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Suggested bibliography: D. Moldovan, E. Făuraş. Programa analitică la disciplina „Doctrine economice”. ASEM, cat. „Teorie

economică şi doctrine economice„ Editura ARC, Chişinău 2003. D. Moldovanu. Doctrine şi economişti celebri, Editura ARC, Chişinău, 2011. E. Feuraş, V. Căun. Doctrine economice, vol. I, curs şi aplicaţii, ASEM, Chişinău, 2003. Gh. Popescu. Evoluţia găndirii economice. Ed. a IV-a, Bucureşti 2009. А. Г. Худокормов. История экономических учений, Москва, 1998. M. Blaug. Economic theory in retrospect, Homewood, Illinois, 1962. Roger Backhouse. The Penguin history of economics, Penguin Books, London, 2002. R. Ekelund, R. Hébert. A History of economic theory and method, McGraw Hill, 4-th edition, 1997. W. E. Kuhn. The evolution of the economic thought, South-Western Publishing, Cincinnati, 1970. Barnes & Noble. Readings in economics, New-York, 1949.

Simultaneously, it is recommended to find the original readings at the following addresses:• http://etext.library.adelaide.edu.au – The University of Adelaide (Australia)• http://www.ibiblio.org – The University of North Carolina at Chapel Hill (USA)• http://homepage.newschool.edu/het/essays – The History of Economic Thought Website – The New

School University (New York, USA)• http://www.mises.org/books/economicdoctrine.pdf – Ludwig von Mises Institute (Austria), with a

book of particular interest: Economic doctrine and method, an historical sketch by Joseph A. Schumpeter. New York, Oxford University Press, 1954.

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What is the economic way of thinking ?It is concerned with material welfare → the Fundamental Dilemma

of the Economic Activity up to XXI century ?↔? since now

Material welfare in the short run ?↔? in the long run

Three main factors that influence the development of the

economic thought (way of thinking): Personality → Time = Th + W + F → ?

Nation → Time & Space

Religion

Nation-state

Religion

Personality

Economic thought

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The components of the economic thought:economic idea economic theory economic schooleconomic doctrine (*) economic mainstream The logic of development of the economic thought’ components:

The economic ideas do not disappear, they are generated, may be forgotten and then rediscovered;

Every new doctrine appears just when the previous one discredits itself: (+)(-) → (+)(-)

The Economic Doctrines course aims at:1. Presenting the integral picture of the development of the

economic thought to avoid the dogmatization (?) of anydoctrine ↔ microeconomics (?) & macroeconomics (?);

2. Grasping the economic ideas & theories appropriate for the development of (my) personality;

3. Highlighting the economic doctrines (recipes) suitable for the development of (my) country;

The title of the course is also determined by the limited time allocated to the course in AESM compared to the Western Universities (2-3 semesters of “History of Economic Thought”)

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Theme 1. The object of study of the Economic Doctrines. Ancient and Medieval Economic

Thought.

I. The object of study and the method of the Economic Doctrines.

II. Economic thought in Antiquity. The Elite Doctrine.

III. Economic Thought in Middle Ages. Social Justice Doctrine.

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I. The object of study and the method of the Economic Doctrines.

The object of study :• The genesis of the main theories,

doctrines & mainstreams of • The essence economic thought from our

country and from the • The social role whole world.

The research method: Formal logics – analysis, induction, deduction; Dialectics – the interplay of thesis, antithesis and synthesis

→ allows grasping: the evolution ↔ the involution ↔ the revolution in the Economic Thought;

Systemic approach (system builders: A. Smith, K. Marx+...); Case studies (economic miracles made by German nation, + …)

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I. The object of study and the method of the Economic Doctrines.

The research results:

Formally, the History of Economic Doctrines (Thought) → periods:

I According to the object of the economic thought:

Ancient economic thought – II-nd millenary before Christ till the

middle of the I-st millenary after Christ;

Medieval economic thought – the middle of the I-st millenary till the

middle of the II-nd millenary after Christ;

Modern economic thought – from XVI-th century till XIX-th century;

Contemporary economic thought – XX-th and XXI-st centuries.

II According to the quality or the theoretical level of the economic

thought:

The pre-scientific period or the prehistory – from the beginnings till the

middle of the XVII-th century;

The scientific period – from the middle of XVII-th century till nowadays.

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II. Economic thought in Antiquity. The Elite doctrine.Xenophone, Plato and Aristotle.

At that time, scholars mostly concerned with political, military and spiritual problems → their economic knowledge was exposed only by the way.Plato and Aristotle → the concept of an ideal society:

– the wealth ?↔? the (spiritual) elite of the society, the land aristocracy– the slavery – ? …

Plato: aristocratic elitarian communism → three classes in the society: the philosophers, the military and the producers: Common proprietorship - ? …Private property - ? …

Aristotle: Plato's idea about the community of the goods and families ?↔? the

human selfish nature; justifying the slavery ← the "Domination and Submission Law",

characteristic both for nature and society, valid for the individuals, but also for the nations.

