XVII – Leon Walras – History of Economic Thought; Part 1

Leon Walras was a French economist.  He was one of the three men who championed the subjective theory of value.  His major works were the two volumes of Elements of Pure Economics.  Walras also focused on general equilibrium analysis, which looked at every market, as opposed to partial equilibrium analysis, which looks at a few individual markets.


XVI – William Stanley Jevons – History of Economic Thought; Part 1

William Stanley Jevons was an English economist and one of the three men who pioneered the Marginal Revolution.  In fact, he was the first of the three to discover the subjective theory of value.  His major works were A General Mathematical Theory of Political EconomyThe Coal QuestionElementary Lessons on LogicThe Theory of Political Economy, and The State in Relation to Labor.  In The Coal Question, he writes how (in his time) coal is probably the most important substance in their modern civilization.  However, since the supply of coal is finite, it will get pricier and pricier to mine.  He then presents the “Jevons Paradox”: if you increase the efficiency of coal-burning machines, the rate of consumption of coal will go up.  People can now do the same amount of work with a smaller amount of fuel, thus making the use of that fuel more cost-effective.

XV – Carl Menger, Part 2 – History of Economic Thought; Part 1

Carl Menger also developed a theory of the origin of money.  There are no records indicating a political leader created it, and that would have been a pretty huge achievement to leave off the books.  It also would have been pretty hard to convince other people to just start randomly using money.

Menger’s theory was that, when a man wanted to trade a specific illiquid good for a different good, he could have traded the illiquid good first for a good that was more liquid.  He would have used the more liquid good as a stepping stone to trade for the good that he originally wanted, since, because it is more liquid, the chances went up of the man finding a trade for the good he really wanted.  Because of the man’s willingness to use the more liquid good as a stepping stone, the more liquid good became even more marketable.  Eventually, a good or goods became so marketable that they could be used for almost every transaction.  This became money.

XIV – Carl Menger, Part 1 – History of Economic Thought; Part 1

Carl Menger was one of the three men who individually developed the subjective theory of value and began the Marginal Revolution.  His major works were Principles of EconomicsThe Errors of Historicism in German Economics, and “On the Origin of Money” in Economic Journal.

The Marginal Revolution was the discovery of the subjective theory of value and the transition from the labor or cost theory of value to such.  There were three men who individually completely developed the subjective theory of value at around the same time: William Stanley Jevons, Carl Menger, and Leon Walras.

Carl Menger engaged in a “battle over method” with Gustav von Schmoller, a member of the German historical school of economics.  The German school held that there were no general economic laws, that everything was too complicated to derive principles, and that everything depended on the specifics of the time.  Menger, on the other hand, held that the laws of cause and effect held true for all sciences, not just the natural ones.

XIII – Karl Marx – History of Economic Thought; Part 1

Karl Marx was the philosopher and economist who developed Communism.  His major works were The Poverty of PhilosophyCommunist ManifestoA Contribution to the Critique of Political Economyand Das Kapital.  He had a close partnership with Friederich Engels, with whom he wrote the Communist Manifesto.  Marx viewed history as a giant class struggle, which, in his time, was the struggle between two specific classes: the bourgeoisie and the proletariat.  The bourgeoisie were the rich capitalists who exploited the proletariat, the hired workers who sold their labor to live.  Marx viewed Communism as a scientific socialism as opposed to a utopian socialism.  He held that communism would naturally and necessarily come about after the peak of capitalism, as capitalism came from feudalism.

XII – John Stuart Mill – History of Economic Thought; Part 1

John Stuart Mill, son of James Mill, was born in London.  He was a child prodigy who then went on to become an influential economist and political theorist, and he was also the first member of Parliament who was for women’s suffrage.  Some of his major works were Essays on Some Unsettled Questions on Political EconomyPrinciples of Political EconomyOn LibertyUtilitarianismAugust Comte and Positivism, and The Subjection of Women.  His Principles, where he expounded upon David Ricardo’s system, was the bestselling book on economics for forty years.  Mill also brought the word “entrepreneur” into usage in the English-speaking economic world.

XI – The Great French Classicals, Part 2: Frederic Bastiat – History of Economic Thought; Part 1

Frederic Bastiat was a French economist.  His major works were Economic SophismsThe Law, and Economic Harmonies.  He was one who noticed how necessary it is to, seeing the obvious effects of legislature, contrast them with the long-term effects.  Bastiat also wrote the “Candlemakers’ Petition”, satirizing protectionism.