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ECO 4405—History of Economic Thought
Instructor: Professor. Aladár Madarász
Contact: madarasz@econ.core.hu
Course Description
The Great Recession starting in 2008 seriously changed the landscape of economic thinking and discourse. Various economists - mostly forgotten – enjoyed a curious revival in the blogosphere, on editorial pages and in academic discussions. According to some observers the next presidential campaign in the USA would be a re-edition of the famous Hayek-Keynes debate of the 1930s. To understand past ideas and their renaissance we need to re-create the contexts in which they arose.
The aim of the course is to give an insight into how economic thinking has reached its present state. There can be no understanding of economics without an awareness of its history, without knowing the intellectual efforts that have been made in order to understand economic phenomena and the history of the analytic or scientific aspects of economic thoughts.
The topics cover the developments within the mainstream economic theorising and the emergence of alternative approaches alike. We focus on the relevance of theories and problems, on their historical perspectives and not on their sometimes highly complex technical aspects. In dealing with the subject, however, we assume that students have already been acquainted with the content of standard micro- and macroeconomic courses.
For the most part, this class will be conducted as a seminar. The students are expected to give an individual presentation of a chosen reading material (small lecture) 10-15 minutes, a midterm paper in class and a final paper. The questions will be based on the textbook and discussed in the seminars. The discussion of the presentations represents an important part of this course. For this reason, student participation is mandatory, every student must attend regularly and actively participate in classroom discussions. The attendance policy is in accordance of the rules established in the Student Handbook. The College' s Honor Code will be strictly upheld.
Grading:
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Presentation: 20 %
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Midterm paper: 30 %
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Final paper: 35 %
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Participation: 15 %
Manual to be used:
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Backhouse R.: The ordinary business of life. Princeton University Press, 2004.
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During the course students will read parts/chapters of most important publications of the history of economic thought. The readings will be discussed in the course of tutorials. Some materials will be distributed for small lectures during tutorials. The main internet source:
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http://socserv.mcmaster.ca/econ/ugcm/3ll3/
Readings: selected chapters from canonical texts e.g.
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Aristotle: Politics, Nicomachean ethics
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Saint Thomas of Aquinas: Summa theologiae
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Thomas Mun: England' s Treasure
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Francois Quesnay: Tableau Économique
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Adam Smith: Wealth of Nations
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David Ricardo: Principles of Political Economy
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Karl Marx: The Capital
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William Jevons: Theory of Political Economy
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Carl Menger: Principles of Economics
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Leon Walras: Elements of Pure Economics
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Alfred Marshall: Principles of Economics
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Eugen von Böhm-Bawerk: Capital and Interest
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Irving Fisher: The Purchasing Power of Money
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Knut Wicksell: The Rate of Interest
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J. M. Keynes: The General Theory
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Milton Friedman: A Theoretical Framework of Monetary Analysis
Week by week
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1. Review of the main schools of thoughts. Methodological issues. (Jan. 30 - Febr.1)
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2. Ancient and scholastic economic thought. (Febr.6 - 8)
Lectures:
Aristotle: Politics Book I.
St. Thomas Aquinas: Summa Theologiae. II/2
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3.The emergence of modern world view: mercantilism and physiocracy. (Febr. 13 - 15)
Lectures:
T. Mun: England' s Treasure
F. Quesnay: Tableau economique
Discussion between mercantilists and physiocrats
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4. Classical economic thought I: The Scottish Enlightenment and the transition. (Febr. 20 - 22)
Lectures:
A. Smith: Wealth of Nations
T. Malthus: An Essay
Discussion on the relation between moral philosophy and political economy
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5. Classical economic thought II: D. Ricardo and the abstract approach. Decline of classical thought. (Febr. 27 - 29)
Lecture:
D. Ricardo: Principles of Political Economy
J.S. Mill: Principles of Political Economy
Discussion on the theory of value and the laws of production and distribution
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6. A radical alternative to the classical economics: Marx' s political economy and its impact. (March 5 - 7)
Lecture:
K. Marx: Contribution to the Critique of Political Economy
K. Marx: Capital
K. Marx and F. Engels: The Manifesto
Discussion: has the recent crisis validated Marx' s prophecies?
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7. The Split between History and Theory: Marginalist revolution. Neoclassical economics I. (March 12 – 14)
Lectures:
S. Jevons: Theory of Political Economy
A. Marshall: Principles of Economics
Discussion between the followers of the classical and of the marginalist theory of value.
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Midterm week (March 19 – 23)
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8. Neoclassical economics II. Walras and the general equilibrium theory. (March 26 – 28)
Lectures
L. Walras: Elements of Pure Economics
J. Schumpeter, J.: Marie Esprit Leon Walras
Discussion about the necessary and sufficient conditions of equilibrium and the survival of the original Walrasian thoughts in modern thinking.
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9. Money and the Business Cycle: Keynesian revolution I. Keynesian macroeconomics. (Apr. 11 - 16)
Lecture:
Keynes: The General Theory of Employment
Discussion about the need for a new paradigm.
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10. Keynesian revolution II. Policy approach. (Apr. 19)
Lecture:
Keynes: The General Theory of Employment, Interest and Money, Ch. 24.
Discussion on the survival of Keynesianism in theory and economic policy.
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11. Institutionalism: old and new. (Apr. 23)
Lecture:
J. Commons: Institutionalism
Discussion on social and economic phenomena in which dispersed knowledge plays a role.
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12. Austrian school: old and new. ( Apr. 26 )
Lectures
C. Menger: Principles of Economics
F. Hayek: The Use of Knowledge in Society
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13. Monetarism. Friedman and his policy approach. The rise of new classical economics. (May 2 - 7)
Lecture
Friedman: The Role of Monetary Policy
Discussion debate between Keynesians and monetarists as regards the effectiveness of fiscal and monetary policies.
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14. The Great Moderation and the Great Recession.
Lecture: Slapping by the invisible hand.
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15. Final week. Final paper and evaluation. (May 14 - 18)
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