History of Economic Thinking - Essay Example

Aristotle looked at the ways of wealth acquisition questioning whether it should be privatized or publicized because of its effects. The French, later in the medieval era, was against mercantilism. Mercantilism, also known as commercialism, is the system through which trade was encouraged to amass wealth. That is more exports than imports to increase the quantity of gold in stores.

The French vied this with little regard and their works inspired the Scottish philosopher Adam Smith, who is considered the “father of Economics.” Smith took their ideas expounding them into a thesis on how economies should be driven versus how they were currently being driven. He believed that completion in itself was self-regulating and the government should be involved in business unless it was to support free market trade. In doing so, many of the resultant economists’ works were in one way or another other in reaction to his thesis.

From Smith’s work, Marxism came into play. Karl Marx believed that production was the pillar of any economy. This was influenced by Thomas Malthus, who also received Smith’s theory negatively claiming that the food supply was not able to sustain the rapidly growing population. Marx was convinced that capitalism was very unstable and would lead to a collapse in the economy brought about by the different classes brought about by it. He failed to see the flexibility of capitalism (Beattie 4) where investing brought a mixed class of workers and owners who held each other’s interests thus a balance.

However, he was able to predict the growth of businesses. He claimed they would grow larger and more powerful. Keynesian economics largely influenced by Marxism led to the development of the mixed economy. Marx saw capitalism’s inability to allow self-correction as a flaw whereas John Keynes saw this as a chance for the government to step in leading to the basic principles of macroeconomics. Leon Walras of France brought with him a new way of speaking economics. Through his models and theories, he influenced economics to be regarded more statistically and mathematically rather than conventional theories.

Alfred Marshall took mathematical modeling further introducing concepts such as economies of scale among others that are not fully understood (Beattie 5). Its economist Milton Friedman’s work resulted in the United States economy maturing to where it is. He argued that as the economy grew the removal of redundant controls had to be removed such as antitrust legislation (Beattie 8). Rather than increasing the Gross Domestic Product (GDP), he suggested the focus on consuming less of the economy’s capital.

This would allow more to remain in the system, thus allowing operation without government interference. The above has resulted in the above developments in economics, and this has resulted in two main streams of economic thought: Practical and theoretical. Practical thinking is governed by fact, practice and action. Here the odds are weighed and decisions are made based on the consequences that favor the situation. Theoretical thinking involves the use of mathematics and models to test concepts.

In the end, a combination of the two allows one to understand economics better and help develop policies to help govern it for beneficial purposes.