by Richard Heinberg
This post is one in a series from respected guest commentators while Chris is on vacation with his family and at work on his new book. The original article has been amended by the author in response to input from the CM community.
Economies are the systems by which humans create and distribute wealth. Economics is a set of philosophies, ideas, equations, and assumptions that describe how all of this does, or should, work.
The first economists were ancient Greek and Indian philosophers, among them Aristotle (382-322 BC)—who discussed the “art” of wealth acquisition and questioned whether property should best be owned privately or by government acting on behalf of the people. Little of real substance was added to the discussion during the next two thousand years.
The 18th century brought a virtual explosion of economic thinking. “Classical” economic philosophers such as Adam Smith (1723–1790), Thomas Robert Malthus (1766–1834), and David Ricardo (1772–1823) introduced basic concepts such as supply and demand, division of labor, and the balance of international trade. As happens in so many disciplines, early practitioners were presented with plenty of uncharted territory and proceeded to formulate general maps of their subject that future experts would labor to refine in ever more trivial ways.
These pioneers set out to discover natural laws in the day-to-day workings of economies. They were striving, that is, to make of economics a science on par with the emerging disciplines of physics and astronomy.
Like all thinkers, the classical economic theorists—to be properly understood—must be viewed in the context of their age. In the 17th and 18th centuries, Europe’s power structure was beginning to strain: as wealth flowed from colonies, merchants and traders were getting rich, but they increasingly felt hemmed in by the established privileges of the aristocracy and the church. While economic philosophers were mostly interested in questioning the aristocracy’s entrenched advantages, they admired the ability of physicists, biologists, and astronomers to demonstrate the fallacy of old church doctrines, and to establish new universal “laws” by means of inquiry and experiment.
Physical scientists set aside biblical and Aristotelian doctrines about how the world works and undertook active investigations of natural phenomena such as gravity and electromagnetism—fundamental forces of nature. Economic philosophers, for their part, could point to price as arbiter of supply and demand, acting everywhere to allocate resources far more effectively than any human manager or bureaucrat could ever possibly do—surely this was a principle as universal and impersonal as the force of gravitation!
by jturbo68 
