History of economic thought

The history of economic thought deals with different thinkers and theories in the subject that
became political economy and economics from the ancient world to the present day. It encompasses
many disparateschools of economic thought. Ancient Greek writers such as the
philosopher Aristotle examined ideas about the art of wealth acquisition, and questioned whether
property is best left in private or public hands. In medieval times, Scholastic scholars such as Thomas
Aquinas argued that it was a moral obligation of businesses to sell goods at a just price.
Since medieval times, economics was developed almost exclusively in the West until the 20th century.
Scottish philosopher Adam Smith is often cited as "the Father of Modern Economics" for his treatise The
Wealth of Nations (1776).[1][2] His ideas built upon a considerable body of work from predecessors in the
eighteenth century, particularly the Physiocrats. His book appeared on the eve of the Industrial
Revolution, with associated major changes in the economy.[3]
Smith's successors included such classical economists as Thomas Malthus, Jean-Baptiste Say, David
Ricardo, and John Stuart Mill. They examined ways the landed, capitalist, and laboring classes produced
and distributed national output and modeled the effects of population and international trade. In
London, Karl Marx castigated the capitalist system, which he described as exploitative and alienating.
From about 1870, neoclassical economics attempted to erect a positive, mathematical, and scientifically
grounded field above normative politics.
After the two world wars of the early twentieth century, John Maynard Keynes led a reaction
against governmental abstention from economic affairs, advocating interventionist fiscal policy to
stimulate economic demand and growth. With a world divided between the capitalist first world,
the communist second world, and the poor of the Third World, the post-war consensus broke down.
Others like Milton Friedman and Friedrich Hayek warned of The Road to Serfdom and the unworkability
of socialism, focusing their theories on what could be achieved through better monetary policy and
deregulation.
As Keynesian policies seemed to falter in the 1970s, there emerged New Classical Macroeconomics,
developed by prominent theorists including Robert Lucas, and Edward C. Prescott, who tried to provide
neoclassical microeconomic mechanisms to help analyze macroeconomic issues. New
Keynesian economists including Paul Krugman, Edmund Phelps, John B. Taylor and Huw Dixon responded
to their critiques, eventually leading to the New Neoclassical Synthesis in macroeconomics.
Meanwhile development economists like Amartya Sen, and information economists like Joseph
Stiglitz introduced new ideas to economic thought.