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ECN 431 2020-2021 ECONOMICS PROGRAMME, BOWEN UNIVERSITY, IWO
INTRODUCTION (UPDATED)
Abdul-Ganiyu Ajani Garba
January 11,2021
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TALKING POINTS 1. Conceptualization
2. Nexus: Economic History and History of Economic
Thought
3. Evolution of Economic Thought
4. Essential Nature of Economics
5. Current State of Economics Thought, Practice and
Economies
6. Why Study History of Economic Thought and
Alternative Approaches
AG Garba, 2020; BOWEN UNIVERSITY, IWO 2
CONCEPTUALIZATION
What is History of Economic Thought? • History of economic thought is the history of economic
ideas, theories, theologies, philosophies,
methodologies, thinkers and the religious, social,
economic and political conditions that shaped their
thoughts.
• HOET = {Economic Ideas; Theologies, Philosophies,
Methodologies, Theories, Thinkers and Conditions}
AG Garba, 2020; BOWEN UNIVERSITY, IWO 3
KEY BIBLICAL AND HISTORICAL TIMELINES 1.Biblical Times (15th Century BC): Egypt; Canaan;
Israel, Assyria, Babylon (606-539 BC), Medo-Persian
(539-331BC), Grecian (331-146 BC) and Roman (146
BC – 476 AD)
2.Lower Middle Ages (350 – 1049 AD)
3.High Middle Ages (1050 – 1300 AD)
4.Renaissance (14th -16th Century)
5.Modern (17th -21st Century) AG Garba, 2020; BOWEN UNIVERSITY, IWO
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TIMELINES: EVOLUTION OF ECONOMIC THOUGHT
1.Biblical Times: Biblical Foundations (Themes, Doctrines and Principles)
2. Greco-Roman Times: Greek and Roman Philosophy – Sophists (Rhetoric,
Ethics and Epistemology); Socrates (Epistemology and Ethics), Plato
(Metaphysics, Epistemology and Ethics), Aristotle (Metaphysics,
Epistemology and Ethics), Xenophon , Epicureans, Stoics and Skeptics
3.High Middle Ages (Scholastics)
4.Renaissance (Curiosity and Objectivity, Individualism and Humanism) –
5.Modern: (i) Pre-Classical (Mercantilism -1500-1750) and Physiocrats
(1750-1780 ); (ii) Classical (1776-); (iii) Neo-Classical (1871- ); (iv)
Keynesian Revolution (1936 -); (v) The Synthesis and Debates(1937 - );
(vi) The Counter-Revolution; (viii) Crisis (2008- ); (ix) COVID –Pandemic
AG Garba, 2020; BOWEN UNIVERSITY, IWO
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FROM PHILOSOPHY TO ECONOMICS
• Philosophy: Sophists, Socrates, Plato, Aristotle, Xenophon
• Scholastics: St Thomas Aquinas; Don Scotus Philosophy
• Pre-Classical: Mercantilist/Physiocrats
• Moral Philosophy: Jeremy Bentham, Adam Smith
• Classical (Political Economy): Adam Smith, D Ricardo, Jean Baptist Says; Malthus;
Political Economy and Moral Philosophy
• Neoclassical: Cambridge; Lausanne and Austrian Schools
• Keynesian Revolution
• The Aftermath
• The Current
Economics-Grand Theorizing and the
Aftermath
6 AG Garba, 2020; BOWEN UNIVERSITY, IWO
EVOLUTION OF ECONOMIC THOUGHT: THE HOURGLASS METAPHOR
1.1776-1900: Political Economy and Moral
Philosophy
2.1930-1980: Economics as Technical
Science and Tool of Social Control
3.1990- Economics and Political Economy Source: Peter J. Boettke, Peter T. Leeson, and Daniel J. Smith. “The Evolution of Economics:
Where We Are and How We Got Here”.
AG Garba, 2020; BOWEN UNIVERSITY, IWO 7
ESSENTIAL NATURE OF ECONOMICS: CONTENDING POSITIONS
1. A Moral Science? JM Keynes
2. A Social Science? Lord Robbins – Study of human behavior as a relationship between means and ends
– A separate an inexact science? Mark Blaugh
– A pseudo science TW Hutchinson
– Cause-Effects Determinism and the Free Will Problem
3. Synthesis of Science and Art? JM Keynes
4. An Evolutionary Science? – History of Economic Thought
5. A Tool of Rebellion and Deception? - Garba AG Garba, 2020; BOWEN UNIVERSITY, IWO 8
TEACHING OF ECONOMICS: TYPICAL CURRICULAR
1. CORE: Equilibrium Theory (Micro and Macro)
2. Extensions: Micro (Strategic Behaviors; Economics of
Information; Information Economics) and Macro (Short
Run; Medium Run and Long Run Analysis)
3. Tools: Logic; Mathematics; Statistics and Econometrics
4. Applications: Development Problems; Industrial
Economics; Monetary Economics, Public Sector Economics;
International Trade and Finance; etc.
