Oser, J. 1963. The Evolution of Economic Thought. Harcourt, Brace & World, Inc.

Chapter 1 and Links to Chapters 2-24

Study Guide by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Economics Main Page | Political Issues Main Page

Preface

This book includes the ideas of seventy-two major economists covering more than four hundred years of economic thought from 1500 to 1950.

Chapter 1: Introduction

The author uses 1500 A.D. as a dividing line between two epochs with very different economic characteristics. Prior to 1500 there was little trade, most goods were produced for local consumption, money was not widely used, strong national states and national economies had not been developed, economic theorizing had not evolved, nor had any schools of economic thought been formed. After 1500, trade expanded rapidly, the money economy superseded the self-sufficient economy, national states and national economic systems developed, and economic schools were formed around systematic bodies of economic thought and policies.

The economic thought that developed over several hundred years must be analyzed and judged from the social relationships, institutions and environment that existed when it was developed. This helps us understand why a theory was developed, why it achieved some success, and why it declined and sometimes disappeared.

The Five Major Questions

Five major questions are considered for each school of economic thought:

1. What was the social background of the school? Economic theories are assumed to develop in response to changes in the environment that involve new problems. Ideas that are useful and effective in answering questions related to new problems are disseminated and popularized. Those that are irrelevant to society at the time they are developed have short lives.

2. What was the essence of the school? Generalizations allow one to get at the heart of a theory quickly and concisely. However, a disadvantage of generalizing is that there are always exceptions. For example, classical economists believed in free trade. Malthus was a classical economist, but he was a protectionist.

3. What groups of people did the school serve or seek to serve? Economic theory was developed by groups of people who developed common ideas based partly on self-interest and partly on how an economy should be organized and directed. In the middle ages the emphasis was on the compatibility of charging interest for loans and the salvation of one's soul. The merchant capitalist were concerned with how to accumulate gold and silver. The classical economists were interested in how to increase production, while the socialist focused on the condition of the working class.

4. How was the school valid, useful, or correct in its time? The validity of economic ideas should be related to their time and place. Some ideas were valid for the environment in which they were developed, but are no longer valid in the current environment. Some ideas that were not valid at the time they were developed become valid in the present, but might become inappropriate in the future. Some accepted ideas of today may be invalid or inappropriate, but persist because of the difficulty of changing men's minds.

5. How did the school outlive its usefulness? The evolutionary approach to economic theory recognizes that changes in the social and economic environment leads to new questions, new groups, and new ideas. New problems need new solutions.

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Go to the next Chapter. Chapter 2: The Mercantilist School (1500-1776).

Related summaries:

Martin, J. R. Not dated. A note on comparative economic systems and where our system should be headed. (Note).

Milanovic, B. 2019. Capitalism, Alone: The Future of the System That Rules the World. Harvard University Press. (Summary).

Piketty, T. 2014. Capital in the Twenty-First Century. Belknap Press. (Note and Some Reviews).

Porter, M. E. and M. R. Kramer. 2011. Creating shared value: How to reinvent capitalism and unleash a wave of innovation and growth. Harvard Business Review (January/February): 62-77. (Summary).

Thurow, L. C. 1996. The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World. William Morrow and Company. (Summary).