History of Economic Thought - Eco 3303
History of Economic Thought
Introduction to Economic Thought
Examination of the philosophical foundations of economic theory, starting with Aristotle.
Importance of Aristotle
Aristotle (384-322 B.C.) recognized as a seminal figure in Western thought.
Assertion that modern Western civilization owes much of its achievements—science, technology, political theory, aesthetics—to Aristotle.
Aristotle’s philosophy laid the groundwork for both the Renaissance and subsequent scientific and technological advancements.
Contributions of Ancient Greeks
Gifts of the Greeks
Major contributions included:
Polis (City-States): The concept of the city-state as a center of political organization.
Philosophy: Introduction of rigorous methods of rational inquiry.
Three Laws of Thought:
Law of Identity: A proposition is always equal to itself (x=x).
Principle of Non-Contradiction: A statement cannot be both true and false simultaneously.
Excluded Middle: A statement is either true or not true; no middle ground exists.
Overview of the Greek Economy
Structure
City-States: Independent political entities.
Slavery: Integral to the labor system of ancient Greece.
Empire: Expansion and colonization that facilitated trade and economic growth.
Aristotle’s Economic Thought
Overview of Aristotle’s Economics I
Describes society as an organic structure where each individual has a natural purpose—happiness or flourishing achieved through reason and virtue.
Virtues: Defined as the mean between extremes, emphasizing balance in behavior and decision-making.
Relationship between the individual and the state:
The individual’s purpose contributes to a broader societal good.
Arguments for Slavery
Aristotle posits that certain individuals are predestined for servitude:
Quote: "From the hour of their birth some are marked for subjection, others for rule."
Empirical observations suggest inherent human inequalities.
Argued that reason justifies slavery, indicating it may be more beneficial for slaves to be ruled than to live without guidance.
Acknowledges that often those in slavery do not possess merit-based justification for their condition.
Eleven Arguments Supporting Slavery
Natural Inequality: Slavery reflects the natural order of society.
Historical Prevalence: Slavery has existed in all cultures throughout history.
Global Existence: Slavery is found in every part of the world.
Incapacity: Slaves are unable to take care of themselves.
Survival Without Masters: Former slaves would struggle to survive without guidance.
Relative Conditions: Common people in free societies can be worse off than slaves.
Consequences of Abolition: Abolishing slavery could lead to societal chaos.
Fear of Uprising: Freed slaves would cause disorder and violence.
Utopian Ideals: Efforts to eliminate slavery are impractical.
Responsible Management: Maintaining slaves sensibly can be more humane.
Progress Indicator: Slavery is an indicator of societal advancement.
Critique of Aristotle’s Defense of Slavery
Potential Issues
Raises ethical dilemmas concerning human rights and autonomy, questioning the validity of the arguments he presents for a practice that is widely condemned.
Understanding Property in Economic Thought
First Economic Question
What is property?
Importance of Property: Fundamental to understanding a market economy, impacting wealth distribution and individual rights.
Perspectives on Property: Plato and Socrates
Seen through a political lens, leading to advocacy for common property ownership to mitigate inequality.
Quote from Plato: "Wealth and poverty lead to social conflict and unrest."
Aristotle’s Types of Property Systems
Defines three classifications concerning ownership and usage:
Private property with common use.
Common property with private use.
Fully common ownership and usage.
Advocates that property should primarily be private but can have common use to promote virtuous behavior.
Defining Private Property
Aristotle’s Insight: “Property should generally be private, as distinct interests foster progress, with individuals tending to their own affairs.”
Challenges Associated with Common Property
Critiques the inefficiency of state unification that suppresses virtues like temperance and liberality as common resources lead to a lack of personal responsibility and generosity.
Justice, Property, and Exchange
Concepts of Justice
Justice: Defined as a virtue involving fairness.
Distinction between types of justice:
Legal Justice: Aimed at the common good.
Particular Justice: Involves distributive justice (between individuals and the state) and commutative justice (between individuals).
Raises the issue of what constitutes a fair price in exchange.
Further Exploration of Aristotle’s Economics
Economics as Household Management
Economics characterized as the art of managing a household (oikonomia).
Wealth considered a means to achieve ends, not an end itself.
Status and role of merchants and their functions examined.
Aristotle’s View on Money and Interest
Money is intended for exchange, not merely to accrue interest; interest is deemed unnatural growth akin to 'breeding money,' which goes against the natural purpose of economics.
Historical Perspectives on Trade
Cicero on Trade
Describes hired laborers and merchants who exploit trade to gain profit as disreputable.
Acknowledges that large-scale importing might be viewed as acceptable due to practical benefits.
Old Testament Economics
The laws within Leviticus illustrate a comprehensive system tying social, political, and economic aspects together, including:
Wealth, Sabbath observances, Jubilee year, Protection of vulnerable groups, and the concept of labor.
Biblical Perspectives on Wealth
Wealth understood as God’s abundant gift:
Quote from Deuteronomy: "Remember the LORD your God… who gives you the ability to produce wealth."
Love of Wealth and Its Consequences
Warning against the detrimental effects of greed and the pursuit of wealth:
Quote from Ecclesiastes: “Whoever loves money never has enough…”
Reflects on how increased wealth can lead to dissatisfaction.
Wealth Exploitation and Social Responsibility
Critique of Exploitation in the Old Testament
Prophets denounce the perpetuation of poverty and highlight societal responsibilities to ensure fairness, condemning fraudulent practices and exploitation within trade.
Early Church and Christian Economic Philosophy
Formation of the Church’s Economic Views
The Catholic Church, rooted in apostolic tradition and scripture, established a collective property philosophy among early communities.
Separation of Church and State emphasized, shaping a unique economic/social system distinct from earlier traditions.
Teachings of Jesus on Wealth
Ethical teachings against hoarding and emphasizing spiritual wealth over material accumulation:
Quote from Matthew: “Do not lay up for yourselves treasures on earth…”
Warns of the challenges that wealth brings to spiritual fulfillment.
Teachings of St. Paul
Advocates for equality through mutual support among community members:
Quote from 2 Corinthians: “Your abundance should supply their want…”
Clement of Alexandria’s Views
Discusses the moral role of wealth, insisting on its use for the good of humanity, summarizing:
“Possessions were made to be possessed… it is absurd that one man lives in luxury while others live in poverty.”
St. John Chrysostom’s Insights
Offers a radical perspective on wealth and need:
Reframes understanding richness not by possessions, but by needs and desires rather than the accumulation of goods.
Historical Development of Christianity
Christian Legalization and Economic Thought
Constantine's Edict of Milan (313 AD) allows freedom of religion, shaping Christian thought on economics, emphasizing stewardship of wealth.
Developing moral principles regarding economic participation:
Wealth as instrumental, not idolatrous.
Shared wealth is preferred over hoarding, stressing a universal destiny of goods and charity towards the poor.
The Prosperity Gospel Phenomenon
Modern Interpretation
Emphasizes financial success and self-improvement as part of God’s blessings, typically expressing promises of increased wealth and an easier life.
Economic Structures of Pre-Medieval Societies
Dominance of Tradition
Social structures dominated by tradition, where land ownership was synonymous with power.
Internal Composition of Societies
Wealth was seen as a prize for achieving political, military, or religious status rather than trade, with military prowess being highly valued over economic prowess.