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Economics 326History of Economic Thought

#27854 LCD

(with Economics 395: Writing)

Mondays 3:00-5:30BSB 331

3 hours credit, and simultaneous writing credit (Econ 395).Concurrent registration is requiredwith Econ 395; prerequisites:Econ 2! or Econ 22" or Econ 22.

Deirdre N. McCloskey(we# site deirdremcclos$e%.org, which %oushould &isit soon). '% oce hours are 'onda%*unda%, 2+ hours ada%. . . on email (deirdre2uic.edu). -m glad to chat #rie/% #e0oreor a0ter class, at the classroom. -m alwa%s willing to discusseconomics and its histor%. 1ut administrati&e questions to me inclass, #ecause the% will o0ten appl% to people other than %ou alone.

- neverdiscuss a persons grade, unless the person detects an errorin adding up points. Never, so please ta$e it o %our agenda

4e as$: oes the past o0 economics matter to modern economics, to theeconom%, to %ou6 7he o#8ecti&es o0 the course, #% which %ou should 8udge%oursel0 and me, are to help %ou ma$e progress in:

nderstanding the histor% o0 %our eld o0 stud%, economics.

nderstanding the histor% gi&es %ou another chance to learn economics,and to see it criticall%. nd its histor%, a0ter all, is a ta$e on modernhistor% generall%. nderstanding modern histor% is necessar% to #e a*erious Citi&e read entire the old and ?dicult? #oo$s were going toread, and there0ore will #ecome una0raidto read other old and dicult#oo$s. 7hat wa% %ou can continue reading them a0ter college, and end upat age !" or so as a reall% educated person. (-t ta$es at least that long. . .#ut the trip is worth it) @oull also learn to read quic$l%, sometimes.

*$ipping entirel% at other times. *lowl% and care0ull% at other times,watching 0or the crucial points, arguing with the author, or agreeing.

7al$ing. iscussing ideas. 'a$ing %our point on %our 0eet. sserting with%our presence. -t>s what %ou need in the #usiness world. *pea$ing up inclass will #e the occasion. @ou will #e graded 0or it. It is therefore veryimportant that you attend all the classes. With the Monday-onlyschedule we have (which I admit has compensating charms the

mailto:deirdre2@uic.edumailto:deirdre2@uic.edu

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importance is magni!ed. If you miss two classes" you#ve gottenan $ for discussion on %&' of the course.

4riting well. @ou need that in the #usiness world, too.

o that last end" on every Monday you must turn in as the price ofadmission a couple () or * pages of critical re+ection (a ,positionpaper, on the days assigned reading. 7%ped, name, no title page,spellchec$ed, no right 8usti0%ing, dou#le spaced, not a ?#oo$ report? in thewa% o0 Arade 5an adult>s comment on the reading, telling %our colleaguessomething the% might ha&e missed, sa%, or some central idea that could useclarication, or some cra

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,et and read t!ese immediately. I do not 1est2 @oull #e using them 0or %ourdail% papers rig!t away.

Fut the good news is that those are the onl% #oo$s %ou need to #u%

or all the rest well #e reading 0rom Oi#ert% unds I1orta#le Oi#rar% o0

Oi#ert%,H which is some hundreds o0 #oo$s (we wont read all o0 them) on a Cpro&ided 0ree when %ou&e decided to sta% in the class, compliments o0 Oi#ert%und o0 -ndianapolis, -ndiana. (7he same #oo$s, and e&en more, are a&aila#le online: google Oi#ert% und IOi#rar% o0 Oi#ert%.H 3se this site until you are sureyou are going to stay in the class.) 7hat is, we are going to read t!e !istorynot a-out t!e !istory. s the people in the epartment o0 Pistor% put it, weregoing to read Iprimar% sourcesH onl%. 7he real 'cCo%. -n class well discuss theIa#out.H -ll pro&ide the contet and the 0ramewor$, and help %ou thin$ throughthe economics in the tets.

4hen something is mentioned 0or a date that means it should #e read inpreparation 0or that 'onda% class, along with e&er%thing #e0ore. T!ere will -e

pop quies quite #requently to test t!at you/ve done t!e reading. -0 %oupersistentl% 0ail these %oull get an in the course. -ll schedule when it seemswise longer qui

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course now. t much less than " hours a wee$ on it %ou wont get much out o0the course.

(nd i0 %ou ha&e to s$imp %our other courses the same wa%, %ou won>t getmuch out o0 college generall%. -0 that>s the case, though, - #eg %ou, 0or %our ownsweet sa$e, to reconsider %our priorities. 4or$ at %our pa%ing 8o# man% 0ewer

hours. 7o ma$e that possi#le, get rid o0 %our car. Eat less pi

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Christian religious tradition say about work, markets, rewards?Compare it

with your own tradition. (E.g. Holy Koran, Hebrew Bible, Hindu texts.)

Week 4, Feb. 1: Getting It Very Wrong, Early 16thcentury

Thomas More,Utopia(1516), which is longish.{Read it selectively for itseconomic

content!}. Assignment: write anattackon Mores economics.Show that it is

b-a-d economic reasoning. Persuade your boss, who likes it, that shes all

wet. (Cite the book in detail.)

Week 4, Feb. 8:Getting it Half Right, Late 17thcentury

JohnLocke,Two Treatises of Government(1690; ed. of 1824). Book II, paragraphs 4-51

(on the state of nature, on war, etc., and especially Of property, chp. v.:

Topic for reaction paper: Is Lockes theory of property economically sensible?

