Political Economists: Adams Smith, Karl Marx, John Stuart Mills

Apr 2014
189
New York, U.S.
Ok answer this precisely: Was Karl Marx the first individual to look at economic causes of historical events thereafter causing historians to do the same? Yes or No?
No.
But he was the one who had the greatest influence on the future development of economic history as a serious form of historical inquiry.
 

VHS

Ad Honorem
Dec 2015
4,733
Florania
as far as I know , modern economics started in the Spanish university of Salamanca

"In the sixteenth and early seventeenth centuries, clerics gave lectures at the University of Salamanca on such topics as the varying purchasing power of money, the morality of money, and how price is determined. "
Francisco de Vitoria (1485-1546) is the most proeminent in classic medieval dialectic he used his predecessor thinking in an iterative dialogue
on the problem of price , most of their inquiries was of a mercantile nature , the crux of the discussion being the moment of exchange

"They went on to explore almost all aspects, moral and theoretical, of economic science. For a century, these thinkers formed a mighty force for free enterprise and economic logic. They regarded the price of goods and services as a consequence of the actions of traders. Prices vary depending on the circumstance, depending on the value that individuals place on goods. That value in turn depends on two factors: the goods’ availability and their use. The price of goods and services are a result of the operation of these forces. Prices are not fixed by nature, or determined by the costs of production; prices are a result of the common estimation of men.
"
Martn de Azpilcueta Navarrus (1493-1586), a Dominican monk, the most prominent canon lawyer of his day, and eventually the adviser to three successive popes.
Using reasoning, Navarrus was the first economic thinker to state clearly and unequivocally that government price-fixing is a mistake.
When goods are plentiful, there is no need for a maximum-set price; when they are not, price control does more harm than good.
In a manual on moral theology (1556), Navarrus pointed out that it is not a sin to sell goods at higher than the official price when it is agreed to among all parties.

Navarrus was also the first to fully state that the quantity of money is a main influence in determining its purchasing power.
“Other things being equal,” he wrote, “in countries where there is a great scarcity of money, all other saleable goods, and even the hands and labor of men,
are given for less money than where it is abundant.”

during the "Silver age of Spain the country became poorer as the New World silver was pouring in , learned men discussing this contradiction became known as " Economistas"
they were the butt of ferocious jokes

Jean Baptist Colbert , minister of finances from 1665 to 1683 believed that trade was a nearly zero sum game and developed protectionism theories
government investment to develop import replacement industries
French in the 18th century developed mercantilism with charts of money flows and the first attempt ( how French ) to quantifies the economic process


There is absolutely nothing wrong with pursuing an intellectual endeavor from past thinkers ,
it doesn't mean the new theories are void of interest , even if they are not fruitful

Adams Smith theory presuppose an infinity of sellers to an infinity of buyers both in a perfectly informed situation
he put profit as the main motor of trade , that had been said for century ,
his "invisible hand" is the biggest intellectual dodge in the field

Marx main contribution is to identifies the labor component as the main source of the margin of profit
all the industries relocating to places where the labor is cheaper would agree with him
Spain might have the headstart in theoretical economics; in practice, its wealth and influence waned soon after loots from
the Americas dried up.
What gave Britain the headstart in both international trade and manufacturing?
Adams Smith is way better known than the Spanish scholarship you mentioned, why?
 

sparky

Ad Honorem
Jan 2017
5,338
Sydney
The influence of Marx was directly related to its adoption by a political movement as a theoretical backbone
the result is that the many who did not like the " Marxist-Leninist "power structure also rejected Marx
it stoped being an economic theory and became a touchstone of political correctness on both sides
 
Jul 2019
122
Pale Blue Dot - Moonshine Quadrant
Spain might have the headstart in theoretical economics; in practice, its wealth and influence waned soon after loots from
the Americas dried up.
What gave Britain the headstart in both international trade and manufacturing?
Adams Smith is way better known than the Spanish scholarship you mentioned, why?
I suspect the best answer to your last question is that Smith's work was pretty consistently adopted at an important point in time when errors of Mercantilism and the tendency toward statism and war that resulted from it caused it to be at least partially discarded in England.

As to your first question, I think that trade occurred at least partially because as an island nation England had to have a navy for state-centered power struggles and that led naturally to trade.

Manufacturing came about in no small measure because it England’s Protestant religion where immediate consumption had a clear tinge of sinfulness. Thus savings and capital formation were enabled in a greater degree than was the case in Catholic countries. In nations of both religions there was an aristocracy that accumulated wealth (often by means of which we would not approve) but Protestants were more likely to refrain from immediate dissipation of that wealth, resulting in capital formation.

Emil Kauder in his A History of Marginal Utility Theory went deeply into this last point.

Kauder:

Calvin and his disciples placed work at the center of their social theology ... All work in this society is invested with divine approval. Any social philosopher or economist exposed to Calvinism will be tempted to give labor an exalted position in his social or economic treatise, and no better way of extolling labor can be found than by combining work with value theory, traditionally the very basis of an economic system. Thus value becomes labor value, which is not merely a scientific device for measuring exchange rates but also the spiritual tie combining Divine Will with economic everyday life.

Of course, in the above quote we can see the origins of the erroneous Labor Theory of Value that Ricardo developed and Marx took the point of reductio ad absurdum. In doing so Marx opened the door for Marginal Utility as a far more correct explanation of value.

