History of Economic Thought (The Ancient & The Medieval)

By: Pavel VassiljevMSc International Marketing & Brand Management

• What is economics for you?

• Why there was a need to start creating economics?

• How would you define the history of economics?

• History of economic thought made a basis for creating such subjects like: political economy and economics.

• The history of economic thought deals with thinkers and theories from the ancient time to present day and the history is being written as we speak.

Ancient Near East

• Effective distribution of resources was one of the needs that needed thoughts upon.

• Mesopotamia, Assyria, Phoenicia, Egypt (Fertile Crescent) were driven by the need of growing crops near rivers, which needed space, labor power, management.

• The city-states of Sumer developed a trade and market economy based originally on the commodity money of the Shekel which was a certain weight measure of barley, while the Babylonians and their city-state neighbors later developed the earliest system of economics using a metric of various commodities, that was fixed in a legal code.

Greko-Roman• Speaking of recourses were:

• Hesiod• Xenophon• Aristotle• Plato

• Plato: “Mind, body, estate”

• Necessary VS Luxury

Aristotle (384 BC – 322 BC)• was a Greek philosopher and polymath, a

student of Plato and teacher of Alexander the Great. His writings cover many subjects:

physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology.

• Aristotle: “The art of wealth acquisition”

• Aristotle also thought on the question in whose hands property should also be.

Ancient China

• Fan Li discussed seasonal effects on markets, and business strategy. Imagine that !?

• Government role and monopolies were things discussed amongst Confucian factions.

Ancient India

• Lord Mahavira describes the nature of man under the four main aspects without which it would be difficult to understand humans fully.

– Passion– Lust or greed for wealth– Faith in Religion– Emotion

• The aspects of human nature leads us to the basic elements of Mahavira's economics. In modern economics, there are three basic elements -– Desires– Needs– Demands

• However under Mahavira's economics, there are four more elements to those of modern economic thoughts :– Means of convenience– Attachment– Luxury– Fame (or Ego)

Medieval Islamic world

• Islamic economics is the practice of economics in accordance with Islamic law. The origins can be traced back to the Caliphate, where an early market economy and some of the earliest forms of merchant capitalism took root between the 8th–12th centuries, which some refer to as "Islamic capitalism"

• Nasir al-Din al-Tusi: "the study of universal laws governing the public interest (welfare?) in so far as they are directed, through cooperation, toward the optimal (perfection)."

• Persian philosopher Ibn Miskawayh: "The creditor desires the well-being of the debtor in order to get his money back rather than because of his love for him. The debtor, on the other hand, does not take great interest in the creditor."

• Abu Yusuf (731-798) discussed proportional tax on produce instead of fixed taxes on property as being superior as an incentive to bring more land into cultivation. He also advocated forgiving tax policies which favor the producer and a centralized tax administration to reduce corruption.

• Ibn Khaldun (1332-1406) the greater the social cohesion, the more complex the successful division may be, the greater the economic growth. He noted that growth and development positively stimulate both supply and demand, and that the forces of supply and demand are what determine the prices of goods

Medieval Times

Thomas Aquinas (1225 – 7 March 1274)• Was an Italian Dominican priest and

an influential philosopher and theologian.

• In the medieval times Thomas Aquinas argued that it was a moral obligation of businesses to sell goods at just price.

• Summarize the thoughts and approaches from different cultures and answer the question:

– What similarities or differences were in the thoughts and approaches?

Thank You For Your Attention!