The Development of Economics

The remote sources of the science of economics are traceable to two currents of thought, one contributed by philosophers and the other by men of affairs. The beginnings of the former date back at least to the time of the Ancient Greeks. Aristotle and Plato discussed the economic aspects of social problems and also a number of the specific topics which belong to the present-day subject-matter of the science. Their concepts, theories, and speculations, together with those of the Stoics and Epicureans, were passed on to later generations with additions and modifications, the most noteworthy being those of the Roman Jurists, of the medieval Schoolmen, and of early modern philosophers, e.g., Pufendorf, Grotius, Hobbes, Locke, Hume, and Hutcheson, the teacher of Adam Smith.

In its early phases the other current of thought is not so easily traceable, but from the sixteenth century on it increased in volume and significance. It consists of the observations and thinking of business men, legislators, and other people connected with government, stimulated by the economic problems with the solution of which they were concerned. Often crude, naive, and lacking the systematic character of the work of the philosophers, the thinking of these men dealt with the interpretation of the actualities of their contemporary lives and was frequently keen and illuminating.

In the second half of the eighteenth century these two thought-currents coalesced in the writings of the Physiocrats and Adam Smith, and economics emerged as a distinct and independent discipline. In its subsequent development it received accessions from both philosophy and men of affairs and was influenced by other departments of human knowledge, which, like it, were originally included in the mother science, philosophy.

On account of the relatively advanced stage of economic development attained by England near the end of the eighteenth century and the superior merits of Adam Smith’s Wealth of Nations, first published in 1776, the main current of the development of economics flowed through that country, and it is by this current that we shall be guided in our exposition. In its early course it was marked by The Wealth of Nations and by books written by David Ricardo and John Stuart Mill, but the stream of thought expounded in the writings of these men was fed by smaller ones, some of which had their origin in earlier periods and others in the period contemporary with these authors.

Our first task will be the explanation of the sources from which Adam Smith derived his materials and his inspiration. Of these the chief were the Mercantilists and the Physiocrats and the economic life of the periods in which they lived. We shall then treat in order Adam Smith, the period intervening between the publication of The Wealth of Nations and the close of the Napoleonic wars, Ricardo and his Principles, the period intervening between that publication and Mill’s Principles, and then John Stuart Mill, in whose writings the so-called classical political economy was expounded in its most complete form. In subsequent parts of this book we shall discuss the chief criticisms that have been passed upon this system of thought and some of the attempts to reconstruct the science since the close of the classical period.