SCHOOLS OF ECONOMIC THOUGHT

This schematic shows a simplified overview of the schools of economic thought down the ages.


ANCIENT ECONOMIC THOUGHT


Hesiod - the first economist c 750 BC

Aristotle - Greek phiiosopher




SCHOLASTICISM

Nicole Oresme
c 1320

Thomas Aquinas
1225 - 1274

Medieval writings on ethics and money.



THE MERCANTALISTS

Thomas Mun and many others

17th century

Believed in a positive balance of trade and acquiring gold by restricting imports with tariffs and the creation of an empire





Ibn Khaldun

1332- 1406 Islamic scholar who's ideas anticipate and predate many modern economists





THE PHYSIOCRATS

A.R.J. Turgot 1727-1781

Francois Quesnay
1694-1774



Believed all wealth derives from agriculture and the first economists to employ scientific methods and believe in laissez faire.


THE CLASSICAL SCHOOL

Adam Smith 1723 - 90
David Ricardo
1722 -1823
Jean Baptiste Say
1767 - 1832

Free markets (laissez faire and the invisible hand) mean markets always clear and there will be no unemployment in the long run.

THE NEOCLASSICAL SCHOOL

Alfred Marshall
1842 – 1924
Joan Robinson

Built a deductive system based on assumptions or rationality, profit and welfare maximising. Still an important influence on mainstream economics today


THE MARGINALISTS

William Jevons
Carl Menger
Alfred Marshall

19th and early
20th century

The first economists to understand prices are formed at the margin.

Responsible for theories of marginal revenue, cost and utility.

THE AUSTRIANS

Eugen von Böhm-Bawerk
Ludvig von Mises
Friedrich von Hayek
 
Implacable opponents of socialism.
Belief  that understanding individual choices, opportunity costs and marginalist theory
is  the best way to analyse economic problems. Price signals are vital to economic efficiency.

MARXISTS

Karl Marx - 1888
Friedrich Engles

The labour theory of value
History is class struggle
communist society based on each according to their needs




MONETARISTS


Irving Fischer
Milton Friedman - 2006

Equation of Exchange
MV = PT

Quantity theory of money

Adaptive expectations



KEYNESIANS

J. M. Keynes
1888 - 1946

Belief that labour markets don't always clear and mass unemployment caused by a lack of aggregate demand. Govt. intervention is needed to avoid communism and national socialism.


NEO KEYNESIAN

Followers of Keynes who tried to reconcile neoclassical microeconomics and Keynesian macro economics.

John Hicks
Paul Samuelson


NEW KEYNESIAN

Keynesians who accept that people have rational expectations but also worry about market failure and stress that prices and wages are 'sticky' so markets don't adjust instantly.









BEHAVIOURAL ECONOMICS

Adds psychology into the mix with neoclassical economics.

Daniel Kahneman






NEW CLASSICAL

Use neoclassical assumptions, believe in rational expectations and that markets clear at all times (a vertical short -run AS curve. Business cycles are caused by efficient responses to real events not market failures.

John Muth
Robert Lucas