AG Garba, 2020; BOWEN UNIVERSITY, IWO 9
ECONOMICS PRACTICE Opportunities:
1.Public Sector: Executive, Legislative and
Judiciary
2.Private Sector: Entrepreneur; Services;
Industry; Agriculture; etc.
3. International: UN System; Global Finance and
Global Corporations; Others AG Garba, 2020; BOWEN UNIVERSITY, IWO 10
UNIQUENESS OF BOWEN ECONOMICS PROGRAMME
Foundations of Theonomics I Foundations of Theonomics II
1. Review of foundation of Economics for easier
comparison with the foundations of Theonomics.
2. Review of Real Number Line; Set Theory and
Cartesian Products: to illustrate Omniscience,
Ignorance and Basic Divine and Human
Relationships
3. Basic Questions of Life and Alternative Answers:
Origin, Meaning, Morality, Eschatology (Future)
and Identity
4. Concepts that darken or enlighten reasoning and
confidence: dogma, sermon/lecture, science,
principles, doctrines, theory, reason, sense
experience, revelation
5. Inter-Disciplinary Relations: Economics;
Theology; Philosophy; Science, Theonomics
6. Frameworks for Theonomics and Economic
Analysis
1. Review of ECN 247
2. Truth, Knowledge, Wisdom and
Understanding: Serpentine Dialogue; Two
Paths; Biblical and Non-Biblical sources;
natures and foundations of Truth,
Knowledge, Wisdom and Understanding
3. Meaning, Elements and Domains of
Economics and Theonomics
4. Principles of Economics and Theonomics
5. Christian World View (Created Order) vs.
Secular World view (The Contemporary
World Order)
6. Theology of Philosophy, Science,
Theonomics and Economics
7. Decision Making Time 11
CURRENT STATE OF ECONOMICS THOUGHT 1.The Mainstream: Neoclassical, Classical, Keynesian, Neoclassical
Synthesis, The New Successors (Keynesian, Classical, Business Cycle)
2.Key Issues in the 20th Century: Risks and Uncertainties; Risk
Based Models; Imperfections and Evolutionary Economics;
Information Economics, Economics of Information, Strategic
Behaviour (Game Theory, Auction Theory, Negotiations, Strategic
Planning, etc)
3.The Heterodox: Austrian School, Evolutionary Economics,
Institutional Economics, etc.
4.State of Economics in Nigeria: Training, Practice, Research and
Academic Writing
AG Garba, 2020; BOWEN UNIVERSITY, IWO 12
AG Garba, 2020; BOWEN UNIVERSITY, IWO 13
Aspects The Core Principles of Mainstream Economics
1. HOW AGENTS
CHOOSE
1. The Trade-Off Principle: economic agents face trade-offs.
2. The Opportunity Cost Principle - cost of what agents have is what
they gave up to have it
3. The Cost-Benefit Principle - rational economic agents think at the
Margin i.e., agents compare MC to MR.
4. The Incentive Principle - people respond to incentives
2. HOW AGENTS
INTERACT
1. Trade can make everyone Better Off.
2. Markets are Usually a Good Way to Organize Economic Activity.
3. Government Can sometimes improve market outcomes: public
goods, market failure and market power.
3. HOW THE
ECONOMY
WORKS
1. Production of goods and services is the key determinant of a
country’s standard of living.
2. Prices rise when government prints too much money.
3. Economies face a short run trade-off between Inflation and
Unemployment.