It is worth noting that Marx’s errors in his value theory were just a case of him taking Ricardo’s errors (that some believe Adam Smith shared) to their logical conclusion. He did not cook up the mistakes himself; he just propagated them. If all value does come from labor then Marx was right and capital truly is just appropriated labor.

Kauder was one of those who saw Adam Smith as a regression in economics. Kauder asserted that the dominant economic thought in France and Italy during the seventeenth and especially the eighteenth centuries emphasized subjective utility and relative scarcity as the determinants of value, of which, In Kauder's view, Smith was largely unaware.
 
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Jul 2019
122
Pale Blue Dot - Moonshine Quadrant
Whereas Marx’s theory of economics was faulty, his main influence was to develop a whole new way of studying history.
Marx’s main theory was that all history is determined by economic factors. This new idea caused future historians to always include the economic factors that caused historical events.
This discussion on Marx is hampered by the fact that economics as a formal undertaking only started with the Physiocrats, Turgot, and Adam Smith, followed by Jean-Baptiste Say, David Ricardo, and Thomas Malthus. Earlier commentators offered less systematic ideas. Murray Rothbard in his Economic Thought before Adam Smith goes back to the Greeks, through the Middle Ages, the Scholastics at Salamanca, the Mercantilists, Dudley and Roger North, Richard Cantillon, David Hume, and Turgot – who Rothbard complimented repeatedly.

Cantillion actually has a claim to a systematic approach that pre-dated Adam Smith. His Essai was read and supported by Hume and was one of the few books actually cited by Adam Smith.

So naturally Marx’s fanatical and false deterministic focus on economics would garner more attention than earlier individuals. But it was Marx’s erroneous claim of economic determinism that has caused so many to claim that he was the first to seriously emphasize the economic effects on history – although it must be admitted that because of him Marxist historians often do a better job in integrating economics and history.

But Marx was far from the first to do so in a serious way and unlike those less fanatical personalities who commented on history with an economic awareness, Marx, influenced by Hegel, embraced a historical determinism that soon exposed his mistakes in both economics and his projections of the future.

Thucydides viewed the political behavior of individuals and the subsequent outcomes of relations between states as ultimately mediated by, and constructed upon, the emotions of fear and self-interest. In reference to the cause of the Peloponnesian War was he stated:" The growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable." Of course Athens mercantile power that threatened Sparta, not its military prowess.

Polybius writing in the generation before Caesar’s birth clearly had a view of economic class analysis:

“…as soon as…the democracy has descended to their children’s children, long association weakens their value for equality and freedom, and some seek to become more powerful than the ordinary citizens; and the most liable to this temptation are the rich. So when they begin to be fond of office, and find themselves unable to obtain it by their own unassisted efforts and their own merits, they ruin their estates, while enticing and corrupting the common people in every possible way. By which means when, in their senseless mania for reputation, they have made the populace ready and greedy to receive bribes, the virtue of democracy is destroyed, and it is transformed into a government of violence and the strong hand. For the mob, habituated to feed at the expense of others, and to have its hopes of a livelihood in the property of its neighbors, as soon as it has got a leader sufficiently ambitious and daring, being excluded by poverty from the sweets of civil honors, produces a reign of mere violence. Then come tumultuous assemblies, massacres, banishments, redivisions of land; until, after losing all trace of civilization, it has once more found a master and a despot.”

The Roman historian Livy noted one of the Roman Secessio plebis (basically a general strike), which was an effective strategy in the Conflict of the Orders because of the strength in numbers; plebeian citizens made up the vast majority of Rome's populace and produced most of its food and resources.

Giambattista Vico, although little focused on material matters, described his ideal eternal history most colorfully when he gave us this axiom: “Men first felt necessity, then look for utility, next attend to comfort, still later amuse themselves with pleasure, thence grow dissolute in luxury, and finally go mad and waste their substance.” These are certainly economic notions.

The Scottish Enlightenment with Henry Home (Lord James Kames 1696 –1782) offered the first full-blown theory of human progress with four distinct stages of growth, based on how human beings make their living (what later Marx would call “the means of production”)

1. Hunting and fishing
2. Animal Domestication
3. Agrarian Stage
4. Commercial Stage

Turgot, similar to Lord Kames, also developed the four-stage theory of economic and social development from hunter-gatherer, to pastoral, to agricultural, and finally to the peace and prosperity of commercial or market society.

Turgot, in addition to his economic insights, employed an evolutionary theory of development in which society naturally progresses, evolving in a sequence of regular stages, the last of which is the contemporary commercial world of capitalism. His idea was of a linear progressive advancement of mankind although his experiences of his own era made clear that, contrary to Marx later, there was nothing deterministic about progress.

Marx was far from the first to think seriously about economics and history. He was just the most fanatical.

It can be argued that even after Marx, economic factors remain under-recognized – with the American Civil War, hyper inflations in Russia, Germany and China being cases where economics had larger than often recognized effects. In addition, the economic decay of the middle class asa driver in the rise of Mussolini, Hitler, and also the ongoing destruction of the American currency and the decline of its own middle class all being pretty obvious examples of economics leading to populist backlash that are only occasionally framed in economic terms.
 

Port

Ad Honorem
Feb 2013
2,093
portland maine
Which social science did he excel in, if his history and economics were failures?
Marx had the greater impact. Although most of the countries that adopted his economic r every country that adapted it either failed or adapted the theory, as China

So many people have been impacted, as in being killed imprisoned, wars. Both Marx and Adm Smith are still discussed, used politically as adjectives.