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Adam Smith is called the "father of modern economics" and his book The Weath of Nations, a fundamental work in the field of economics, is considered the first modern book on economics. In addition, economics first became a study in 1776 when The Wealth of Nations was published.

Why is the word "modern" used in both descriptions? I know that individuals throughout the centuries and even Aristotle have dabbled with some economic theories, but I do not recall anyone making any significant contributions to economics before Adam Smith.

Were there important contributions to economics made before 1776? If not, then why do we use the term "modern" even if there was no one in the study previously?

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French Physiocrats –  Steve S Nov 20 at 3:36
    
@SteveS Explain. Who were they? When did they live? What did they do? What were their major accomplishments? Were they the only pre-Smith group to study economics or just one of many? Also, instead of writing another comment, please write it as an answer. In order for this to be a good beta, we need questions to have thorough answers, and we need the beta to register that at least 90% of the questions have answers. Thanks! –  Mathematician Nov 20 at 4:51
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I'll incorporate this into an answer later if I'm up to it, but the first person to formally write about economics was probably Aristotle. One assumption he made was that all trade is neutral (he thought there was no mutual benefit). There were later economists, in particular, one Arabic economist that lived a few centuries before Smith (I forgot his name) contributed to the field with a few principles that Smith would later build upon. Murray Rothbard wrote his first volume on the history of economics discussing economic thought before Smith. –  rosenjcb Nov 20 at 5:07
    
Yeah, yeah--you can definitely go back to Aristotle (and, for that matter, plenty of religious texts will at least implicitly cover economic topics like "usury")... @rosenjcb: I was going to mention Murray Rothbard, too, but you beat me to it! (I got distracted)... Mathematician: I know, I know--I was hoping I'd inspire someone else's response (I mean, it is kind of a loaded question)... Also, (frankly) I couldn't come up with a particularly compelling answer on my own so I was going to consult a few books and see what they had to say... –  Steve S Nov 20 at 5:29
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I did not vote to close the question, but I think the question is at risk of being put on hold because it contains two different questions which would deserve to be asked separately : 1) Were there any "significant contributions to economics" before Smith? 2) What is so different in pre and post Smith economics that we call one modern and the other not? –  Martin Van der Linden Nov 20 at 18:14

4 Answers 4

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Direct predecessors to Adam Smith within the classical tradition (maybe a more useful distinction than modern) include Hume, Locke and Dudley North. Before the classical economists, there were the physiocrats (18th century), such as Francois Quesnay and Turgot. The physiocrats emphasised agricultural productivity as a driver of the wealth of nations. They were contemporaneous with, but also preceded by mercantilists (16th century - 18th century). Mercantilists mostly concentrated on creating a favorable balance of trade, which would allow reserves to accumulate in the possession of an absolute ruler. They emphasized government control of the economy as an extension of state power. The mercantilists had a lot of influence in the policies of nations, for instance in the form of Colbert. Famous writers might include de Malynes and Mun. Mercantilists were one of the main targets of Adam Smith's critique. The distinction being that mercantilists believed the quantity of reserves to be the ultimate source of a nation's wealth and so emphasized protectionism, while Smith focused more on trade allowing inputs to become more productive. In doing so he was very influenced by Quesnay to whom he had considered dedicating The Theory of Moral Sentiments. The inclusion of gains from trade, self-interest and competition leading to increased productivity, and division of labor distinguishes Smith from these earlier writings and forms the link to "modern" economics.

There were also "economists" long before the 16th century, the connections between them and economics is we understand it tends to become more tenuous the farther back you go. Iba Khaldun is a good example, Aristotle (or more likely one of his students) literally wrote a book called "Economics" (this deals with economics in the literal sense of management of a household), you could also talk about Hesiod's "Works and Days" (a very old text indeed) being an example of early economics.

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There exists the... "Adam Smith of the Arabs": Ibn Khaldun. He lived during the 14th century. The work of his that focuses on Economics is Muqaddimah translated in English in 1958 as "The Muqaddimah: An Introduction to History".

He advocated less involvement of the state in production and trade activities, which should focus instead on stabilization policy. He also argued in favor of a reduction in military expenses, in order to invest more on education and technology. He also pointed to the increased efficiency that comes from specialization of labor.

Don't all these sound eerily familiar? (400 years before Adam Smith). For a summary of his economic theories, see here.

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That's his name! Ibn Khaldun! –  rosenjcb Nov 20 at 19:16

The wealth of nations is not the source of relatively modern economics.

John Locke in two books in the 1670's has priority on the supply and demand determining price, and arguments that show the harmfulness of price controls in the same way as we do today. His philosophy was later written to justify his political views!

Lord North explained mutual gain to exchange and price coordination.

Cantillon explained inflation effect on price and supply and demand price determination as auction rationing, and finally, presented the entrepreneur concept.

Condilliac discovered opportunity cost, in the appendix to his theory of sensation, the concept of utility as source of value, and discussed the general idea behind decreasing marginal utility, the water and diamond paradox (which Smith failed to solve).

Adam Smith is mostly famous for the first eighty pages of the first volume of wealth of nations, because this is the clearest explanation of division of labor gains and reasons for peaceful social cooperation until the early nineteenth century.

Both Condillac and Smith referred to Cantillon, who in turn based his work on that of Locke.

The physiocrats mostly had their own theories based on land and labor as major sources of value, and these theories did not survive criticism, except where they followed Cantillon.

The first Western economist was Copernicus, who wrote an essay against inflation (he argued that it was more destructive than war and plague, but preferable to death). One can find this essay, also discussing prices, in his collected works, both surviving versions translated.

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For our purposes, "traditional" society refers to an agricultural society. "Modern" economics, at least as understood up to the end of the twentieth century, is the hallmark of an industrial society. Adam Smith was arguably the first economic writer to write about such an economy. His work described how improvements in manufacturing processes (e.g., the division of labor) could not only improve those processes, but the efficiency of society as a whole. It foreshadowed the mass consumption society (a modern construct), and applied to the economies of whole nations, not just individuals.

Adam Smith's "Wealth of Nations" is a blueprint for a modern industrial society. It was actually a little bit ahead of its time, meaning that probably "no one" before him would treat the same subject matter. (By 1776, "everyone" could see the industrial revolution coming, including the inhabitants of 13 British colonies on the far side of the Atlantic, or "pond," but it hadn't yet arrived.) The publications of earlier writers discussed mainly the impact of agriculture on society. They referred to a "less modern" world than one where industry dominates the economy.

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