ECN-305 Lecture Notes (Part 1)

ECN-305 Lecture Notes (Part 1) - University of Wisconsin...

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Lecture Notes The Worldly Philosophers Introduction Worldly activity: drive for wealth Economics: search for order and meaning of social history Age of economists: last 200 years Introduction Economists: powerful ideas (thus the importance of economics) Examples: “shattered empires”, “exploded continents”, “undermined political regimes” Plan: “gradual construction of the intellectual architecture of much of contemporary life” The Economic Revolution Problem: survival as a member of a social group (dependence on cooperation but with a self-centered nature) Primitive society: survival is determined by the environment and norms of kinship and reciprocity Modern society: unpredictability The Economic Revolution Solution:
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Tradition Authoritarian rule Market system guided by self-interest How things could be done under the decentralized market system? This is the central question of economics The Economic Revolution Previous history: France, 1305: fairs with small volume of merchandise Germany, 1550: expansion of markets, but with different weights and measures Boston, 1639: church condemns profit (in England the first trading company is created and in France the government regulates industry) Conclusion: system based on personal gain is incipient. Economy is intertwined with religion and politics The Economic Revolution Profit motive and its social sanction: new Wealth and trade is pursued by just a few individuals Work is the natural way of life; it is the end, not the means Exchange and markets, although existing for thousand years, were not widespread Market system: self-reproducing mechanism for sustaining and maintaining an entire society The Economic Revolution Factors of production: didn’t exist as such (no market for land, labor, and capital) Land: core of social life (prestige and status) Labor: duty, not a commodity (apprenticeship was regulated by Guilds in cities) Capital: private wealth driven by safety, not risk and change Medieval world: ruled by custom and tradition (no role for markets meant no role for economics, only ethics and politics)
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The Economic Revolution Revolution: rise of market as a self-reproducing, self-sufficient world Resistance: France: innovations depended on the judges of the town, who imposed fines England: expropriation of common land (enclosures) to produce wool Land became private property Peasants: proletarian, beggar, robber, pauper. Alternative: parochial workhouses The Economic Revolution Forces behind change: National political units: centralized monarchies, laws, standardized measures and currencies, support for foreign exploration of treasures Decay of religious spirit, notwithstanding the rise of Protestantism (new attitude towards work and wealth: acquisitiveness became a virtue) Material changes: growth of towns and transportation, (with increased use of money and expansion of markets),
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This note was uploaded on 05/09/2008 for the course ECN 305 taught by Professor Milan during the Spring '08 term at Rhode Island.

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ECN-305 Lecture Notes (Part 1) - University of Wisconsin...

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