History of Economic Ideas in 20 Talks PDF
Preview History of Economic Ideas in 20 Talks
Cheng-chung Lai Tai-kuang Ho History of Economic Ideas in 20 Talks History of Economic Ideas in 20 Talks · Cheng-chung Lai Tai-kuang Ho History of Economic Ideas in 20 Talks Cheng-chung Lai Tai-kuang Ho Hsinchu, Taiwan Department of Economics National Taiwan University Taipei, Taiwan ISBN 978-981-19-4505-2 ISBN 978-981-19-4506-9 (eBook) https://doi.org/10.1007/978-981-19-4506-9 Translation from the Chinese language edition: “经济思想史的趣味.” by Cheng-chung Lai, © Zhejiang University Press 2016. Published by Zhejiang University Press. All Rights Reserved. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Acknowledgements T. K. Ho was a student in my early career, and years later, we became colleagues and frequent co-authors. He has been familiar with both economic history and history of economic thought ever since his undergraduate years. He is now an expert in International Money/Finance and their historical issues and has published widely in learned journals. I am particularly glad to have his inputs in this book. Due to my age and health, please direct all correspondence to T. K. Ho ([email protected]. tw). This book is adapted from a Chinese edition (2016) that has 40 chapters in three parts, all of which are also in accessible Q&A style. Market reaction has been quite encouraging. Among the 25 chapters in Parts I and II, the first four chapters are now condensed into two for sake of simplicity. A chapter on German historical school and List’s protectionism and a chapter on Lausanne school are also omitted. Part III “Concepts and debates” (Chaps. 26–40) are on various selected topics, such as Chap. 26 “Quantity theory of money is theoretically unfounded”, and Chap. 27 “How Isaac Newton’s concepts influenced Adam Smith.” These 15 issues are a bit lengthy and less systematic for non-experts, and thus we opt to omit them. The original edition was published in Taiwan by Asian Culture (允晨文化, 2011) along with a China version by Zhejiang University Press (浙江大學出版社, 2016). The above publishers hold copyrights for the Chinese versions to be circulated in Taiwan and China. We are grateful to Shen-Hsun Liao, an economics graduate student at National Taiwan University, for preparing most of the illustrations. v To Readers This is an entry-level text (popular science) in history of economic thought for readers aged 15–99. It is the authors’ responsibility if you do not follow each chapter smoothly. As such, some basic economic knowledge would be helpful, but not required. We have three aims in mind for this book: to be interesting, entertaining, and thought-provoking. In some cases, we are opinionated, but intentionally so in order to alert readers to form their own views. History of ideas does not make us smarter nor richer, but it can reduce our ignorance and the “banality of evil”—a term Hannah Arendt referred to people who lack self-reflection, “He did his duty...; he not only obeyed orders, he also obeyed the law.” What is our basic mentality behind writing this book? We invite Isaac Newton to speak on our behalf: “I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me.” Yes, the great (expanding) ocean of truth in the history of economic ideas lays undiscovered before all of us: the sea gets deeper as you go further into it, according to a Venetian proverb. It is meant to share knowledge with wider audience. Bon appétit! vii Contents Part I Fun and Useful 1 Welcome! ..................................................... 3 2 Dead Men’s Wrong Ideas? ..................................... 11 Part II Pioneers and Contenders 3 Wealth and Power: Mercantilism ............................... 21 4 The Physiocrats and Law of Nature ............................. 29 Part III Classical School 5 Adam Smith and the Invisible Hand of the Market Mechanism .... 37 6 Thomas Malthus and Effectual Demand ......................... 45 7 David Ricardo and Differential Rent ............................ 53 8 John Stuart Mill and the Peak Time of the Classic School ......... 61 Part IV The Rise of Socialism 9 Antagonists to the Classic School ............................... 69 10 Karl Marx and the Collapse of Capitalism ....................... 73 Part V Marginal Analysis 11 The Marginal School in France ................................. 81 12 The Marginal School in Germany, Austria, and the U.K. .......... 89 13 Application and Extension of the Marginal School ................ 95 14 Alfred Marshall and the Foundation of the Neoclassical School .... 101 ix x Contents 15 Theories of Imperfect Competition .............................. 109 Part VI Contemporary Trends 16 The Boom of Mathematical Economics .......................... 117 17 The Institutional School ....................................... 123 18 Keynes and Keynesian Economics .............................. 131 19 Early Austrian School ......................................... 139 20 The Rise of the Chicago School ................................. 145 Epilogue .......................................................... 151 Further Readings .................................................. 155 About the Authors Cheng-chung Lai is an Emeritus Professor at National Tsing Hua University (Taiwan), with three decades of experience in teaching economic history and history of economics thought. His books in English include: Adam Smith across Nations: Translations and Receptions of The Wealth of Nations, Oxford University Press (2000); Braudel’s Historiography Reconsidered (2004). He was educated in Taiwan (BA) and Belgium (MA), received his doctorate from École des Hautes Etudes en Sciences Sociales, Paris. e-mail: [email protected] Tai-kuang Ho is a Professor of Economics at National Taiwan University, educated in Taiwan (BS and MA) and at the University of Bonn, Germany (Ph.D.). Special- izing in International Money/Finance as well as its historical aspect, he has been published widely in many learned journals, including Journal of Money, Credit and Banking, Oxford Economic Papers, Economica, Explorations in Economic History, and Journal of Economic History. e-mail: [email protected] xi List of Figures Fig. 4.1 This graph shows the circular flow of income in a five-sector economy. Flow of money is shown in purple, and flow of goods and services is orange. Money flows in opposite direction to that of goods and services. Source “Circular flow of income”, Wikipedia .............................. 30 Fig. 4.2 Tableau économique, 1758. Source “François Quesnay”, Wikipedia ............................................. 33 Fig. 5.1 Chinese translation of Wealth of Nations, cover and first page, 1902 ............................................ 38 Fig. 5.2 Division of labor in a needle factory. Source Encyclopédie ou Dictionnaire raisonné des sciences, des arts et des métiers, vol. 4 (plates). Paris, 1765 ........................ 40 Fig. 6.1 World economic history in one picture. Incomes rose sharply in many countries after 1800 but declined in others. Source Clark (2007): A Farewell to Alms: A Brief Economic History of the World,p.2,Fig.1.1................ 46 Fig. 7.1 Heliocentric model from Copernicus’ De revolutionibus orbium coelestium (1543). Source Adapted from https://en.wikipedia.org/wiki/Copernican_heliocentrism ....... 58 Fig. 8.1 Source From the authors ................................. 63 Fig. 9.1 Artist’s rendition of Robert Owen’s theoretical design of a socialist community. Engraving by F. Bate, London 1838. Source “List of Owenite communities in the United States”, Wikipedia ...................................... 70 Fig. 11.1 The reaction function and equilibrium point E of two monopolists (competitors). Source From the authors .......... 85 Fig. 11.2 Augustin Cournot lived and died here: 2 rue de Tournon, Paris 6e (nearby le Sénat). Source Wikipedia ................ 86 xiii
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