W1: How we learnt to be economists: the rise of economic thought

Pre-history and the need for economics

Economics often assumes that individuals must act in their own self-interest to benefit society, overlooking the importance of collective effort.

This focus on prominent historical figures, labelled ‘the great white men of history’ stems from the belief that individualism is inherent to our nature. While we recognise investors and leaders, the contributions of those who supported and enabled change are often forgotten.

This perspective is reflected in Neo-classical economics, which emphasises that individuals maximise private returns rather than public good.

However, the history of human society reveals that collective action, community ties, and collaboration have been fundamental to our progress.

Neo-Classical economics:

A theory that emphasises the role of individual decision-making in markets. It focuses on how people make choices based on their preferences and constraints, aiming to maximise utility (satisfaction) or profit. Key principles include the idea of supply and demand determining prices, rational behaviour of consumers and firms, and the notion that markets are generally efficient. Neo-classical economics often assumes that individuals act independently and that the economy tends toward equilibrium. It contrast with earlier economic theories by prioritising mathematical models and marginal analysis.

What does archaeology and anthropology tell us?
Our knowledge of early human ancestors is limited. Neanderthals and Denisovans existed before modern humans (homo sapiens) but disappeared around 50,000 years ago. We share about 1-2% of our DNA with Neanderthals, suggesting they coexisted with early humans for a brief time. While there is evidence of tool-making and cultural artefacts like rock art and bone carvings, no permanent encampments have been found. Homo sapiens began spreading from Africa around 60,000 years ago, with the earliest stone tools dating back 50,000 years, and evidence of humans in Europe appearing around 45,000 years ago.

We have more knowledge about homo sapiens than other human ancestors due to the discovery of encampments, tools, and cultural artefacts. Much of this understanding comes from observing the behaviours and beliefs of more modern clans and tribes studied since the 19th century during the era of colonialism. Desmond Tutu’s quote “When the missionaries came to Africa they had the Bible and we had the land. They said “Let us pray.” We closed our eyes. When we opened them we had the Bible and they had the land.” illustrates the cultural impact of missionaries in indigenous lands. The class will focus on the period between 15,000 and 10,000 years ago, often referred to as 15,000-12,000 BP (before the present).

The first affluent societies

In resource rich areas, foraging, hunting and gathering were effective economic systems, allowing small groups to obtain 80% of their food within hours. Leadership emerged from expertise in local environments, including knowledge of plants, animal behaviour, and seasonal changes. These communities developed systems of cosmology and social logic connected to their surroundings, using plants, animals, and geology to frame their histories. However, there is no evidence that these systems were permanent or hereditary, nor is there evidence of surplus or exclusivity in resource distribution.

The prevention of inequality

Hunting societies like the Netsilik Eskimo developed complex food-sharing practices, where shared parts of a seal held value and required reciprocation among kinship groups. Cooperation and equality were central to their social structure, with sharing fostering social obligations; those who didn’t share faced ridicule or exclusion.

These practices extended to trading networks, exemplified by the gift-giving tradition known as “hxaro” in warm-weather hunter-gatherer communities in equatorial Africa and Asia, which emphasised reciprocity within 6-24 months. This allowed givers to relocate to resource-rich areas during scarcity.

Among the Kung people of Botswana and Namibia, gift exchanges were regulated to ensure equality, preventing long-term dependence. Additionally, individuals in hunting groups shared tools like arrows, which meant that kills could not be attributed to any specific hunter, despite differences in skill levels.

Family structures

These were based upon economic units and the existence of food supplies.

At least six forms of family unit were identified.

• man and woman

• man and two women

• two men and one women

• two men and two women

What determined these household forms was economic access to food and the labour involved in processing the meat.

Within plains peoples there were two further forms of individuals (spirit people):

• a man chose to dress and behave in the woman’s role

• a woman who dressed and behaved in a man’s role.

Within plains people there were also:

• one man and a two-spirit person

• one man, one woman and a two-spirit person household

Hierarchy and decision making

Temporary, based upon knowledge, skill or experience.

These societies were often matrilineal.

Based upon female lineage and leadership. But of most importance whatever hierarchy emerged was temporary and non-hereditary.

