This summary contains and explains all the material (lectures, work group and literature) in a way that can be understood by everyone. It acts as an addition to your own notes because the summary links all topics together and makes connections between them. This summary is the way to a high grade f...
History of Economics Samenvatting
Mercantilism
This was the first school of economic thought. It was not really an academic school. It comes
from the word ‘merchant’ and it is their ideology. It appeared in Europe in 1500-1800. It was
characterised by the amazing growth of trade. Before that, there hardly was any trade. People
were self-sustaining before that period. The growth of trade led to the attempts to understand
it. Also, there was an emergence of nation states and the struggles between them. The states
were al colonial powers. Trade was between them, and between them and colonies.
Two important questions were being asked. 1) What is the source of wealth for the state? The
answer they gave was very childish: gold and silver make your rich. They gave the most
primitive answer. We know that this is not the full answer. 2) What should the state do to
become wealthier and stronger? This is a policy question. The answer they gave was trade.
This was the magic formula. The king should limit foreign exports by taxes. Exports to
foreign countries should be supported. And there was a preference for exporting
manufactured goods over raw materials, because when it is manufactured they cost more.
The existence of large and hard-working population should be promoted to reduce the costs.
Then you will get increased competitiveness of domestic goods. They were striving for an
active/positive balance of trade. That means more exports than imports.
We could say this is very naïve. Inflation happened. However, there was some truth in
mercantilism. The economic growth was very big. Trade is an important vehicle for that, and
money is important as well. Other than that, the social status of merchants was reconsidered
and became more important. You can still see mercantilism in protectionism today.
Mercantilists say international trade is a zero sum game. The profit of one is being eliminated
by the profit of another. Hume said international trade is a positive sum game. He said that
prices react to the amount of money available. That is natural law thinking. When the
economy changes, it will be absorbed by something so that it gets to an equilibrium. Note
that Hume is a critic of mercantilism. He was a classical economist.
So, where does value come from according to mercantilists? Gold and silver out of trade.
Physiocrats
This school was a reaction on Mercantilism. They said there are rules of nature. All activities
should be made in harmony with that. They were searching for rules that apply to the whole
universe.
Laissez-faire was important (Vincent de Gournay). The government influence should be as
little as possible. They should only facilitate things like protection of property and
maintaining the possibility of keeping someone to a contract.
They were big supporters of agriculture because it was the only thing that created wealth
according to them. Therefore, only landowners were taxed. Nature produces value because it
is self-reproducing. It has the ability to produce a surplus beyond the costs. A seed becomes
twenty seeds. You can feed the labourers with it, ánd you get a surplus. The beneficials go to
the landowner. We call this rent.
They also looked at the interrelatedness of the economy: the three classes of workers,
landowners and capitalists.
So, where does value come from? From production, more specifically land/agriculture.
1
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper sebastiaanschols. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €5,23. Je zit daarna nergens aan vast.
