455 Fall 2018 History of Economic Thought Professor Lynne Kiesling Tuesday-Thursday 4:30-5:50 Krannert G012

Office location: 345 Krannert Hall Email: [email protected] Office hours: Thursday 2:00-4:00 By appointment

Readings: Jürg Niehans, A History of Economic Theory (HET) – required , , Liberty Press edition (WN) – required Bucholz, New Ideas from Dead – required All other readings available on the course Blackboard website

Readings marked with an asterisk (*) are required and are all included in the assigned texts or the online readings. The other references are optional additional reading, all of which should also be available in the library if you want to explore something in more depth.

NOTE: You should also ensure that you have access to intermediate micro and macro texts, as you may feel the need to brush up on the theory that we will be discussing. For example, I will take as given that you are familiar with the IS/LM framework of the Keynesian model, and the contrasting classical model, when we discuss Keynes. McCloskey’s Applied Theory of Price is an intermediate micro book that’s available online if you don’t still have yours from 340: http://www.deirdremccloskey.com/docs/price.pdf

Description: The development of economic thought and from the advent of the mercantilists to the formation of current schools of economics in the early 20th century. The course will focus on economics as an evolving body of thought and an ongoing conversation, with strong emphasis the movement from to in the 19th century as a foundation for modern economic theory. This course is intended to be a capstone to your economics major, to be taken after completion of the major's core classes and several electives.

Prerequisites: Economics 252 and Economics 340

Learning objectives: After completing this course, students will be able to • Think more deeply and independently about economic theory and practice, and apply that deeper understanding to modern economic thought • Describe the chronological and thematic progression of economic ideas from the 17th century to the 1930s • Identify the different fundamental questions in economic analysis during this period and how and why they changed over time • Identify important writers in economics, the works and ideas associated with them, and the interaction of their ideas with those of other writers • Analyze and critique these ideas, both within their historical context and as they relate to current economic thought

Evaluation: Daily discussion questions 10% Class participation 10% Short essays (4) 20% Midterm exam/paper 25% Final exam/paper 35%

Mobile Communications Policy: You may not use electronic devices in the classroom except to access class readings and search for passages as we discuss them. If you have an accommodation (see below) under which you use an electronic device to take class notes, please contact me as soon as possible so I am familiar with your situation.

Academic Dishonesty: Purdue prohibits "dishonesty in connection with any University activity. Cheating, plagiarism, or knowingly furnishing false information to the University are examples of dishonesty." [Part 5, Section III-B-2-a, University Regulations] Furthermore, the University Senate has stipulated that "the commitment of acts of cheating, lying, and deceit in any of their diverse forms (such as the use of substitutes for taking examinations, the use of illegal cribs, plagiarism, and copying during examinations) is dishonest and must not be tolerated. Moreover, knowingly to aid and abet, directly or indirectly, other parties in committing dishonest acts is in itself dishonest." [University Senate Document 72-18, December 15, 1972]

If the professor finds that a student is cheating on an assignment or quiz, that student will receive a failing grade on the assignment or quiz. If the professor finds that a student is cheating on an exam (either receiving or giving help), the students involved will receive a failing grade on the exam and the student will be reported to the University.

Accessibility and Accommodations: Purdue University strives to make learning experiences as accessible as possible. If you anticipate or experience physical or academic barriers based on disability, you are welcome to let me know so that we can discuss options. You are also encouraged to contact the Disability Resource Center at: [email protected] or by phone: 765- 494-1247.

Online Behavior: Disruptive behavior on the discussion boards or towards others in the class is not tolerated and is grounds for being removed from the online class. Disruptive students will be referred to the Dean of Students Office for further action.

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Use of Copyrighted Materials: The video lectures, problem sets, and quizzes that are presented as part of this course are protected by copyright law. Always assume the materials presented by an instructor are protected by copyright unless the instructor has stated otherwise. Students enrolled in, and authorized visitors to, Purdue University courses are permitted to take notes, which they may use for individual/group study or for other non-commercial purposes reasonably arising from enrollment in the course or the University generally. No individual is permitted to sell or otherwise barter notes or course materials, either to other students or to any commercial concern, without the express written permission of the course instructor.

Emergency: In the event of a major campus emergency, course requirements, deadlines and grading percentages are subject to changes that may be necessitated by a revised semester calendar or other circumstances beyond the instructor’s control. Relevant changes to this course will be posted onto the course website or can be obtained by contacting the instructors or TAs via email. You are expected to read your @purdue.edu email on a frequent basis.

