In a far-ranging interview, economist Jo Michell, navigates us through key periods and transformations in economic thought, culminating in the cataclysmic event of the Second World War.
Key points
Pre-Smith Economic Thought
- Mercantilism focused on trade and gold flows as sources of national wealth
- Physiocrats emphasized agricultural production and developed early national accounting concepts
- These ideas laid groundwork for Adam Smith’s more comprehensive political economy
Classical Political Economy
- Adam Smith introduced concepts of self-interest, division of labour, and labour theory of value
- David Ricardo developed theories on rent, comparative advantage, and class-based economic dynamics
- Marx critiqued classical political economy, introducing concepts of exploitation and surplus value
Neoclassical Economics
- Shifted from class-based to factor endowment analysis
- Introduced marginal utility, supply and demand curves, and mathematical modelling
- Aimed for a more “scientific” approach, though political implications remained
Keynesian Revolution
- Great Depression exposed the limitations of neoclassical theory
- Keynes introduced macroeconomic concepts like aggregate demand
- Brought politics back into economics by advocating government intervention
Limitations of Economic History
- Predominantly reflects European and North American perspectives
- May not adequately address needs of developing economies or non-Western contexts
- Continues to influence global economic policy through institutions like IMF and World Bank
