EVOLUTION of ECONOMIC THOUGHT
Reading Requirements:
The majority of our readings are online either on www.jstor.org or http://oll.libertyfund.org (please use the facsimile pdf)
Even if the texts are online, I would encourage the purchase of the following from www.libertyfund.org:
SMITH, Adam. [1776] 1981. An Inquiry onto the Nature and Causes of the Wealth of Nations. Indianapolis: Liberty Fund.
SMITH, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. Other materials are available on the course site.
Course Objective: This course addresses vital micro- and macro-economic questions that concern us today and examines how economic thinking has evolved over time to answer them. The course complements the mechanical problem solving skills that students have. It allows students to develop a broader perspective based on the wide-ranging background and views of the economists of past ages. The course will benefit students who want to have a better understanding of modern economics and economic problems. Some of the questions we will look at are: How does an economist distinguish a man from a rat, given that they are both maximizers? Are our preferences fixed or does exchange change our preferences? Under what conditions is paper money preferred to commodity money? Under what condition is public debt the preferred form of public financing? Why do we observe differences in wage rates? Why is economics dismal? The course is topical, not chronological.
1
Grading:
The class aims at a dialogue. You are expected to have done the readings for that day and to contribute actively to the discussion. Before every class, you are expected to write one or two pages with your thoughts on the material for that class. A research paper on a topic of your choice is due at the end of the semester.
Your total grade will be based on the following: Class participation 33%
1-2 page paper 33%
Research paper 34%
I will use the standard grading scale (A>90%, B>80%, C>70% …) and I do not intend to curve the grading.
2
Tentative Schedule
What is economics?
• Groenewegen, Peter. 2002. Eighteenth-Century Economics: Turgot, Beccaria and Smith and their Contemporaries. New York and London. Routledge. Handout.
INFLUENCE OF COMMERCE
• • Ensminger, Jean. 2004. “Market Integration and Fairness: Evidence from Ultimatum, Dictator, and Public Goods Experiments in East Africa” in Foundation of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. Eds. Henrich, Joseph, Robert Boyd, Samuel Bowels, Colin Camerer, Ernst Fehr, Herbert Gintis. On class site. Or at : http://www.people.virginia.edu/~cah2k/bush.pdf
• • Henrich, Joseph, et al. 2010. “Markets, Religion, Community Size, and the Evolution of Fairness and Punishment.” Science. Vol. 327, No. 5972 (Mar. 19, 2010), pp. 1480-1484
• • Hume, David. [1752] 1987. “Refinements of the Arts”. in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. At: http://oll.libertyfund.org
• • Smith, Adam. (1762), “Lecture on the Influence of Commerce on Manners” in Lectures on Jurisprudence. Report dated 1766. 326-333. Pages 538-541.
• • Marx, Karl. “The Power of Money in Bourgeois Society” in Economic and Philosophic Manuscripts of1844. PP.59-62 (on class site)
• Aristotle. Politics. Book 1
At: http://oll.libertyfund.org
Suggested readings:
• • Mandeville. [1732] 1988. The Fable of the Bees. Indianapolis: Liberty Fund. At http://oll.libertyfund.org/
• • Cowen, Tyler. 2000. What Price Fame? Harvard University Press.
3
• Thorstein Veblen. 1899. The Theory of the Leisure Class. Chap. 4 “Conspicuous Consumption” At http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/
HOW DOES COOPERATION MATTER?
• • Greif, Avner. 2006. “History Lessons: The Birth of Impersonal Exchange: The Community Responsibility System and Impartial Justice” Journal of Economic Perspectives. 20.2: 221-236.
• • Brosnan, S.F. and de Waal F.B.M., 2014, Evolution of responses to (un)fairness. Science, 17 Oct 2014, 346: 6207, 314
o de Waal, F.B.M. and Berger, M. L. 2000, Payment for labour in Monkeys. Nature 404:563.
o Brosnan, S.F. and de Waal F.B.M. 2003, Monkeys reject unequal pay. Nature, 425, 297-299.
o Keith Jensen, et al. 2007. Chimpanzees Are Rational Maximizers in an Ultimatum Game, Science 318, 107
o Clutton-Brock, Tim. 2009. “Cooperation Between Non-Kin in Animal Societies”. Nature. 462. 51-57.
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. I.ii (p. 25-30)
• • Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund.I.i.1 and I.i.2 (p. 9-16)
• • Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. II.ii.2-3 (p. 82-91)
• • Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. III.1-2.3 (p. 109-114)
4
• • Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. III.3.1-6 (p. 134-138)
• • Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. III.3.4 (p. 156-161)
• • Mauss, Marcel. The Gift. [1950] 2002. New York: Routledge. PP. 10-59 (on class site)
• • Suggested readings:
• • de Waal, F.B.M. 2003 On the Possibility of Animal Empathy. In Feelings and Emotions: The Amsterdam Symposium, T. Manstead, N. Frijda & A Fisher (eds), pp. 279-299. Cambridge : Cambridge University Press.