READINGS:

I. The of criticism and the progression of ideas

*HET, Chapters 1 and 2

II. Pre-classical political : , Hume, Cantillon, Physiocrats

*HET, Chapters 3, 4 (Cantillon), 5 (Quesnay), and 6 (, Hume) *Mercantilism handout *“Mercantilism”: http://campusvirtual.uma.es/econlinks/Escuelas/mercant.htm *“Mercantilism,” Concise Encyclopedia of Economics: http://www.econlib.org/library/Enc/Mercantilism.html *D. Hume, Essays Moral, Political, and Literary, “Of the ” (para. 1-13 only) and “Of the Jealousy of Trade,” Chapters II.V and II.VI: http://www.econlib.org/library/LFBooks/Hume/hmMPL.html *Bio of Cantillon: http://www.newworldencyclopedia.org/entry/Richard_Cantillon *Text of Essai sur la Nature du Commerce, in English (Table of contents; Part I Chapters I-IV, X, XIII; Part II Chapter II): http://www.econlib.org/library/NPDBooks/Cantillon/cntNT.html *Bio of Quesnay: http://www.econlib.org/library/Enc/bios/Quesnay.html *Facsimile of the Tableau Economique: http://www.taieb.net/auteurs/Quesnay/t1759m.html *Text of the Tableau Economique, in French: http://www.taieb.net/auteurs/Quesnay/t1758.html

-Vaggi & Groenewegen, Concise Theory of , (Palgrave, 2003) Chapters 7, 8 -, Fable of the Bees -David Hume, Writings on Economics -Jacob Viner, "English Theories of Foreign Trade before Adam Smith," in Studies in the Theory of International Trade (1937) -Kuczyinski and Meek, eds. Quesnay's Tableau Economique (1972) -Meek, ed. Turgot on Progress, Sociology and Economics (1973) -Robert L. Meek, The Economics of Physiocracy (1962) -Antoin Murphy, Cantillon: Entrepreneur and (1986)

III. Classical economists: Smith, Malthus, Ricardo, Say, J. S. Mill

*HET, Chapters 7, 9, 11, 12, pp. 110-115 (Say) *Adam Smith, Theory of Moral Sentiments, selections (see attached list): http://www.econlib.org/library/Smith/smMS.html *Smith, WON, assigned readings (see attached list) *Coase, “Adam Smith’s View of Man” *, Principles of and Taxation, Chapters 2, 3, 7 *J.B. Say, Treatise on Political Economy, Chapter 15: http://www.econlib.org/library/Say/sayT15.html *T. R. Malthus, Definitions in Political Economy, Chapter VI (1827) *, Commerce Defended, Chapter 6: http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1668&layo ut=html#chapter_104764 *, Principles of Political Economy, Book III, Chapters 1, 2, 13, 16, 18

-T. R. Malthus, Essay on the Principle of Population -T. R. Malthus, letter to David Ricardo dated 7 July 1821: http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=213&layout =html#chapter_61321 -Sraffa, ed. The Works and Correspondence of David Ricardo (1951-55). Sraffa's introduction is particularly of to historians of thought. -E. G. West, Adam Smith and Modern Economics -History of Political Economy, Winter 1976: entire issue on Smith -Euzent and Martin, "Classical Roots of the Emerging ..." History of Political Economy 16 (1984) -G. Stigler, "The Successes and Failures of Professor Smith," in The Economist as Preacher, and Other Essays -G. Gilbert, " and the Poor in Malthus' Essay on Population," History of Political Economy 12 (1980): 83-96 -Mark Blaug, (1958)

IV. Early French Theory

*Cournot, Researches into the Mathematical Principles of the Theory of Wealth, Chapter IV (Of the Law of Demand); Chapter VII (Of the of Producers) *Dupuit, TBD

-Ekelund & Hébert, Secret Origins of Modern : Dupuit and the Engineers

V. Marx's response to earlier Classical economists

*HET, Chapter 12 *Marx, , Vol. 1, assigned readings (see attached list) *Thomas Sowell, Marxism Chapter 7

-, Essay on (1966)

VI. Marginalist microeconomic theory: Jevons, Menger, Marshall, Walras, Edgeworth, Pareto

*HET Chapters 17, 19, 20, 18 *EH Chapter 12, pp. 292-313 *EH Chapter 14, pp. 342-361, 371-372 *W. S. Jevons, Theory of Political Economy, Chapter IV: Theory of Exchange *, Principles of Economics, TBD *R. Albon, " and the Consumers' Loss from the British Post Office Monopoly," History of Political Economy 21 (1989) *Marshall Principles of Economics, selected readings (see attached list) *Edgeworth TBD *Pareto TBD

-Creedy, “Jevons’s Complex Cases in the Theory of Exchange,” Journal of the History of Economic Thought, 1992 -Vaggi & Groenewegen, Concise Theory of Economic History, Chapters 19, 21, 22 -Pigou, The Economics of Welfare -Walras, Elements of Pure Economics

VII. Schumpeter on dynamism and development

*EH, Chapter 20 (Schumpeter and section) *Schumpeter, Theory of Economic Development, Chapter 2 (focus on Sections I and II) *Schumpeter, , Socialism and Deomocracy, Chapter 7

VIII. Austrian economists and early-20th century responses to : Mises, Hayek, and the socialist calculation debate

*EH, Chapter 20 (Hayek section) *HET Chapter 33 pp. 444-451 *Mises TBD *F. A. Hayek, “The Use of Knowledge in Society,” American Economic Review, 1945 *F. A. Hayek, “The Pretence of Knowledge,” Nobel Prize lecture, 1974

