Routledge Dictionary of Economics, Second Edition
‘The study of the general methods by which men co-operate to meet their mate rial needs’ (Sir William Beveridge); ‘the study of mankind in the ordinary business of life’ (A.Marshall); ‘a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses’ (L.Robbins); ‘Economics investigates the arrangements between agents each tending to his own maximum utility’ (F.Y.Edgeworth); ‘Wants, Efforts, Satisfaction—this is the circle of Political Economy’ (Frederic Bastiat); ‘Not a gay science…what we might call…the dismal science’ (Thomas Carlyle).
First discussed by the Ancient Greeks, and the subject of general textbooks since the eighteenth century, economics has changed its focus as the concerns and techniques of its practitioners have developed. Originally the word meant ‘household management’ as the household was the basic economic unit of the time, including both farming and manufacturing activities. But the Greeks also, to their credit, raised the basic issues of VALUE, the nature of MONEY and the DIVISION OF LABOUR.
The word ‘économistes’ was first used by the French PHYSIOCRATS in the 1760s and in that century CANTILLON and SMITH produced the first comprehensive treatises on the subject. Smith, and his classical disciples, produced theories of growth, value, distribution and taxation.
CANTILLON, the PHYSIOCRATS and RICARDO introduced model building into economics. Although methodological debates were present in the subject as early as John Stuart MILL and SENIOR, particularly in the standard debate about deduction and induction, it was DUPUIT, the MARGINALISTS and EDGEWORTH who first encouraged a mathematical treattheory.
The hints of earlier writers have provided the foundations for present-day economists. Issues of welfare, raised by MARRSHALL and his follower PIGOU, led to a formal study of WELFARE ECONOMICS. The concern for measurement, first proposed by PETTY, has inspired the econometric testing of economic theories. The wider discussions of economics as ‘POLITICAL ECONOMY’ has linked economics to ideological positions in current policy debates, and later KEYNES produced a general theory of the economy which determined the postwar agenda for macroeconomic theory. The increased size of the economics profession (in the UK there were only sixteen professional economists in 1908) has inevitably led to subdivision of the subject, especially in more empirical areas.
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