AG Garba, 2020; BOWEN UNIVERSITY, IWO 14
Period Questions Core Problems Markets Applications Extension Policy Issues Short Run o What
happens to
economy
from year
to year?
o IS-LM
Determination
of SR
equilibrium
levels of output,
income,
employment,
wages, price
and interest
o Goods
and money o Evaluation of the
effects of fiscal
and monetary
policies on
equilibrium
o Open economy – BB o Expectations
1. Autonomy of
policies 2. Effectiveness of
policies 3. Uncertainties
and Policy 4. Expectations and
Policy 5. Art of Monetary
Policy Medium
Run o What
happens to
the
economy
over a
decade?
o AS-AD Determination
of Output in
medium term
(Aggregate
Supply and
Demand)
o Goods,
Labor and
Money
o Relation between
output and
inflation, roles of
fiscal and
monetary policy
in short run and in
medium run
o Open economy – BB o Expectations o Pathologies (business
cycles and high
inflation)
o Same as above
Long Run o What
happens to
economy
over half a
century?
o Growth
Theories Determinants of
Growth, capital
accumulation,
technological
progress
o Interaction
between
technological
progress, wages
and
unemployment
o Open economy – BB o Expectations o Pathologies (business
cycles and high
inflation)
o Same as above
OVERVIEW OF MACROECONOMICS
AG Garba, 2020; BOWEN UNIVERSITY, IWO 15
Evolution of Macroeconomics
and Leading Builders
Enabling Events Ethical Commitment Innovations Influence Contestations
1. Keynes (J. N. Keynes) o Great Depression
o Failure of the Classical theory
o Revolutionize economics
o Full employment
o Greater equality
o Global peace
o Units of quantities for macro analysis o Marginal Propensity to consume, o Multiplier o Aggregate Demand o General Theory of Employment o Liquidity preference function o Role of expectations o Theory of Interest o Paradox of thrift o Paradox of poverty in the mist of plenty
1936 – 1970s o Classical
postulates
2. The Neoclassical Synthesis (John Hicks, Alvin Hansen, Paul Samuelson, Milton Friedman, Franco Modigliani, James Tobin, Lawrence Klein, Anna Schwartz, Edmund Phelps)
o Keynesian Revolution
o Post-War Economic Growth
o Consensus among economics
o IS-LM framework o Theories of consumption, investment and money o Growth Theory o Macro-econometric Models
1940s -1970s o Monetary Policy
vs. Fiscal Policy
o The Phillips
Curve
o Role of Policy:
discretionary vs
policy rule
3. The Rational Expectation Critique (Robert Lucas, Thomas Sargent and Robert Barro)
o Economic crisis of stagflation
o Failures of the synthesis
o Revolutionize Macroeconomics
o Restore confidence in neoclassical economics?
o Nobel Prize?
o Lucas critique o Explicit integration of rational expectations into
Keynesian frameworks to take account of implications of forward looking behavior by people and firms
o Random walk consumption (Robert Hall) o Overshooting model of exchange rates (Rudiger
Dornbusch) o Wage and Price Setting under staggering of wage and
price decisions (Stanley Fischer and John Taylor). o Game Theoretic Theory of Policy
From 1970s o Micro-
foundations of
Keynesian
Economics
EVOLUTION OF MACROECONOMICS IN THE 20TH CENTURY
AG Garba, 2020; BOWEN UNIVERSITY, IWO 16
CURRENT STATE OF MACROECONOMICS Evolution of Macroeconomics
and Leading Builders
Enabling Events Research Programs Summary of Problem
(a) New Classical Economics
and Real Business Cycle
Theories (Edmund
Prescott)
o Rational Expectation
Critique
o Explaining fluctuations as the effects of shocks
in competitive markets with fully flexible prices
and wages
“Identifying how much of fluctuations in
output can be thought of as movements in
the natural rate and in the natural
unemployment rate”.
(a) New Keynesian
Economics (George
Akerlof; . Gregory
Mankiw and Ben
Bernanke)
o Rational Expectation
Critique
o Efficiency of wages (George Akerlof)
o Imperfections in credit markets (Ben Bernanke)
o Nominal Rigidities and menu costs explanation
of output fluctuations (George Akerlof and N.
Gregory Mankiw)
“Identify the precise nature of
imperfections and nominal rigidities that
give rise to deviations of output from its
natural level.”
(a) New Growth Theory
(Robert Lucas, Paul
Romer, Phillipe Aghion,
Peter Howitt, Alwyn
Young)
o Rational Expectation
Critique
o Resolve unanswered
questions
o Endogenizing technological progress in growth
models
o Interactions between technology and
employment
“Identifying the factors responsible for
technological progress and growth in the
long run.”
