History of economics - Essay Example

14 April History of Economics To many people, economics is simply the study of markets, banking and business. However, economic deals with how people earn their living, how they spend their resources and time, as well as their lives. Jain and Khanna define an economy as a mechanism that allocates scarce resources among competing users (1). Many economists like Marshall, Hawtrey have described economics as a normative science, which is aimed to determine norms, values and ideas. Many concepts and ideas have been developed about the history of economics.

The history of economics was thought to have begun during the reign of Plato and Aristotle, before the theories were developed. Before the evolution, slave trade was the only trade that people knew and they considered it an economy. During the sixteenth century, people were uncivilized and war was known to be the main economic activity (Canterbery 18). Many economists have come up with many theories to explain the history of economics. The western history of economics is divided into four theories (Deane 1). 1. Classical Greek: This period is also referred to as the feudalism (survival for the fittest).

This is a time when political philosophy focused on ethical problems of the Aristocratic slave based. This was a time when people stopped slave trade and there was no economy and people only produced the necessities like food, clothing, and shelter. 2. Mediaeval Scholastic: During this era, economics was a clerical monopoly and the mediaeval economic ideas were essential. Individual economy behavior was relevant in the market economy rather than exchange economy which actually worked. 3. Mercantilist: This was a time when economic problems of Nationalist-Monarchist states and growth capitalist began and focused on ways of increasing wealth and power through trade. 4. Modern: During the eighteenth century, Adam Smith, a French physiocrat, came up with the study of economics as a distinctive discipline, a science and a technique of analysis, and it was a time when economics was introduced to the people and everyone understood the essence of the economy.

The two economic ideologies (classical Greek and mediaeval) which came up were mainly historical. The Greek and Mediaeval was based on political and theological interest and the approaches had little to do with modern economics. The mercantilist theory was developed during the seventh century. Mercantilists described economics as the art of managing a state, and they had created the element of demand and supply. They developed theories of interest rate, which had factors like yield of investment in the capital stock and the supply of loanable funds (Deane 3).

The main focus was on external trading relationship on nations, but nevertheless, this did not prevent the economists from discussing economic variables and problems associated with production, price, money, tariff policies and interest. These theories had problems when it came to growth and development. The modern economy was developed during the nineteenth century. During this period, economics was divided into two; micro-economics and macro-economics. Macro-economics is the study of the market at large and it tries to solve problems like unemployment, inflation rate and national output, while micro-economics is the study of small markets like the income of an individual and expenditure (Chauhan 21).

Works CitedCanterbery, E. Ray. A Brief History of Economics: Artful Approaches to the Dismal Science. Toh Tuck Link: World Scientific Publishing Co. Pte. Ltd, 2011. Print.Chauhan, S.P.S. Microeconomics: Theory and Applications, Part1. New Delhi, PHI Learning Pvt. Ltd, 2009. Print.Deane, Phyllis. The Evolution of Economic Ideas .New York. Press Syndicate of the University of Cambridge, 1978. Print.Jain, T. R. and Khanna, O. P. Economic Concepts and Methods. New Delhi. VK Enterprises, 2007. Print.