【037】A Little History Of Economics

读书笔记 based on 《A Little History of Economics》，从古希腊到现代的经济思想史，包含主要的经济学家及他们之间的关系

A Little History Of Economics

• Ancient Greeks
  • Plato (428/427–348/347 BC
    • imagined an ideal society. Plato's ideal society then was a compact city rather than a big country. It would be closely organised by its rulers and there'd be little room for markets in which food and labour is bought and sold for a price.
    • in the ideal state soldiers and kings wouldn't be allowed to own private property in case gold and palaces corrupted them.
  • Aristotle (384–322 BC
    • the first to try to organise knowledge into different fields: science, mathematics, politics and so on.
    • criticised Plato's plan for society. Instead of imagining the ideal society, he thought about what worked given people's imperfections.
    • impractical to ban private property. Better to let people own their goods because then they'll take better care of them and there'll be fewer disputes about who contributed the most to the common pot.
    • the exchange of goods
    • moneylending should be banned
• Two Christian Thinkers At Either End of the Long Medieval Age
  • St Augustine Of Hippo (354–430)
    • City of God. Wealth was a gift from God to sinful people who needed it to survive.
    • it was important not to love one's possessions, to understand that they were simply the means to live a good and holy life.
    • feudalism. The economy was governed by religion rather than by the profits and prices
  • St Thomas Aquinas (1224/25–1274)
    • chain of being as a beehive
    • a just price was that normally charged in a community without any tricks or powerful sellers who dominated trade.
    • the worst economic sin was ‘usury’
    • Gradually the churchmen came to see that there was a difference between usury – high interest rates that ruin the borrower – and reasonable rates that were needed for banks to work.
• Practical Mercantilists
  • Gerard De Malynes (C.1586–1641) Thomas Mun (1571–1641)
    • England’s economic disease (its ‘canker’) was too many purchases of foreign goods and too few sales of English goods to foreigners.
    • balance of trade
    • the best way for England to get gold was not by restricting the flow of treasure or, indeed, by Drake’s method of stealing from foreign ships, but rather by selling to foreigners as many goods as possible.
    • what was good for the merchants was good for the nation. Here we see how economic ideas sometimes end up favouring certain groups in society.
• Physiocrats
  • François Quesnay (1694–1774)
    • believed in the division of society into classes of aristocrats and peasants.
    • criticize France’s kings for smothering their economy.
    • argue for taxes on France’s aristocrats
    • it’s often best for the government not to meddle in the economy, for example, by imposing lots of heavy taxes.
    • Quesnay was thoroughly modern in trying to find laws to describe the behaviour of the economy and in depicting them in models
    • It was unwise for a ruler to try to tamper with the surplus.
    • wealth was the wheat and pigs produced by the land. the surplus from agriculture was the life-force of the economy.
    • the world’s first ‘school’ of economists.
• The Invisible Hand
  • Adam Smith (1723–90)
    • ‘invisible hand’
      • exchange between decent people
    • The division of labour
      • improves the efficiency of the economy.
      • it makes workers ‘stupid and ignorant’.
    • the wealth of a nation was the entire amount of useful goods that a country’s economy produces for the people.
    • still believed that governments had important roles to play in the economy.
    • Supported by Ronald Reagan
• Gain From Specialising & Trading
  • David Ricardo (1772–1823)
    • comparative advantage
    • It’s better for countries to open their borders to foreign trade than to try to be self-sufficient.
    • his method of building up a long chain of cause and effect became that of economics.
    • Thomas Jefferson tried to ban his book
• Inventors of Socialism
  • Charles Fourier (1772–1837) Robert Owen (1771–1858) Henri de Saint-Simon(1760–1825)
    • a system of harmony in which you’d be able to do whatever took your fancy and fulfil all your passions, and would be given a share of the total profits.
    • hoped for an economy that would raise up the spiritual, not just the material, condition of the people
    • society should be ruled by talented people, not by princes and dukes. Everyone should allow their fellow humans to flourish and to develop as best they can.
    • markets and competition weren’t the route to a good society.
• The Population Problem
  • Thomas Malthus (1766–1834)
    • more people meant more poverty
    • food production grows much slower than population.
    • payments to the poor simply rewarded laziness
    • having many people was a good thing as long as society had the means to feed them.
• Workers, Unite!
  • Karl Marx (1818–83) Friedrich Engels (1820–95)
    • class struggles
    • capitalism itself contained the seeds of a new society.societies would only successfully establish communist systems once they had well-developed capitalist economies.