(a) Engendering
Macroeconomics
(Cagatay, Grown, Elson,
and a diverse range of
economists)
o Feminism
o Rising Gender Inequality
and poverty
o Economic crisis
o Beijing ‘95
o NGO advocacy
o Analyzing interactions between reproductive
and productive economies
o Gender Accounting
o Gender aware Budgeting
o New Economics of the Household
o Gender and the Institutional Framework of the
Macro-economy
Endogenizing gender relations in trade,
finance and macroeconomic, models
Source: Garba and Garba (2003) - organized by authors from Blanchard, O. 2003. Macroeconomics, Third Edition. New Jersey: Prentice Hall.
CURRENT STATE OF ECONOMISTS
1.Academic Economists: teaching, research,
supervision, mentoring and community service
2.Professional Economists: research, policy analysis
in Private Sector (Finance, Services and Real Sectors)
and Public Sector
3. Issues Incentive System in public and private sectors
Role in the Economy: how effective?
Capacity Building: type, quality, effectiveness, efficiency
Challenges (see Slide 18) AG Garba, 2020; BOWEN UNIVERSITY, IWO 17
CURRENT CHALLENGES OF ECONOMISTS 1.Understanding of the shifting
theologies, philosophies, methodologies
and ethical commitments of Economics
2. Intellectual Skills: weak capacity for
analysis, systematization and evaluation
3.Poor Intellectual Habits: particularly,
unwillingness to study analyze,
systematize and evaluate original texts
4. Lack of interest in understanding the
history of economic thought
AG Garba, 2020; BOWEN UNIVERSITY, IWO 18
5. Understanding differences
between Methods and
Methodology
6. Additional Skills Gaps:
– Skills for Basic and Applied Research
– Applications of Relevant Statistical,
Econometric or Programming
Softwares
– Academic Writing Skills
7. Capacities for Relevant Research
8. Lack of Confidence and a Habit
of Dependence
CURRENT STATE OF ECONOMIES
1.Nigeria: ?
2.Africa: ?
3.North America: ?
4.South America: ?
5.Europe: ?
6.Asia: ?
7.Australia and New Zealand: ?
8.Regional and Global states: ?
AG Garba, 2020; BOWEN UNIVERSITY, IWO 19
WHY STUDY HISTORY OF ECONOMIC THOUGHT 1. To acquire insights into the theological, philosophical,
methodological and historical origins of the core theories and policy menu in economics today
2. To understand the evolutionary paths of economics and the main influences on contemporary economic thought.
3. To know more about the thinkers whose thoughts shaped the evolution of economic thought and how their faiths shaped their thoughts.
4. To acquire capacity to analyze and systematize and evaluate economic theories and their policy recommendations.
5. To acquire capacity to chart a newpath for economics.
AG Garba, 2020; BOWEN UNIVERSITY, IWO 20
HOW TO STUDY HISTORY OF ECONOMIC THOUGHT 1. Focus on thinkers: Greek Philosophers, Scholastics, Islamic Thought,
Economists before and After Keynes
2. Focus on Shifting Philosophy and Methodologies: Metaphysics,
epistemology, ethics, political theory, etc.
3. Focus on Schools: mainstream (mercantilist, physiocrats, classical,
neoclassical, Keynesian, IS-LM synthesis, Monetarist, Ratex, New Classical,
New Business Cycle and New Keynesians) or Heterodox (historical, Marxist,
institutional, evolutionary, experimental, etc)
4. Focus on evolving socio-cultural context and its influence of economic
thought -Sociology of knowledge.
5. Focus on the Shifting Theologies (Pagan, Christian, Atheists, Agnostics)
6. Some combinations of 1 to 5. above.
AG Garba, 2020; BOWEN UNIVERSITY, IWO 21
REVIEW QUESTIONS 1.What is History of Economic Thought and how does it differ from economic history?
2.How does History of economics interact with economic history? How is the COVID 19
creating economic history and history of economic thought simultaneously? What is your
role as a student of economics in the interface between COVID 19, economic history and
history of economic thought?
3.What may we gain from a study of history of economic thought and how should we study
history of economic thought to maximize the gains?
4.Discuss four reasons why a study of History of Economic Thought is useful and discuss at
least seven approaches to the study of History of Economic Thought.
5.Evaluate Boettke, Leeson, and Smith’s hour glass description of the evolution of economic
thought.
6.What challenges are you likely to face as a Nigerian economist? What should you do to
overcome them?
7.Why is the personality and the faith of economic thinkers relevant in the evaluation of
their thoughts and their influences?
AG Garba, 2020; BOWEN UNIVERSITY, IWO 22