That is, would it lead to efficient allocation? Distinguish efficiency from

justice.

NicholasBarbon,A Discourse upon Trade(1690; 2003 ed.), the whole essay: ExplainBarbons case for free trade to your mother who does not know any

economics. Work out Barbons theory of money. Does he grasp that MV =

PT? Show that he does or does not with quotations.

Week 5, Feb. 15: Getting It Wrong and then Right, early 18thCentury

BernardMandeville, Bernard Mandeville,The Grumbling Hive(1705), entire. Essay:

Attack economically Mandevilles theory of the benefit of luxury and vice.

(And notice: it is one version of the theory being put into place to fight the

recession!)

Jean-JacquesRousseau,A Discourse Upon Political Economy(1755), entire: Essay: Whatis wrong with Rousseaus views on private property?

DavidHume ,Essays,1741, 1742, 1758, posthumous 1777: Of Commerce, Of

Luxury, Of the Jealousy of Trade, Of the Balance of Trade, Of Money.

How do these say something different from Mandeville or Rousseau?

Week 6, Feb 22: Getting It Almost Wholly Right, Late 18thCentury

AdamSmith,The Wealth of Nations.Introduction + Book I, Chaps. 1(i) and 2(ii): Pick

a sentence or two and explain it in modern economic terms, using a diagram

when possible. Book I, Chp. 3 (iii) and Chp. 10 (x), Part I alone: The division

of L is limited by the extent of the market; compensation in total is equalizedin different occupations. Paper: Explain each of these to your roommate.

Book IV, Chp. 2 (ii), entire: To be handed in separately, make a careful list of

every argument in favor of free trade (and against restraints upon the

importation) that Smith makes here.

5

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Smith,Theory of Moral Sentiments, Part I, Section I entire: Compare Smiths Impartial

Spectator with the Max U character you have been taught in modern

economics; Book VI, pp. 235-249: What is Smiths theory of virtue?

Week 7, March 1: Environmentalism

Robert ThomasMalthus,Principles of Population, 1798 edition: Chps. 1 and 2: Work

out an economic model of Malthus ideas.

Malthus,Principles, last, 6thedition: Compare how his ideas have developed after

criticism.

Week 8, Mar 8:Pure Theory

DavidRicardo,Principles of Political Economy and Taxation: Chp. II, On Rent: Read

slowly and try to devise a diagram to match. Separately write on Chp. VII,

On Foreign Trade: Explain comparative advantage to your mother.

Week9, Mar 15: The Classical SynthesisJohn StuartMill.Principles of Political Economy, 1848, 1871: Bk. IV, Chp. vi. Of the

Stationary State and Chp. vii, On the Probable Futurity of Labour. To

what does Mill attribute progress in the condition of the workers? Is it likely

to be as large as the 100% increase about to happen in the late 19thcentury, or

the 1500% to follow?

FrdricBastiat,Economic Sophisms, 1845, First Series, Chp. 7, A Petition and

Second Series, Chp. 15, The Little Arsenal of the Free Trader and [google

this: its new in the Library] What is Seen and Not Seen and the example

that follows, The Broken Window.

Mar 22-26 Spring Break

Week 10,March 29:Two Views of Value, One Wrong, the Other Right

KarlMarx,Capital, 1867, Vol. 1, Part II, Chp. iv, The General Formula for Capital

and Part III, Chp. vii, Section 2, The Production of Surplus Value. Try to

see whats wrong with his argument, in the light of modern economics.

William StanleyJevons,The Theory of Political Economy(1871), Chp. IV, Theory of

Exchange, browsing after p. 68 or so. Essay: Put his mathematics in the form

it is usually presented in microeconomics.

Week 11,April 5:High Theory before Full Mathematization

FrankKnight,Risk, Uncertainty and Profit(1921), Part III, Chp. vii, The Meaning of

Risk and Uncertainty.

EdwardChamberlain, 1930, an exposition and criticism of his theory of

monopolistic competition: McCloskey web site, deirdremccloskey.org, full

text ofThe Applied Theory of Price,Chp. 20.

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RonaldCoase,The Problem of Social Cost,http://www.sfu.ca/

~allen/CoaseJLE1960.pdf

Week 12,April 12: Two Types ofMathematics in Economics

RobertSolow, Technical Change and the Aggregate Production Function,Review of

Economics and Statistics39, No. 3 (Aug., 1957): 312-320 At for example:

http://pub.paran.com/econ22/Solow(1957).pdf. The University subscribes to

JSTOR, which allows you to read the original.

AmartyaSen, The Impossibility of a Paretian Liberal,Journal of Political Economy,

Vol. 78, No. 1. (Jan. - Feb., 1970), pp. 152-157. Ditto: you can fish around for it,

or go straight through JSTOR.

Week 13,April 19:Austrian Economics

FriedrichHayek, Economics and Knowledge (1937), reprinted 1973 under the

Various Authors section of the Liberty Fund CD, fromThe LSE Essays on

Cost.

IsraelKirzner, Equilibrium vs. Market Processes, under Various Authors, Edwin

Dolan, ed.,The Foundations of Modern Austrian Economics.

Week 14,April 26:Retrospective: The Rhetoric of Economics

DeirdreMcCloskey, The Rhetoric of Economics (1983), available on McCloskey

web site.

L

http://www.sfu.ca/http://pub.paran.com/econ22/Solow(1957).pdfhttp://www.sfu.ca/http://pub.paran.com/econ22/Solow(1957).pdf