    • ‘labour theory of value’
    • ‘surplus value’
    • ‘alienation’
• Neoclassical economics
  • William Jevons (1835–82) Alfred Marshall (1842–1924)
    • ‘marginal utility’
    • theory of supply and demand
    • ‘perfect competition’
    • ‘rational economic man’
• Wall For Protection
  • Friedrich List (1789–1846)
    • ‘tariff’
    • Free trade was beneficial between countries or regions that were at the same stage of development
    • started the ‘battle of the methods’ among economists
• Against the Imperialism
  • Vladimir Ilyich Lenin (1870–1924) John Hobson (1858–1940)
    • three big trends
      • economic interconnection
      • monopoly capitalism
      • imperialism
    • sometimes a country could end up saving too much.
      • The solution was to redistribute income, not to send armies to foreign countries.
    • 'aristocracy of labour' - workers who accept capitalism and war; happy with the home comforts bought with their wages, they prefer to keep their jobs rather than start a revolution.
      • 所谓“韭菜”
• When Market Fail
  • Arthur Cecil Pigou (1877–1959)
    • Alfred Marshall's student
    • side effects
    • externalities
    • when people create externalities or desire public goods, Adam Smith’s invisible hand goes wrong. Markets don’t make the best use of society’s resources: too much of some bad things are produced and not enough of some good things.
    • Governments should encourage ‘positive’ externalities and discourage ‘negative’ ones.
• Between Black & White
  • Joan Robinson (1903–83) Edward Chamberlin (1899–1967)
    • Between perfect competition and monopoly, there're many ways
      • ‘monopolistic competition’
      • ‘oligopolies’
    • Advertising & ‘brand image’
    • ‘The purpose of studying economics is . . . to learn how to avoid being deceived by economists,’
• Communism & Critics
  • ‘central planning’
    • Five-Year Plan
    • Joseph Stalin
  • Ludwig von Mises (1881–1973)
    • information overload
    • There’s simply no yardstick.
    • ‘Socialism is the abolition of rational economy’
    • the prices calculated by officials from the comfort of their armchairs would always be completely unrealistic.
    • Markets work when people know their money is at stake.
• Stop The Waste
  • Thorstein Veblen (1857–1929)
    • people don’t make decisions through rational calculation.
    • ‘leisure class’
    • Conspicuous consumption is a waste
    • the waste caused by conspicuous consumption would be done away with when society was ruled by the instinct of workmanship rather than predation.
• Macro & Micro
  • John Maynard Keynes (1883–1946)
    • recessions are caused by people saving rather than spending
    • the income of a country isn’t what the economy is able to produce.Instead, income is the amount that people spend
    • Savings are a ‘leakage’ of spending from the economy.
    • recessions are caused by people saving rather than spending
    • once the economy is in recession it has no means of escape.because the economy couldn’t right itself, the government had to play a role.
    • Keynes’s ideas had another significant effect: after him, economics became divided into ‘macroeconomics’ and ‘microeconomics’
    • Supported by US President Kennedy
• Creative Destruction
  • Joseph Schumpeter (1883–1950)
    • It’s entrepreneurs who, through daring and determination, make the innovations necessary for economic advancement and so help raise living standards over the long run, thought Schumpeter.
    • Boom and bust, the up-and-down cycles of the capitalist economy, come from successive waves of innovation, the ebb and flow of entrepreneurship and imitation.
    • monopolies helped the economy to advance.
    • In Marshall’s economy, firms compete on the price of oil lamps. In Schumpeter’s, successful entrepreneurs blow away their competitors by inventing light bulbs.
    • Capitalism’s liveliness contains seeds of gloom that will destroy it.the end of capitalism comes about because of the frustration of people at the top of society, the dissatisfied intellectuals.
    • the economy is constantly moving.
    • The problem with calls for the government to sort out the economy is that they view capitalism in the short run and so favour quick fixes.
    • Though he said that socialism was inevitable, he was a strong defender of capitalism, and didn’t welcome a drift towards socialism..
• The Prisoners’ Dilemma
  • John von Neumann (1903–57)
    • started the field of game theory.
  • John Nash (1928–2015)
    • ‘Nash equilibrium’
      • the outcome of a game – its ‘equilibrium’ – is that in which each player does the best for himself given what the other player does. When everyone’s doing that, no one has any reason to change what they’re doing, so that’s the equilibrium of the game.
• The Road to Serfdom
  • Friedrich Hayek (1899–1992)
    • ‘totalitarianism’
    • state control of the economy would deprive people of their freedom, even under the middle way of the mixed economy.