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III. Economic Thought in Middle Ages. The Social Justice doctrine.

At the beginning of the Middle Ages, the European society:

deep political, economic and cultural crisis;

the rise of Christian Church → the appearance of universities dominated by it;

the scholastics and the canonists developed the economic knowledge (ideas of

the Greek philosophers (Aristotle) + ideas from the Bible)

The Social Justice Doctrine:

Christian principle: every right implies some duty → people should be moderate,

unselfish.

the most important economic issue – the determination of the right price and of

the right wage.

Saint Thomas Aquinas → the right price is established according to:

• The quantity of labor in order to produce a given commodity;

• The social and material status of the producer.

The right wage should allow the working person and his family to live according to

their social status.

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Theme 2. The mercantilism

I. The theoretical fundamentals of the

mercantilism.

II. The mercantilism as an economic policy

and its national peculiarities.

III. The importance of the mercantilism for

the development of the economic

thought.

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I. The theoretical fundamentals of the mercantilism.

The term mercantilism ← "mercato" & "mercantile" (Italian)

The Mercantilism: about three centuries → 1450 - 1750 = Important

geographical discoveries + Formation of strong & centralized nation-

states + Rise of Protestantism (moral & intellectual revolution in

Europe)

The mercantilism as theory was concerned with three main problems:

• The individual and national wealth;

• The origin & role of the profit.

Mercantilists → the concept of a balance of trade including both visible and

invisible (shipping expenses, insurance, etc.) items.

• The relationship between prices’ level, the amount of commodities

and the amount of money mediating the transactions. Jean Bodin

was one of the first exposing the Quantitative Theory of Money (?)

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II. The mercantilism as an economic policy and its national peculiarities.

The mercantilism was an alliance of power between the monarch and the merchant-capitalist:

The state was planning and regulating the economic life in a specific way: detailed state regulations in some economic sectors, little or no regulation in others, taxation

and subsidization of particular industries and

restricted entry in many markets.

Legal monopolies in the form of franchises and patents

granting exclusive trading rights to a particular

merchant or league of merchants (East India Company etc.). Use of the political process to secure monopoly gains was a form of rent seeking.

As to the state economic policy, mercantilists suggested applying protectionist trade policy + national economy rules (valid for the R. Moldova?) → …

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In the matter of state economic policy, mercantilists suggested applying some national economy rules

(valid for the R. Moldova?) That every inch of a country's soil be utilized for agriculture, mining or

manufacturing; That all raw materials found in a country be used in domestic

manufacture, since finished goods have a higher value than raw materials;

That a large, working population be encouraged; That all export of gold and silver be prohibited and all domestic money

be kept in circulation; That all imports of foreign goods be discouraged as much as possible; That where certain imports are indispensable, they be obtained at first

hand, in exchange for other domestic goods instead of gold and silver; That as much as possible, imports be confined to raw materials that can

be finished at home; That opportunities be constantly sought for selling a country's surplus

manufactures to foreigners, so far as necessary, for gold and silver; That no importation be allowed if such goods are sufficiently and

suitably supplied at home. (Fillip von Hornick, Austrian mercantilist.)

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National peculiarities of the Mercantilism.• The early mercantilism (the monetary system) → increasing by

all the ways the money reserves (the stock of precious metals) of the country. In Spain, Portugal – bullionist mercantilism.

• The late, the developed mercantilism (the trade balance system):

• gave up the rigid settlements intended to attract and stock a biggest quantity of precious metals.

• boosting the foreign trade of the country → an active trade balance.

• In France → the industrial mercantilism → developing the national manufactures. Colbert → elaborated a lot of programs → to develop both royal and private manufactures, especially those capable to export.

• English commercial mercantilism → developing not only the visible exports, but also the invisible ones (shipping services, insurance services and so on). Great Britain succeeded to create the most powerful navy in the world.

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III. The importance of the mercantilism for the development of the economic thought.

Mercantilism qualities Mercantilism deficiencies

1) Mercantilists were the first studying the economy as such, liberating the economic thought from the moral, religious dogmas and transforming it into an independent science. The mercantilism is the first mainstream of the modern economic thought.

1) The Mercantilism is the last mainstream of the pre-scientific economic thought, since it was centered too much on the state economic policy and was using especially the descriptive method.

2) It played an important role for the consolidation of the nation-states, for the development of the national markets. It was concerned with the advantages of the foreign trade and protectionist policies.

2) Mercantilism → deepening of social differentiation. Exports stimulation was increasing domestic prices and was concentrating the profits in the hands of a reduced number of merchants. At the international level: the exploitation of some countries and nations by the other ones.

3) It analyzed such important items as: principles of money’ and commodities’ circulation; the quantitative theory of money; the structure and the role of the trade balance.