• • Iacoboni, Marco. 2008. Mirroring People: the new science of how we connect with others. New York: Farrar, Straus and Giroux.
5
WHO IS THIS ADAM SMITH?
• • Montes, Leonidas. 2004. “Das Adam Smith Problem: its origins and the debate” in Adam Smith in Context: a Critical Reassessment of some Central Components of his Thought. Palgrave. On class site.
• • Coase, Ronald. 1976. “Adam Smith’s View of Man.” Journal of Law and Economics, Vol. 19, No. 3, pp. 529-546.
What do we do with Adam Smith today?
• • Smith, Vernon. 1998. “The Two Faces of Adam Smith” Southern Economic Journal. Vol. 65. No. 1. pp. 1-19.
• • Ashraf, Nava, Colin F. Camerer and George Loewenstein. 2005. “Adam Smith Behavioral Economist” Journal of Economic Perspectives, Vol. 19, No. , pp. 131– 145
• • Smith, Vernon. 2010. “What Would Adam Smith Think?” Journal of Economic Behavior & Organization, 73: 83-86.
• • Smith, Vernon. 2015. Adam Smith: Homo Socialis, yes; Social Preferences, No; Reciprocity Was to Be Explained. Journal of Economic Behavior & Organization, 2: 183-193.
Additional reading:
• Bittermann, Henry J. 1940. “Adam Smith’s Empiricism and the Law of Nature.” The Journal of Political Economy, Vol. 48, No. 4, pp. 487-520, and The Journal of Political Economy, Vol. 48, 5, pp. 703-734.
6
MONEY
• • Friedman, Milton. 1987. “Quantity Theory of Money” in The New Palgrave: a dictionary of economics, edited by John Eatwell, Murray Milgate, Peter Newman, New York : Stockton Press. (On class site).
• • Lucas, Robert. 1996. “Nobel Lecture: Monetary Neutrality.” The Journal of Political Economy, Vol. 104, No. 4, pp. 661-682.
• • Aristotle. Nicomachean Ethics. Book V. At http://oll.libertyfund.org
• • David Hume. [1752] 1987. “On Money” AND “On the balance of trade” in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. At http://oll.libertyfund.org
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund, WN. I.iv, I.v and II.ii 1-36 85-106 (to better understand this chapters I would encourage the reading of all WN II.ii and of WN II.i)
Suggested readings:
• • Simmel, Georg. [1900] 1990. The Philosophy of Money. London and New York: Routledge.
• • Galiani, Ferdinando. [1751] 1977. On Money: a translation of Della moneta. Ann Arbor: Published for Dept. of Economics of the University of Chicago.
7
LABOR: human homogeneity and heterogeneity
• • Stigler, George J., and Gary S. Becker. 1977. “De Gustibus non est disputandum”. The American Economic Review, Vol. 67, No. 2., pp. 76-90.
• • “LOGOS” in Henry George Liddell, Robert Scott, A Greek-English lexicon. At http://www.perseus.tufts.edu (go to Classics, then to secondary sources, or directly to http://www.perseus.tufts.edu/cache/perscoll_Greco-Roman.html or http://www.perseus.tufts.edu/hopper/text?doc=Perseus:text:1999.04.0058 or http://www.perseus.tufts.edu/hopper/text?doc=Perseus%3Atext%3A1999.04.0057%3 Aentry%3Dlo%2Fgos
or google it
and in Catholic Encyclopedia at http://www.newadvent.org/cathen/09328a.htm or google it
• • Smith Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. Book 1 chap. 1, 2, 3,
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. Book 1 chap. 10
• • Plato. The Republic. Especially Book II §367-376d, Book V § 427d-434d, § 458-460. At http://oll.libertyfund.org/Home3/Author.php?recordID=0204
• • Leonard, Thomas C. 2003. “More Merciful and Not Less Effective: Eugenics and American Economics in the Progressive Era” History of Political Economy 35(4): 709-734. At http://www.princeton.edu/~tleonard/papers/Eugenics.pdf
• • “Dismal” on the OED. At http://dictionary.oed.com
8
•
•
•
Carlyle, Thomas. 1849. “Occasional Discourse on the Negro Question” Fraser’s Magazine http://cruel.org/econthought/texts/carlyle/negroquest.html
Or google it.
Mill, John Stuart Mill. 1850. “The Negro Question” Fraser’s Magazine At http://cruel.org/econthought/texts/carlyle/negroquest.html
Or google it.
“Am I Not a Man and a Brother?” (picture) http://www.pbs.org/wgbh/aia/part2/2h67.html http://www.picturehistory.com/find/p/632/mcms.html http://www.yale.edu/glc/archive/928.htm
Additional readings:
• • Carlyle, Thomas. 1851. “The Present Time” in The Latter-day Pamphlets At http://cepa.newschool.edu/het/
Or google it.