    • the loss of freedom could even cost you your life. In an economy controlled by the state, if you do your work badly you don’t lose your own money but that of the nation as a whole. The entire community pays for your mistakes. You can’t repay your fellow citizens with your own possessions because the state owns everything. You must pay by going to prison or, in an extreme case, with your life.
    • some government spending in the economy was needed: to guarantee a basic living to the unemployed and to provide goods that markets can’t.
    • What we mean by freedom is the central question, not just for philosophers, but for economists as well.
    • Winston Churchill supported it
• Development Economics
  • Arthur Lewis (1915–91) Paul Rosenstein-Rodan (1902–85)
    • ‘underdeveloped’ or ‘developing’ countries
    • markets didn’t work at all well in poor countries. To be profitable, a factory depends on there being other factories.
    • the ‘big push’ - the government had to make massive investments in many areas of the economy.
    • Sadly, in some countries state involvement in the economy turned into something much worse than a stalled big push.
• Explain Everything in Society
  • Gary Becker (1930–2014)
    • ‘human capital’
      • The larger the discriminated-against group, the more its members end up working for low wages for racist bosses who pay more to employ people from the favoured racial group.
    • Opportunity Cost
    • economics was a ‘tool’ rather than a ‘thing’. It’s a powerful way of explaining all sorts of human behaviour.
    • economics needs to incorporate richer models of human behaviour that go beyond calculations of costs and benefits.
      • “理性人”假设再次被挑战
• The ‘Non-Rival’ Good
  • Robert Solow (b. 1924) Trevor Swan (1918–89) Paul Romer (b. 1955)
    • technological improvements creates growth in income per person in the long run.
    • investing in more capital – factories and machines – would at best only boost growth temporarily. To grow in the long run, an economy needed better technology.
    • Technology is special because once discovered it can be used over and over again.
    • Romer’s theory of technology and growth implies that governments can play a role by paying for research and development to bring about the creation of more new ideas than private markets alone create.
    • big economies can keep on getting bigger without slowing down.
• Everything Is Connected
  • Kenneth Arrow (b. 1921) Gérard Debreu (1921–2004) Léon Walras (1834–1910) Vilfredo Pareto (1848–1923)
    • Ripples - Changes in one market cause changes in others.
    • ‘General equilibrium’
    • the supply and demand for one product depends on every price in the economy
    • ‘pareto improvement’ ‘pareto efficient’
      • An economic outcome is undesirable or ‘inefficient’ if it’s possible to make at least one person better off without hurting anyone else
    • the First Welfare Theorem
      • when an economy is in equilibrium there are no wasted resources
    • ‘economies of scale’
• Rich Countries Exploit Poor Countries Through Trade
  • Andre Gunder Frank (1929–2005) Raúl Prebisch (1901–86)
    • export of goods from poor countries – things like bananas and coffee – don’t go into real economic development such as new schools or industries.
    • Poor countries’ economies are dominated by big foreign companies. Foreign companies are like modern versions of the European explorers of the fifteenth and sixteenth centuries
    • over time the differences between rich and poor countries become bigger, not smaller.
    • ‘dependency theory’
    • the poor country specialises more in sugar production to pay for cars, but over time each tonne of sugar buys fewer cars. In the end the poor country can’t grow as fast as the rich country.
    • Poor countries shouldn’t specialise, they should diversify.
      • Opposite to David Ricardo
• Followers of Keynes
  • Paul Samuelson (1915–2009) Alvin Hansen (1887–1975) John Hicks (1904–89)
    • ‘budget deficit’
    • tax cutting
    • ‘multiplier’
      • the eventual impact on the economy is a multiple of the original spending boost or tax cut.
    • ‘fiscal’ policy & ‘monetary’ policy
  • Bill Phillips (1914–75)
    • ‘Phillips curve’
      • When unemployment was high, indicating a lot of unused resources in the economy, then inflation – how fast prices increase – tended to be low. When unemployment was low, inflation tended to be high.
• Politics Without Romance
  • James Buchanan (1919–2013)
    • Politicians and government officials were people who pursued their own interests like everybody else.
    • ‘public choice’
    • What all politicians want, above all else, according to Buchanan, is to stay in office.
    • ‘rent-seeking’
    • the government should not to spend more money than it collects in taxes – to have a ‘balanced budget’
• Money Illusion
  • Milton Friedman (1912–2006)
    • Opposite to Keynesian economists
    • the problems of the 1970s were the result of too much government, not too little.
    • Friedman brought money back to the centre of economics and his school of thought became known as ‘monetarism’.
    • ‘velocity of circulation’
      • the velocity of money was fairly stable, and therefore that money does influence national income.
    • The best thing is for the government to commit to a fixed rate of growth in the money supply in line with the growth of the economy.
