Hıstory of Economıc Thought (ENG) — Ünite 2 Soru-Cevap

This book was dated 1776, which was quite early, was a comprehensive book examining:

1. the process and dynamics of accumulation of capital,

2. elements and patterns of economic growth, trade and exchange relations, distribution of income and wealth, 
3. the role of state policies through public finances in the industrial society.

The science aspect of economics is explained with the scientific knowledge that comes up with explanatory hypotheses based on abstractions, assumptions, methods, and/or techniques.

The elements and processes are observed by means of methods and techniques. Hence, the collected information is used to develop and analysis to explain the facts. 

The characteristics of economic thought are;

1. less scientific analysis and more intellectual reflections

2. analysis and reflections are based on philosophical, notably moral, theological, metaphysical, religious, apologetic, legal, cultural, literary, practical advisory, experience-based and observation-grounded accounts.

3. difficult to identify its origins.

The main differences are;

1.the history of economic science deals with the theoretical consistency of the past explanations and economic doctrines, whereas the history of economic thought engages in a more complex genealogical history of the past reflections about the economy. 

2.  the history of economic science presents the progressive/chronological historiography of the grammata (written rules) of economic analysis, while the history of economic thought is formed within the general epistemic, practical, and discursive conditions  of economic knowledge.

3. Economic thought  easily and deliberately escapes the systematically constituted strict rules of science/language.

 The scientific dimension is concerned with the theoretical explanations of economic reality.

The history of economics analysis/science, therefore, will show us which intellectuals, the learned people or savants, and philosophers in the past are relevant to modern economics.

The history of economic thought, on the other hand, is concerned with the  ‘genealogical’ perspective to history, and therefore,  will help us understand how a scientific economic
theory in the past had non-scientific knowledge aspects which constituted its political, practical,
cultural, and normative relationship with the real world.

Feudalism contributed to the field in terms of knowledge structures, which in turn led to a a specific model and epistemology of economic thought. Besides, understanding the general economic model
in feudalism would contribute to the understanding of  the characteristics of scholastic philosophy and its reflections on economy. 

1. Scholastic thought was born with feudalism.

2.  The idea of moral economy interpreted according to Christian teaching was emphasized.

3.  “unsystematic” and “prescriptive” in character;

4. close to “normative economics”

5. concerned with the general descriptions of the economic behaviors and processes according to the “moral philosophy” rather than ‘positive economics,’

6. Although religious in character, practical in the sense that it morally imposed and prescribed on the sovereigns and subjects how to think and behave in their economic activities.

7.  Unlike modern economic thought, scholasticism did not support the idea of increasing production and growth.

hus, Aristotle made a  distinction between oikonomia and chrematistics in two respects.

1. A distinction based on the two different conceptions of value:
use-value and exchange-value because Aristotle believes that  “Every piece of property has a double use; both uses are uses of the thing itself, but they are not similar uses; for one is the proper use of the article in question; the other is not.

2.  distinction between oikonomia and chrematistics is significant to help us understand the true process of capital accumulation.

 Plato conceptualizes economy for a good life as part of pure morality. But Aristotle  saw economy as part of moral life but his analysis based on the distinction between oikonomia and
chrematistics makes him contemporary with modern economics. Towards the end of scholasticism, Aristotle was reconsidered in terms of his economic analysis close to scientific knowledge of economics. 

Mercantilism is a set of economic policies and doctrines that have developed in the
geography including England, France, Spain, the Netherlands and Belgium in Western Europe since
the beginning of the 16th century.

Mercantilism as a system of thought and policies was an essential part of the establishment of the capitalist economy.

 (1) bullionism: a monetary policy aiming to keep as much gold and silver as possible in the domestic economy and thereby creating an advantageous position against the rival countries in terms of the balance of trade and payments,

(2) the protection of domestic economy and restrictions on import to obtain trade surpluses

(3) the state’s fiscal support for exporting sectors providing them subsidies and tax exemptions

(4) the state policy for bestowing monopoly privileges to keep the prices high for
super-profits

(5) the state’s military protection for colonization through which companies with
monopoly privileges sell their products at high prices in different countries

(6) the state policy for the establishment of a national market, which is the foundation of the nation-state

(7) laws for the establishment and protection of private property and the creation of a working-class without property

(8) the state protection for the poor and the unemployed harmed by the capitalist economy.