-Carl Menger, Principles of Economics, Chapter 8 (Theory of Money) -G. O'Driscoll, "Money: Menger's Evolutionary Theory," History of Political Economy 18 (1986) -E. Böhm-Bawerk, and the Close of His System, pages 28-63 -E. Böhm-Bawerk, The Positive Theory of Capital -E. Böhm-Bawerk, Capital and Interest -G. Stigler, Production and Distribution Theories, Chapters 6-9 (1941)

IX. Keynes and

*HET Chapter 27 *Keynes, The General Theory of Employment, Interest and Money, Chapters 2,3,13,15,18 *Keynes, QJE (1937) *J. R. Hicks, "Mr. Keynes and the 'Classics': A Suggested Interpretation," Econometrica 5 (1937): 147-159 (in packet)

-J. R. Hicks, and Capital (1939) -A. Leijonhufvud, On and the Economics of Keynes (1968) -R. Lucas, "Methods and Problems in Cycle Theory," in Studies in Theory (1981)

X. Hayek and Keynes on capital and business cycles

Readings TBD

XI. Pigou and Coase

*Pigou, Economics of Welfare, TBD *Coasea, The Problem of (1960)

NOTE: Most readings are posted on Blackboard and I am giving you the links as a backup, so you have them and can explore the reading more if you like, both during and after the course.

Readings From Theory Of Moral Sentiments (http://www.econlib.org/library/Smith/smMS.html)

• Part I, Section I, Chapter I: Of Sympathy; Chapter II: Of the Pleasure of Mutual Sympathy • Part II, Section II: Of Justice and Beneficence, Chapters I, II, III • Part III, Chapter I, Chapter II: Of the love of Praise, and of that of Praise-worthiness; and of the dread of Blame, and of that of Blame-worthiness: paragraphs III.I.5, III.I.6, III.I.8, III.I.9, III.I.10, III.I.12, III.I.13, (discussion of the impartial spectator); Chapter III: III.I.46, III.I.47, III.I.48 (the China example) • Part IV, Of the Effect of Utility upon the Sentiment of Approbration: Chapter I paragraphs IV.I.8, IV.I.9, IV.I.10 • Part VI, Section II, Of the Character of the Individual, so far as it can affect the Happiness of other People: Chapter I, I.1-I.10 (social distance); Chapter II (the “man of system” and public policy)

Readings From The Wealth Of Nations (page references for the Liberty Press Edition)

• Author's introduction and plan of the work • Book I o Chapters I, II, III in their entirety o Chapter IV, paragraphs 12-18 o Chapter V, paragraphs 1-7, 17 o Chapter VI, paragraphs 1-12, 17-18 o Chapter VII o Chapter VIII, paragraphs 1-11, 21-22 o Chapter X, Part II (starts p. 135), paragraphs 1-5, 12, 27, 31 o Others TBD based on our discussion • Book II o Chapter III, paragraphs 1-6, 15-20 o Others TBD based on our discussion • Book IV o Chapter II o Chapter IX, paragraphs 48-52 • Book V o Chapter I, Part ii, paragraphs 1-12 (pp. 708-715) o Chapter I, Part iii, paragraphs 1-2; Article I, paragraphs 1-14 (pp. 723-728) o Chapter I, Part iii, Article II, paragraphs 1-18 (pp. 758-765), 46-57 (pp. 780-786), 61 (p. 788)

J.S. Mill, Principles Of Political Economy (http://www.econlib.org/library/Mill/mlP.html)

Book III, Chapters 1, 2, 16, 18 (other sections may be added, TBD)

Marx: Pages To Read In Capital, Volume 1 (http://www.marxists.org/archive/marx/works/1867-c1/)

Part I, Chapter 1, Sections 1, 2 Part II, Chapter 6 Part III, Chapter 7; Chapter 10, Section 1 Part IV, Chapter 12

Marshall, Principles Of Economics (http://www.econlib.org/library/Marshall/marP.html)

Book III, Chapter III (law of demand) Book III, Chapter IV (elasticity) Book V, Chapter V (immediate, short, and long run) Book V, Chapter VI (derived demand, joint )

Online resources:

Library of Economics and Liberty: http://www.econlib.org

Online Library of Liberty: http://oll.libertyfund.org

McMaster University Archive for the History of Economic Thought: http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/

Planned schedule of readings

Date Topic 21-Aug Intro, Mercantilism 23-Aug Hume, Cantillon, Physiocrats 28-Aug Smith TMS 30-Aug Smith TMS 4-Sep Smith WN 6-Sep Smith WN 11-Sep Smith WN 13-Sep Smith WN 18-Sep No reading – small group work 20-Sep No class – LK in UK 25-Sep Ricardo 27-Sep Ricardo J. Mill, Malthus, J.B. Say on gluts and 2-Oct 4-Oct J.S. Mill 9-Oct Cournot and Dupuit 11-Oct Marx 16-Oct Midterm exam/paper 18-Oct Jevons 23-Oct Menger 25-Oct Marshall 30-Oct Marshall 1-Nov No reading – small group work 6-Nov Marshall, Walras 8-Nov Edgeworth, Pareto 13-Nov Schumpeter 15-Nov Hayek 20-Nov Keynes Hayek and Keynes on capital and business 27-Nov cycles 29-Nov Pigou, Coase on