in England for some time, was set up, for turning their grindstones. The manufacture of hard ware is ... much increased... and they talk of 30000 men employed in the whole. from A Tour Through the Whole Island of Great Britain by Daniel Defoe published in 1724