Quotes from reading

“It is notable how hard the !Kung worked to prevent a meritocracy of good hunters from arising. First, using a system of reciprocal gift-giving called hxaro, they exchanged arrows with each other.” - p33

“!Kung were forbidden to reciprocate with a gift more valuable than the one they had received.” - p34 (The Creation of Inequality: How Our Prehistoric Ancestors Set the Stage for Monarchy, Slavery and Empire

The Role of Labour in the transition to the Modern Economy

Creation of civilisation: settled agriculture, the rise of class-based societies and the invention of inequality

Early depictions of human labour such as cave paintings in Spain c.8,000 BC show male and female figures together carrying out the same roles.

Early animal husbandry suggests non-gendered roles. While specialisation existed with male roles linked to hunting and female roles linked to gathering food supplies and child rearing there was no evidence that there were hierarchical or fixed. Gathering foods was the bulk of the nutrition for early hunter gather societies, so female roles were probably more important for the survival of the group or tribe and as a result matrilineal lineage seems to be more common in hunter gather societies.

Hunter gather societies also developed plant and return strategies. As knowledge of seasonal changes developed and plant cycles many hunter gathering societies also developed knowledge that ground could be cleared seeds sown and the group could return at a later date when the crops were ready to harvest.

Most of the artefacts that are known to exist, most of the artworks that have been discovered emphasise the environment and depict an understanding of the animals, foods rather than human activities. The cosmology (belief systems) placed humans within the natural world without a need for the development of explanations placing humans at the top of the natural environment.

It is not until still later with the development of settled agricultural societies (10,000 years BP) that we begin to identify more gendered roles between men and women. These new societies now begin to highlight the use of labour in transforming the environment rather than living within it. Alongside these changes comes both the development of hereditary hierarchy and inequality.

A social class of dominant leaders emerges. These hierarchies are linked to specialist knowledge, highlighting the dominance of humans controlling and changing the environment rather than being placed within it. The creation of surpluses provides the means by which hierarchy can sustain itself and a class who control the surpluses rather than create the surpluses arises. The earliest forms of religion begin to be identified with multiple gods, with powers over the natural world.

For hereditary structures to emerge requires the knowledge of whose child is whose. We thus see the position of women and men changing in these agricultural societies with men becoming more senior in the social structures and women being lower.

Some of our earliest depictions of human labour come from the bronze statues found in the Harrappan societies.

We now have the origins of societies in which inequality emerges and the wealth within society is concentrated with the hand of elites, ruling classes which have hereditary lineage through the male line. Anthropologists work from Engles to Eleanor Burke Leacock identify the origins of women’s oppression with this changing economic development to settled agriculture.

Alongside comes forms of ideology which highlight the dominance of human beings over the environment. Forms of polytheism develop - the worship of multiple gods - exist in these societies.

One of the most remarkable comes from a synagogue in Galilee in the fourth century 1600 BP. It shows the Jewish symbol of the hoy script the Torah flanked by candles but below it is a symbol of the zodiac. Different religions co-existed in many of these societies.

The labour theory of value gives a way to understand how human work helped build economic value building civilisation.

10,000 years after; the rise of the modern economy and the role of labour in this transition

The basis of production in these agricultural societies was the value created by labouring on the land. A Labour Theory of Value developed by David Ricardo:

“The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour.”

Ricardo (1817), Principles of Political Economy and Taxation

(The value of a product comes from the amount of labour going into it)

Adam Smith and still later Karl Marx identified the labour theory of value in the creation of new techniques and organisation of industry.

The role of specialisation for the creation of new productive capacity in Adam Smith and the pin factory.

“One man draws out the wire, another straights it, a third cuts it, a fourth point it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands.”

Adam Smith, Wealth of Nations

The Labour Theory of Value with the rise of industrial society also gave rise to the development of concepts of class and trade unionism.

Trade unionism Chartists 1848: Once labour moved from agriculture into industrial environment the importance of labour for the creation of value continued to pre-dominate economic thinking.

New unionism 1880s and demands that labour be recognised as the source of wealth and that the share of this wealth be distributed more fairly.

Marx and the Tendency for the Rate of Profits to Fall

As investment in new production and new productive techniques grew, costs of production fell and competition between capitals led to profits falling. This tendency for profits to fall was the central contradiction within capitalist production leading to crisis.

Shift from batch production to mass production.

Investment goes into increasing capacity: scale and scope.

Together these drive down the rate of profit.

New markets and destruction of capital - imperialism and war.

New commodities and consumption - expansion of the market into areas where the market never existed. Reliant upon rising living standards.

The Labour Theory of Value can still be seen to operate directly in large parts of the globe with high labour inputs and low levels of capital inputs.