The wrong dismal story…
• • David Levy. 1991. “Some normative aspects of the Mathusian Controversy” in The Economic Ideas of Ordinary People. Rutledge. On class site.
9
PUBLIC CREDIT
• • Barro, Robert. 1974. “Are Government Bonds Net Wealth?” Journal of Political Economy 82, 1095-1117.
• • Buchanan, James, 1976, “Barro on the Ricardian Equivalence Theorem” Journal of Political Economy 84, 337-343.
• • David Ricardo. 1821. On the Principles of Political Economy and Taxation. Chapter 29 http://www.econlib.org/library/Ricardo/ricP7.html#Ch.29
• • Hume, David. [1752] 1987. “Of Public Credit” in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. http://oll.libertyfund.org/
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. V.iii
10
GROWTH
• • Hansen G. and Prescott E., 2002. Malthus to Solow; The American Economic Review, 92.4: 1205-1217
o Solow, Robert. 1956. A Contribution to the Theory of Growth. The Quarterly Journal of Economics 70.1: 65-94
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. III
TRADE/MERCANTILISM
• • Viner, Jacob. 1930. “English Theories of Foreign Trade Before Adam Smith” The Journal of Political Economy. Vol. 38, No. 3, pp. 249-301.
• • Hume, David. [1752] 1987. “Of the balance of trade” in Essays, Moral, Political, and Literary. Ed. Eugene F. Miller. Indianapolis: Liberty Press. At http://oll.libertyfund.org
• • Bastiat, Frederic. [1845-1850] 1997. “Abundance and Scarcity”, “The Balance of Trade”, “Theory and Practice”, “Conflict of principles” in Economic Sophisms. At http://oll.libertyfund.org
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN IV.i-ii.
11
KNOWLEDGE and PERCEPTION
• • Kahneman, Daniel. 2003. Prize Lecture: Maps of Bounded Rationality. The American Economic Review. Vol. 93, No. 5, pp. 1449-1475
• • F. A. Hayek. 1943. “The Facts of the Social Sciences” Ethics. Vol. 54, No. 1, pp. 1-13
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations.
Glasgow edition. Liberty Fund. Book 1 chap. 1, 2, 3, 10
• • Smith, Adam. [1759] 1984. The Theory of Moral Sentiments. Indianapolis: Liberty Fund. I.1, III.3-4, and IV.1
• • Plato. The Republic. Book VI § 514a-521b At: http://oll.libertyfund.org Additional readings:
• Rizzo, Mario and Gerald O’Driscoll. 1985. The economics of time and ignorance. Oxford, UK ; New York, NY, USA : B. Blackwell.
12
APPLICATIONS
The lottery puzzle: Milton Friedman v. Adam Smith
• • Friedman, Milton, and L. J. Savage. 1948. “The Utility Analysis of Choices Involving Risk” in The Journal of Political Economy, Vol. 56, No. 4, pp. 279-304.
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. I.10.
• • + search Liberty Fund electronic edition for lottery.
The usury problem: Stiglitz and Wiess v. Adam Smith v. Jeremy Bentham
• • Stiglitz and Wiess. 1981. “Credit Rationing in Markets with Imperfect Information” AER. vol. 71, no. 3. p. 393-410.
• • Smith, Adam. [1776] 1981. An Inquiry into the Nature and Causes of the Wealth of Nations. Glasgow edition. Liberty Fund. WN. II.4
• • Bentham, Jeremy. “LETTER XIII. To Dr. Smith, on Projects in Arts, &c.” in Defence of Usury.
• • Hollander, Samuel. 1999. “Jeremy Bentham and Adam Smith on the Usury Laws: a Smithian reply to Bentham and a new problem” in The European Journal of History of Economic Thought. 6:4 523-551. On class site.
Disperse knowledge.
• • Hayek F.A. 1945. “The Use of Knowledge in Society” The American Economic Review. Vol. 35, No. 4, pp. 519-530
• • Boettke, Peter. 1998. “Economic Calculation: the Austrian contribution to political economy” in Advances in Austrian Economics, Vol. 5, p. 131-158 On class site.
• Smith. Search Liberty Fund electronic edition for “invisible hand”
13
—–
ECONOMIC THOUGHT EVOLUTION
The majority of our readings are available online at either www.jstor.org or http://oll.libertyfund.org. (Use the facsimile pdf if possible)
Even if the texts are available online, I recommend purchasing the following books from www.libertyfund.org:
[1776] SMITH, Adam. An Inquiry into the Nature and Causes of National Wealth, published in 1981. Liberty Fund, Indianapolis.
[1759] SMITH, Adam The Theory of Moral Sentiments, 1984. Liberty Fund, Indianapolis. Other resources can be found on the course website.
Course Objective: This course addresses vital micro- and macro-economic questions that concern us today and examines how economic thinking has evolved over time to answer them. The course complements the mechanical problem solving skills that students have. It allows students to develop a broader perspective based on
