Economics 493/593 - History of Economic Thought

Class Materials for Lecture 2 on Thursday 1/12/12

Brief Outline of Topics Covered in Lecture 2 (Wednesday 1/6):

Mercantilism (ch. 2) 
Physiocrats (ch. 2)

Jean-Baptiste Colbert

Francois Quesnay

Anne Robert Jacques Turgot

    Sir William Petty

Additional reading:

The Regulations of the Weavers' Gild of Stendal, 1233

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The weavers' law, granted by the city of Stendal, regulated the number of spindles to be used by a craftsman, membership of the gild, and the quality of the work.

The Consuls of Stendal . . . wish it to be known that we have taken the advice of our leading citizens and officials, and have passed the following decree:

1. If any of our burgesses should wish to practice the craft of weaving he ought to have one spindle or as many as two, and he should place them in his house, and for every spindle he should pay three solidi on entry into the fraternity. But if he should not pay the denarii within the said time and he afterwards cease to be of the craft he cannot regain it except with twenty-three solidi.

2. Whoever is not of the fraternity is altogether forbidden to make cloth.

3. But if any brother should make cloth against the institutions of the brethren, and of their decrees, which he ought on the advice of the consuls to observe, he will present to the consuls by way of emendation one talent for each offense or he will lose his craft for a year.

4. But if any one be caught with false cloth, his cloth will be burned publicly, and verily, the author of the crime will amend according to justice.

5. Should any foreigner wish to practice this craft he will first acquire citizenship and will afterwards enter into fraternity with the brethren with twenty-three solidi.

6. But if the heir of any craftsman cease to exercise his father's craft, he will pay three solidi on entrance.

7. Also we decree that every brother will dry his cloth where he can.

8. We concede also that if any one have this craft and cannot set up his implements by any chance, let him prepare and make his cloth on the spindle of another.

9. If any one should marry a widow whose husband was of the craft, he will enter the fraternity with three solidi.

10. And every one who would be of this craft will receive it in the presence of the consuls.

11. Whatever is collected in fines and received in entrance fees will be put to the use of the city, and be presented to the consuls....

Class Materials for Lecture 1 on Tuesday 1/10/12

Brief Outline of Topics Covered in Lecture 1 :

• Introduction (ch. 1)
• The transition from feudalism to capitalism (ch. 1)
• Mercantilism (chs. 1 and 2)

Additional reading:

Serfs Up!, by Paul Krugman: James Surowiecki writes fine columns, and  this one is no exception. But he's got the story of the effects of the Black Death on serfdom backwards. He - and anyone else curious about history - should read  Evsey Domar's  classic 1970 paper "The causes of slavery or serfdom: a hypothesis." (Sorry, doesn't seem to be available online.)

Here's what Surowiecki says: "The Black Death helped undermine feudalism. The population decline was so severe that the individual’s labor grew more valuable, which enabled serfs to abandon their lords and become tenant farmers or urban workers. " That sounds plausible, but it's not the way it happened. According to Domar, serfdom actually withered away before the Black Death, as European population grew close to its Malthusian limit. The puzzle is why serfdom wasn't reinstituted after the Black Death.

Domar was motivated by his knowledge of Russian history. Serfdom in Russia, he knew, wasn't an institution that dated back to the Dark Ages. Instead, it was mainly a 16th-century creation, contemporaneous with the beginning of the great Russian expansion into the steppes. Why?

He came up with a simple yet powerful insight: there's no point in enslaving or enserfing a man unless the wage you would have to pay him if he was free is substantially above the cost of feeding, housing, and clothing him.

Imagine a pre-industrial society where population is pressing on limited land supplies, and the marginal product of labor - and hence the real wage rate under competitive conditions - is barely at subsistence. In that case, why bother establishing property rights in human beings? It costs no more to hire a free worker than to feed an indentured laborer. Indeed, by 1300 - with Europe very much a Malthusian society - serfdom had withered away from lack of interest.

But now suppose that for some reason land becomes abundant, and labor scarce. Then competition among landowners will tend to push up wages of free workers, and the ruling class will try, if it can, to pin peasants down and prevent them from bargaining for a higher standard of living. In Russia, it was all about gunpowder: suddenly steppe nomads were no longer so formidable, and the rich lands of the Ukraine were open for settlement. Serfdom was an effort to keep peasants from taking advantage of this situation. (And if I've got it right, those who were venturesome enough to run away and set up outside the system became Cossacks.)

Meanwhile, the New World opened in the west. Sure enough, the colonizing powers tried various forms of indentured servitude - making serfs of the Indians in Spanish territories, bringing over indentured servants in Virginia. But eventually they hit on a better solution, from their point of view: importing slaves from Africa.

Here's the puzzle. In Europe circa 1100, with population scarce, serfdom was useful to the ruling class. By 1300 it wasn't, and had been allowed to drift away. But after 1348 it should have been worthwhile again. Yet it wasn't effectively reimposed. There were attempts to restrain wages and limit labor mobility, as well as attempts to tax the peasants (Wat Tyler's rebellion fits into all this.) But all-out feudalism didn't return. Why?

And an even bigger question: why hasn't indentured servitude made a comeback in the modern era? Yes, I know, human rights and all that - but if it was profitable to have indentured servants in the modern world, I'm sure that Richard Scaife's think tanks would have no trouble finding justifications...

Anyway, have to get back to real work. But try to find a copy of Domar's paper and read it.

Syllabus for Winter 2012

Course: Economics 493/593: The Evolution of Economic Ideas

Professor: Mark Thoma
Office/Hours: PLC 471 on T/Th 3:30-4:30 p.m.
Phone/Email: (541) 346-4673, mthoma@uoregon.edu
Class Web Page: http://economistsview.typepad.com/economics493/

Text: History of Economic Thought: A Critical Perspective, by E.K. Hunt and Mark Lautzenheiser.

Prerequisites: Economics 311 and 313, or the equivalent.

GTF/Office/Hours: Nicholaus Hockensmith, PLC 405, T/Th 10:30-11:30

Tests: There will be a midterm and a final. The midterm will be given on Tuesday, February 14^th, and the final will be given on Thursday, March 22^nd at 1:00 p.m.

Homework: Problem sets will be assigned periodically. These are graded, and exam questions will be based, in part, upon the problem sets.

Grading: The midterm is worth 35%, the homework counts as 15%, and the final is worth 50%.  Grades will be assigned according to your relative standing in the class.

Tentative Course Outline:

Introduction	Ch. 1
The Mercantilist School	Ch. 2
The Physiocratic School	Ch. 2
The Classical School ‑ Adam Smith	Ch. 3
The Classical School ‑ Thomas Malthus	Ch. 4
The Classical School ‑ David Ricardo	Ch. 5
The Classical School ‑ Bentham, Say, and Senior, and Mill	Ch. 6
The Classical School ‑ Mill	Ch. 8
The Rise of Socialist Thought and Marxian Socialism	Ch. 9
The Marginalist School ‑ Jevons, Menger, and Walras	Ch. 10
The Neoclassical School ‑ Marshall and Clark	Ch. 11
The Institutionalists - Veblen (time permitting)	Ch. 12
Neoclassical Welfare Economics - Edgeworth	Ch. 14
The Keynesian School ‑ Keynes	Ch. 15
More Recent Developments	Ch. 17

Course Materials for Winter 2010

Course materials for the last time the course was offered (Winter 2010) are available here.