3) The mercantilists overestimated the role of the circulation sphere, almost neglecting the production one. They had also confined the capital only to money and precious metals.

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Theme 3. The Classical Liberalism doctrine. I. Economic Liberalism: stages and characteristics.

II. Physiocratic theory & policy. The assessment of the

Physiocracy.

III. Adam Smith: system builder. The Wealth of Nations:

methodological approaches, microeconomic and

macroeconomic foundations.

IV. Thomas Malthus: the principle of population.

V. David Ricardo and his analytical System.

VI. The ideas of the Liberal-optimists. Say's Law and his

theory of production factors.

VII. J. S. Mill: the multiple syntheses.

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I. Economic Liberalism: stages and characteristics.

The Liberalism - the main megatendency of the modern and contemporary economic thought.

Still it was constantly submitted to many metamorphosis imposed by:

Challenges from its theoretical opponents ? … Challenges from the real development of the market

economy ? …

The economic Liberalism had passed through the stages:

I. Classicism – from the second half of the XVIII century till the first two thirds of the XIX century. It comprised ? …

II. Neoclassicism or marginalism – from the end of the XIX century till the beginning of the XX century. It included ? …

III. Neoliberalism – the second half of the XX century, comprising ? …

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The main ideas maintained by the classical liberalism:

The existence of "homo oeconomicus" – individualism &

hedonism;

The private property;

Free competition of the economic agents;

Market self equilibration;

The natural order existing in the economy;

Least possible state implication in the economy – "laissez

faire";

The theory of labor-value;

The universality of the economic ideas.

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II.1 Physiocratic theory.Historical conjuncture.

France in the XVIII century – long secular economic decline due to:

• The costly wars and extravagancies of its kings;

• The French mercantilist policies → Capital accumulation in the production sphere was impossible ?

clergy and nobility ?↔? common farmers Population’s incomes & domestic markets were restricted by the

mercantilist policy of lowering wages and other production costs in order to encourage exports.

The intellectual leader of the Physiocrats was François Quesnay (court physician to Madame de Pompadour and Louis XV) + Marquis de Mirabeau, Mercier de la Rivière, Dupont de Nemours, Le Trosne, Nicolas Baudeau. The French minister Turgot was sympathetic to Physiocratic doctrine.

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Physiocratic theory.The term "Physiocracy" - "rule of nature" ← physiocrats believed in natural

order & primacy of agriculture.

The Physiocrats - system builders (?)

The Physiocracy underlying philosophy → the natural law + the individual

rights and the private property.

The Physiocrats paradoxically exalted the absolute authority (?)

The Physiocrats → the best way to trace out the effects of the oppressive royal policies in France → to show the interdependencies in the frame of a circular flow of income and expenditure: any policy that had the effect of enlarging it was beneficial, whereas any that restricted it, was harmful.

François Quesnay. The Tableau Economique (1758) → three classes:

– A productive class ← agriculturalists (fishermen, miners);

– A sterile class ← merchants + manufacturers + domestic servants + businessmen;

– A proprietary class ← landlords + aristocracy.

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Francois Quesnay.The circular flow of economic activity.

Farmers Artisans Proprietors

Note: Each line represents expenditures of one billion francs.

Commentary: Initial wealth - 5 billion francs → 2 billion francs (the upkeep of the productive class and its livestock during the year) + 1 billion francs (manufactured goods and services) + 2 billion francs (rents and taxes to the proprietors), which represents the net product, being produced entirely by the first class.The circuit is completed when the proprietors spend their income (1 billion for food and 1 billion for manufactures). The sterile class spend theirs (1 billion for food and 1 billion for raw materials). → The 3 billion francs originally spent by the agriculturalists returns to them.

The biggest fallacy: the exclusive productivity of the agriculture. Physiocrats (Quesnay) → manufacturing and services are “sterile” ← they contribute nothing to the net product.

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II.2 Physiocratic policy.

The physiocrats → policies to encourage the accumulation of capital:

• tax reform → to apply the capital to agriculture in order to obtain a taxable net product + to eliminate the unreasonable means of fiscal base assessment.

The solution to both problems → to tax the landlord ? …(short run ?↔? long run)

• land rent.

Mercantilist restrictions on free trade in the agricultural products: ↓farm prices & land rents.

Physiocrats: free trade & a general "laissez faire" → capital accumulation → enable the size of the circular flow to grow over time.

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II.3 The assessment of the Physiocracy.Physiocracy qualities Physiocracy deficiencies

1) Physiocrats founded the first

economic school & the first scientific

doctrine. They changed the focus from

circulation sphere to the production one;

1) Their assertion concerning

the universality of the

economic laws proved to be

wrong;

2) They had been the first who analyzed

the circular flow of economic activity;

2) They wrongly considered

the industry and the trade as

sterile activities;

3) They introduced the term, the theory

and the policy of “laissez faire”.

+ …

3) They underestimated the

role of the external trade & of

the active trade balance.

+ …