Economics

Economics is a social science that studies how production, distribution, and consumption are organized. Economic views that connect to politics form the field of political economy. Since the beginning of capitalism, various schools of economics have developed, including classical political economy, Marxism, Keynesianism, and reactionary neoclassical economics.

Schools

Pre-capitalist economic views

Slavery

Ancient philosophers such as Plato and Aristotle considered slavery a necessity for society, and Plato included slaves in his ideal utopian society. Aristotle coined the term oikonomía (οἰκονομία), the basis of the modern word economics, to refer to the science of managing resources. He promoted a primarily natural (subsistence) economy combined with trade when necessary. He condemned profit-oriented trade and usury, viewing them as sources of unlimited wealth in contrast to agriculture and manufacturing.

In India, Buddhism promoted non-resistance to the ruling class and was used to defend slavery.

Feudalism

In China, Confucius viewed merchants as parasites that did not produce anything. He considered peasants and manufacturing workers to be necessary to society but believed they should be under the rule of scholar-officials.

One of the most influential philosophers of feudal Europe was Thomas Aquinas, who believed that feudalism was mandated by God and that everyone should stay in their proper position in the feudal hierarchy. He believed that commodities should be sold at "just" prices based on the labor used to produce them and the estate of the producer. Unlike ancient slave owners, he believed masters should not kill their serfs. Medieval theologians condemned usury at first until the Catholic Church began to benefit from it. Rebellious serfs were also deeply influenced by religion and quoted the Bible to justify their demands.

Mercantilist

Mercantilism was an early stage of bourgeois political economy and of the economic policy of the states in the era of the original accumulation of capital (15th–18th centuries); it reflected the interests of commercial capital when the latter was still linked to industrial capital.

The mercantilists considered that profit is created in the sphere of circulation and that the wealth of nations is based on money. Hence, the mercantilist policy tended to attract the country as much gold and silver as possible. Mercantilism considered that the source of wealth lies in foreign trade, and since it was the artisans who supplied the goods that were exported, the conclusion was reached that it was essential to promote artisan production. Capitalist production was in its beginnings and the ideas of the mercantilists were conditioned by the level of economic development of that time.

Mercantilism implies a set of economic theories and practices developed during the Modern Age. In this historical context, a significant association was observed between the national states, which sought ways to strengthen their political power, and the bourgeois class, responsible for the development of activities of a commercial nature. This long-term experience was of great importance for the primitive accumulation of capital.

• William Petty
• John Locke
• Jean-Baptiste Colbert
• Thomas Mun

In his time, the policy of mercantilism was progressive as it contributed to the development of the first large capitalist companies: manufacturing; it facilitated the progress of the productive forces, the victory of capitalism over feudalism. Mercantilism as a current of economic thought of the bourgeoisie is followed by the theory of the physiocrats.

Physiocracy

Physiocracy as an economic school appeared in the 18th century, as one of the manifestations of enlightened despotism, to which they adhered, opposing mercantilism, arguing that the wealth of nations was not measured by its accumulation in gold and silver, but by land and agricultural development, which provide a surplus between raw materials and what is produced, which would not occur in other activities, such as commerce or industry, which they considered sterile.

For this ideology, human life, both individual and social, should be governed by natural laws, following that order predetermined by a superior divine will, and therefore perfect, and not involve the State in economic life, but instead people should be able to carry out their activity freely (laissez faire). The role of the state was to ensure the right to education, the peaceful enjoyment of liberties and the carrying out of public works. Within the natural social order, the social class of peasants was the most important, since it was the only one that originated wealth. The taxes levied on rural exploitation were very low.

• François Quesnay
• Honoré Gabriel Riqueti

The father of classical economics, Adam Smith was greatly influenced by the physiocrats.

Classical

Classical political economics emerged during the era of bourgeois revolutions and discredited the old economic ideas of the feudal aristocracy. It played a progressive role against feudalism and followed the labour theory of value but included limitations due to its lack of historical materialism. The classical political economists never questioned the historical origin of money, capital, and commodities.

• David Ricardo
• Adam Smith

Vulgar (post-classical bourgeois)

As the class struggle intensified, bourgeois economists rejected the scientific aspects of classical economics while upholding its flaws. They replaced the labour theory of value with unscientific theories including the utility theory of value, supply and demand, or production costs. While claiming to defend "freedom of labour," they attacked trade unions and strikes. Vulgar economics became the dominant form of mainstream economics during the 1830s and 1840s.

• Frédéric Bastiat
• Henry Charles Carey
• John Bates Clark
• Thomas Malthus
• Alfred Marshall
• Jean-Baptiste Say

Austrian

See main article: Austrian economics

Austrian economics is a form of vulgar bourgeois economics that bases economic laws on subjective psychology instead of social relations. It promotes a marginal utility theory of value.

• Eugen Böhm-Bawerk
• Carl Menger
• Friedrich Wieser

Historical

The historical school of economics completely denies the existence of economic laws and instead focuses on separate historical facts and often supports reactionary policies. Many of its followers praised the German monarchy.

• Bruno Hildebrand
• Wilhelm Georg Friedrich Roscher
• Gustav Schmoller

Keynesian

During the Great Depression, John Maynard Keynes proposed an idealist explanation for unemployment and economic crises. Keynes believed the state should decrease the wages of workers and increase capitalist profits in order to increase employment.

Social

Unlike the Austrians, the social school of economics deals with social relations between people. It sees these relations as idealistic legal relations instead of material relations and considers capitalist activities to be service to society.

• Adolf Ammon
• Othmar Spann
• Rudolf Stolzmann

Petty-bourgeois

A petty-bourgeois economic trend began in the early 19th century and criticized capitalism while idealizing the small-scale production of the peasantry and artisans. These economists promoted utopian socialism and failed to see the inevitable growth of capitalism and expropriation of the peasantry.

• Pierre-Joseph Proudhon
• Jean Charles Léonard de Sismondi

Marxist

Karl Marx and Friedrich Engels turned socialism from utopianism into science. They applied dialectical materialism and improved upon the basis laid by Smith and Ricardo to turn economics into a proletarian science. Marx and Engels published their discoveries in Capital, which consisted of three volumes released between 1867 and 1894. They based their analysis on surplus value and exposed the fundamental contradiction between bourgeoisie and proletariat.