In a planned economy comparable shadow price relations must be satisfied for the efficient use of resources, as first demonstrated by the Italian economist Enrico Barone.
Some important insights on collective behavior (for example, emergence of organizations) have been incorporated through the new institutional economics.
A definition that captures much of modern economics is that of Lionel Robbins in a 1932 essay: "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."
[5] Disputes within mainstream macroeconomics tend to be characterised by disagreement over the convincingness of individual empirical claims (such as the predictive power of a specific model) and in this respect differ from the more fundamental conflicts over methodology that characterised previous periods (like those between Monetarists and Neo-Keynesians), in which economists of differing schools would disagree on whether a given work was even a legitimate contribution to the field.
Most survive to the present day as self-consciously dissident schools, but with greatly diminished size and influence relative to mainstream economics.
These forays into economic thought contribute to the modern understanding, ranging from ancient Greek conceptions of the role of the household and its choices[7] to mercantilism and its emphasis on the hoarding of precious metals.
It was founded on free and unhindered circulation of wealth so as to handsomely reach even the lowest echelons of society.
Trade in Islamic societies saw innovations such as trading companies, big businesses, contracts, bills of exchange, long-distance international trade, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), credit, debt, profit, loss, capital (al-mal), and capital accumulation (nama al-mal),[10] circulating capital, capital expenditure, revenue, cheques, promissory notes,[11] trusts (see Waqf), startup companies,[12] savings accounts, transactional accounts, pawning, loaning, exchange rates, bankers, money changers, ledgers, deposits, assignments, the double-entry bookkeeping system,[9] lawsuits,[13] and agency institution.
The Physiocrats were 18th century French economists who emphasized the importance of productive work, and particularly agriculture, to an economy's wealth.
Chydenius, who was a Finnish priest and member of parliament, published a book called The National Gain in 1765, in which he proposes ideas of freedom of trade and industry and explores the relationship between economy and society and lays out the principles of liberalism, all of this eleven years before Adam Smith published a similar and more comprehensive book, The Wealth of Nations.
The American School owes its origin to the writings and economic policies of Alexander Hamilton, the first Treasury Secretary of the United States.
Most members of the school were also Kathedersozialisten, i.e. concerned with social reform and improved conditions for the common man during a period of heavy industrialization.
Moreover, Prussia was the intellectual powerhouse of Germany and so dominated academia, not only in central Europe, but also in the United States until about 1900, because the American economics profession was led by holders of German Ph.Ds.
In English speaking countries, the Historical school is perhaps the least known and least understood approach to the study of economics, because it differs radically from the now-dominant Anglo-American analytical point of view.
Yet the Historical school forms the basis—both in theory and in practice—of the social market economy, for many decades the dominant economic paradigm in most countries of continental Europe.
Ricardian socialism is a branch of early 19th century classical economic thought based on the theory that labor is the source of all wealth and exchange value, and rent, profit and interest represent distortions to a free market.
The pre-Marxian theories of capitalist exploitation they developed are widely regarded as having been heavily influenced by the works of David Ricardo, and favoured collective ownership of the means of production.
[16][17] Anarchist economics comprises a set of theories which seek to outline modes of production and exchange not governed by coercive social institutions: Thinkers associated with anarchist economics include: Distributism is an economic philosophy that was originally formulated in the late 19th century and early 20th century by Catholic thinkers to reflect the teachings of Pope Leo XIII's encyclical Rerum Novarum and Pope Pius's XI encyclical Quadragesimo Anno.
It seeks to pursue a third way between capitalism and socialism, desiring to order society according to Christian principles of justice while still preserving private property.
Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the other.
The more specific definition this approach implies was captured by Lionel Robbins in a 1932 essay: "the science which studies human behavior as a relation between scarce means having alternative uses."
The school is primarily associated with Léon Walras and Vilfredo Pareto, both of whom held successive professorships in political economy at the university, in the latter half of the 19th century.
[23] The theory shows how a general equilibrium is reached through the interaction between demand and supply in an economy consisting of multiple markets operating simultaneously.
[24] Contrary to utilitarianism, Pareto found that the welfare of an economy cannot be measured by aggregating the individual utilities of its inhabitants.
Conversely, if a majority of people experienced an increase in utility while at least one person was worse off, there could be no definitive conclusion about the welfare of the economy.
[25] These observations formed the basis of Pareto efficiency, which describes a situation or outcome in which nobody can be made better off without also making someone else worse off.
Like Keynes, they were inspired by the works of Knut Wicksell, a Swedish economist active in the early years of the twentieth century.
Keynesian economics has developed from the work of John Maynard Keynes and focused on macroeconomics in the short-run, particularly the rigidities caused when prices are fixed.
These researchers tend to share with other Neoclassical economists the emphasis on models based on micro foundations and optimizing behavior, but focus more narrowly on standard Keynesian themes such as price and wage rigidity.
These are usually made to be endogenous features of these models, rather than simply assumed as in older style Keynesian ones (see New-Keynesian economics).