1. Mercantilism laid the foundations for capitalism as an economic system.

2. The protectionist state policies and the widening scope of the use of money with inflationary trends created favorable conditions for dismantling the old structures remnant from feudalism.

3. Mercantilism was a project of establishing a national economy under the centralized state power.

4. The centralized state power aimed at developing a stable money order and protecting exchange relations in people’s daily life and their market activities vis-à-vis the growing importance of the speculative world of financial capital that benefited from the sharp increase of the volume of money. 

5. mercantilism as a system of policy and thought was engaged in the formation of a balanced national capitalist economy as a whole (merchant, industrial, agricultural, financial and welfare capitalism).

6.classical political economy took this mission over by giving particular emphasis to industrial capitalism.

1. The German Empire had a particularistic political and administrative structure that was composed of nearly 300 cameralist territorial states while England and France had a centralized nation-state model.

2. The territorial states in the German-speaking lands had powerful and effective bureaucratic systems. They were absolutist states but not in the same
form as that of England or France.

3. Capitalism in the cameralist states was rather underdeveloped. As late as the 19th century, after the customs union in the 1830s, the German states started to build a nation-state with a significant powerful capitalist economy.

Cameralism is usually defined as the German version of mercantilism. 

Cameralism is derived from the word Kammer which means chamber. The chamber here refers
to the room of the state treasury.

Cameralism in its narrow sense means fiscal administration and the cameralists were the bureaucrats of the fiscal administration.

Cameralism is defined both as a science and policy.

 Cameralism refers to both economic thought and policy.

The cameralists were both academics at universities and bureaucrats in the state administration. However, these two types of cameralists are not independent from each other.

The academic side of cameralism was strictly close to the bureaucratic side. This made
cameralism a very practical branch of economic knowledge (mostly fiscal administration) without
assuming an abstract content of scientific economic knowledge about the market, capital, money, etc as in mercantilism.

It is  the police. The term police was alien to mercantilist writers. Police science (Polizeiwissenchaft in German) was the complementary practical governmental knowledge of cameralism. The police regulations (Polizeiordnungen) were the essential governmental apparatus of cameralism through which individuals were governed comprehensively and in a very strict disciplinary way in their private and social lives.

This police-government of individuals aimed at establishing a social and economic order that increases the military and financial power of the state. The police, compared to mercantilism, designed deeper and more wide-ranging interventions and regulations beyond economic life. The police was an inclusive disciplinary and controlling power apparatus of the state. 

Physiocracy is defined as the rule/government of nature. What is meant by nature is physical nature. In this view, society is governed as part of physical nature and of its laws.  According to Du Pont, economics is considered as the application of natural order to the government of society. Physiocrats believe that the nature will take its course. Therefore, this view adopts nature as the economic governmental model  and centers multiple production processes  to develop a general and abstract economic model. 

The similarity is the development of a governmental model and rationality. The difference is the idea of the police. Cameralists adopts the notion of police to control the economy to increase the fiscal and military power of the state whereas, physiocrats adopts the notion of police to regulate the market  in order to allow it to function freely. Physiocrats criticize cameralists on the notion of the police in the sense that they apply the notion of police to economic liberalism.

Hobbes viewed taxes compulsary in order to pay for the protection provided for the state. However, Hobbes believed that the criteria for tax payment should not be the level of the wealth as it would mean to penalize a person who worked hard. According to him, it is the consumption that should be taxed.  With this view, Hobbes laid the foundations of the principle of benefit approach in taxation, which was largely adopted by classical political economy. 

According to Rousseau, an ideal economic system aims abundance, freedom and justice. Therefore, his economic policy was based on;

 (i) promotion of agriculture and useful crafts

(ii) establishment of important enterprises for the necessities of life dismissing the production and trading of luxury goods that support imaginary and unnecessary wants

(iii) the increase of wheat and population

(iv) the restriction of foreign trade

(v) limitation of commerce based on money economy

(vi) increase of the number of nutrients and consumers
in the country as much as possible.

Rousseau even was opposed to the payments of taxes with money. Instead, he argued that people should be involved physically and voluntarily in public works.

Hume considered economy from 3 dimensions.

(1) economic psychology (particularly the theory of
the impulses underlying passions and behavior),

(2) political economy (the market relations)

(3)
economic philosophy (a comprehensive evaluation
of the morality of commercial society)

Therefore, Hume connected historical analysis with psychology. 

With psychology, Hume tried to explain the economic, social and political as well as the psychological basis of human experience in a sociological and historical context.