ILRLE 3440 Lecture Notes - Lecture 8: Physiocracy, Byrsonima Crassifolia, Making Money
8 May 2018
School
Department
Course
Professor
22 February 2018
ECON 3300 - Lecture 08!
!
Mercantilism (early 17th to mid 18th century)!
Physiocracy (mid to late 18th century)!
Classical Economics (1776 to 1870s)!
Adam Smith, the founder of economics !
!
In the 19th century, the British system was a system of learning by doing, but the Germans had
people coming into jobs with far more training than their average Brit!
!
History of Economic Thought
Medieval Thinking!
Economic ideas could not progress in medieval times!•
The Medieval Schoolmen writing on economics are based on two assumptions!•
The real business of life is not making money but salvation!◦
Economic conduct is an aspect of personal conduct and your conduct must be moral!◦
The motives to make money are suspect in individuals and should be suppressed!•
The search for profit is avarice, one of the seven deadly sins!•
!
St Thomas Aquinas (1225-1274) was the most developed thinker of the Medieval Schoolmen!
He argued that the only economic activities which were acceptable were those that kept •
people in the rank that God had placed them in!
He was trying to preserve the existing fabric of society!•
He came up with the theory of the Just Price!•
The just price = value = cost of production!◦
Selling a commodity for more is avarice!◦
It was also sinful to buy a commodity for less than it’s just price!◦
Aquinas argued that if the buyer valued the commodity more than the seller, the buyer ◦
should pay the seller extra out of honour!
“Trade is at best an ethically neutral occupation”!•
In terms of lending, all interest was sinful!•
Money existed only as a means of exchange and the use of money to make money was •
immoral!
Nowadays economic expediency is king!
!
Mercantilism !
Mercantilists as economists didn’t care about individuals!•
Their greatest concern was that the nations resources should be used to make the state as •
powerful as possible!
They focused on international trade and finance because they believed the key to economic •
success was to get as much gold as possible !
Mercantilists measured wealth by who had the most gold!◦
Q: But how do you get more gold?!
Trade was the main avenue for getting gold!•
Balance of trade surplus: EXP > IMP!◦
Balance of trade deficit: EXP < IMP!◦
The surplus from exports would be received in gold!•
Document Summary
In the 19th century, the british system was a system of learning by doing, but the germans had people coming into jobs with far more training than their average brit. Economic ideas could not progress in medieval times. The medieval schoolmen writing on economics are based on two assumptions. The real business of life is not making money but salvation. Economic conduct is an aspect of personal conduct and your conduct must be moral. The motives to make money are suspect in individuals and should be suppressed. The search for pro t is avarice, one of the seven deadly sins. St thomas aquinas (1225-1274) was the most developed thinker of the medieval schoolmen. He argued that the only economic activities which were acceptable were those that kept people in the rank that god had placed them in. He was trying to preserve the existing fabric of society. He came up with the theory of the just price.
