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History of economic thought

by Lewis Henry Haney


There are at least three different branches of study whose names contain the words History and Economics. There is, on the one hand, Economic History, or Industrial History, as it is frequently called; and on the other, there are the closely related subjects, History of Economics and History of Economic Thought. The first concerns itself with the history of commerce, manufactures, and other economic phenomena, dealing objectively with the ways in which men get their living; the second and third treat primarily of subjective matters, dealing for the most part with the ideas men have concerning economic facts and forces.

Now these last two have been confused, and their logical relationship is commonly overlooked. The history of Economics deals with a science — with a body of classified knowledge; it is limited to times in which economic ideas have become distinct, unified, and organized; it is a history of systems of economic thought. The Babylonians had ideas concerning interest and mortgages; the Phoenicians thought about commerce and bills of exchange; the Greeks wrote on the subject of division of labor. Does the history of Economics, then, date to such remote times? By no means. But the history of "economic thought" does, and from its point of view the unrelated primitive ideas of the earliest times are full of meaning. Indeed, for a full under standing of the origin and growth of the science, the underlying ideas are important. The history of economic thought is broader than the history of the science: it may properly be divided into two parts, one of which takes up the origin and development of economic ideas prior to the existence of any distinct and separate science; while the other begins with the rise of Political Economy, or the science of Economics. The point of view to be taken in the following pages is the broader one. The subject, the History of Economic Thought, may be defined as a critical account of the development of economic ideas, searching into their origins, interrelations, and manifestations.

The close relationship between economic history and the history of economic thought is at once to be emphasized. That men's thoughts depend largely upon their surroundings, no one doubts. And so it is that economic ideas, to say nothing of systems of economics, are colored and limited — determined sometimes — by industrial environment. Thus the agricultural South believes in free trade; as manufactures develop, that belief weakens. But this interaction is reciprocal; for opinions and theories once formed are tenaciously adhered to, and may become a determining element in their turn. Witness the influence of "traditional policies" in shaping the platforms and administration of American political parties. The individualism of the laisserfaire economists and statesmen was to a great extent the result of industrial evolution; but in its turn it became a condition reacting upon industry.1 The history of economic thought, then, is an essential part of general history, both explaining it and being explained by it.

To-day it is not so necessary to defend the study of the History of Economic Thought as it once was. Even now, however, there are those who deny the usefulness of study1 Through William Pitt (sec p. 220) and Robert Peel, for example, and the economists of the dominant French school. The former were active in applying the laisser-faire doctrine to the corn laws; the latter did much during the nineteenth century, both as government officials and writers, to bring into practice their optimistie, let-alone theories. Of course, Pitt's accomplishments were very limited.

ing earlier economic thought. And, in any case, it will be of value to state clearly the advantages to be gained from such a study as the present; for the statement may make one's reading more purposeful and suggest new points of view.

First of all, a certain unity in economic thought is to be emphasized, a unity which connects us with ancient times. Continuity in evolution has been denied,1 but such continuity can be demonstrated. Much of the difficulty comes about through an exaggeration of the negative aspect of the Middle Ages. But such an exaggeration misinterprets the period, for the medieval aloofness or quietism implied a positive philosophy which has counted in the history of thought in a positive way. Nor was this period a complete break; in it were nourished Greek ideas concerning money and interest, communism, and other economic matters,— not to mention the "nature philosophy," — which were handed down to modern thinkers. The doctrines of the first economists concerning the importance of land and the beneficent law of nature were drawn through a continuous line of thinkers from Plato and Aristotle. As will appear further on, moreover, not only do Oriental ideas inherited from a still more remote past come down to us through Greece, but through Christianity they have exerted a continuous though changing effect upon the economic thoughts of men. It is logical, then, to begin a history like the present with some account of ancient thought.

Again, there is great value in understanding the origin of a science, especially one like economics, whose scope and nature have been under dispute. For one thing, it gives a truer concept of the relationship among sciences, an important matter for the thinker looking toward the true application of economic principles. Through a study of the history of economic thought may be gained a clear realization of the position of Economics as a distinct member of a group of social sciences: Ethics, Jurisprudence, Philosophy, Sociol1 E.g., A. Oncken, Geschichte der National Ukonomie, pp. 13 f.

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