    • ‘supply-side economics’
      • 供给侧改革
      • The route to stable economy was to enhance the economy’s supply (what its businesses were able to produce), not its demand.
• Market Effeciency
  • John Muth (1930–2005) Eugene Fama (b. 1939) Robert Lucas (b. 1937)
    • ‘rational expectations’
    • share prices can’t be predicted
    • ‘efficient markets hypothesis’
    • ‘market clearing’
    • new classical economics
• Foreign Currency Games
  • Paul Krugman (b. 1953) Maurice Obstfeld (b. 1952) Jeffrey Sachs (b. 1954)
    • ‘hedge funds’
    • ‘floating’ and 'pegged' exchange rate
    • ‘foreign currency reserves’
    • currency crisis
    • economic crises can spread between countries as flu does between people. They call it economic ‘contagion’ and it’s the speculators who spread the illness.
• Beyond GDP
  • Amartya Sen (b. 1933)
    • ‘capability’ - the development of society is the expansion of capabilities.
    • the Human Development Index - an alternative that included life expectancy and literacy along with income.
    • ‘entitlements’
      • People’s entitlements are how much food they can afford to buy given their incomes and the price of food.
      • Entitlements also include the food they grow at home and any that they’re given by the government.
      • democracy and a free press are essential to preventing famines. The Great Leap Forward in China is an example.
    • Real human development is about the growth of freedom itself.
• Information Economics
  • George Akerlof (b. 1940) Michael Spence (b. 1943) Joseph Stiglitz (b. 1943)
    • ‘perfect information’
    • ‘adverse selection’
    • ‘moral hazard’
• Broken Promises
  • Finn Kydland (b. 1943) Edward Prescott (b. 1940)
    • ‘time inconsistency’
    • ‘policy discretion’ actually reduces the power of government to carry out the best policy.
    • A solution to the problem of time inconsistency is for the government to give up its power over the central bank. Make the central bank independent and monetary policy will no longer be in danger of manipulation by politicians.
• Missing Women
  • Diana Strassmann (b. 1955) Nancy Folbre (b. 1952) Marilyn Waring (b. 1952) Julie Nelson (b. 1956)
    • the heads of households are often women rather than men
    • By overlooking women, economics misses important ways in which resources are distributed inside the family.
    • it’s women who bear most of the costs of raising the future labour force.
    • unpaid work could be equivalent to 70 per cent of the world’s economic production. Most of the unpaid work is done by women.
    • The prejudice and discrimination faced by women and other disadvantaged groups, however, often removes free choice.
    • ‘provisioning’ - how to provide people with the various things that they need to live well.
• Behavioural Economics
  • Daniel Kahneman (b. 1934) Amos Tversky (1937–96) Robert Shiller (b. 1946)
    • System 1 & 2
    • 'reference point'
    • Irrational Exuberance
• Economics in the Real World
  • Alvin Roth (b. 1951) William Vickrey (1914–96) Paul Klemperer (b. 1956)
    • ‘market design’
    • ‘auction theory’
      • the second-price principle
• Bankers Go Wild
  • Hyman Minsky (1919–96)
    • Minsky Moment
    • as capitalism develops it becomes unstable.
    • ‘speculative lending’
    • ‘Ponzi finance’
    • innovations like securitization in financial markets help cause speculative and Ponzi finance.
    • the financial crisis and the recession that followed weren’t exactly the result of greedy borrowers or bankers. The deeper reason was to do with the effects of finance-based capitalism. It took decades for capitalism to evolve from its cautious form into its reckless one.
• Inequality
  • Thomas Piketty (b. 1971) Anthony Atkinson (b. 1944)
    • ‘distribution of income’
    • ‘historical law of capitalism’
    • return on wealth, r, vs the growth of the economy, g
      • A high g (growth) and a low r (return to wealth) kept inequality down.
    • fairness vs efficiency
      • redistribution leads to greater equality, but a slower growing economy.
    • recommend the encouragement of technologies that promote equality
• In economics there isn’t one ‘right’ answer that stays right forever. At the start of our story we met the first people to think about economics: the philosophers of ancient Greece. They were concerned with life’s most fundamental questions, ones that we grapple with to this day. What does it take to live well in a human society? What do people need to be happy and fulfilled? What makes them truly thrive? That’s where economics started and, after all the arguments and disagreements, it’s where it must begin from again.
• Support or disagreement from politicians
• 图例说明
• milestones of thinking
• The word ‘economics’ comes from the Greek oeconomicus (oikos, house, and nomos, law or rule). So for the Greeks economics was about how households manage their resources.