HET

• Rome's contribution to economic theory is meager, largely an echo of Greece
• Rome's theory is implicit in their actions, laws and jurisprudence rather than explicit in the works of professional theorists
• Rome's contribution to economic topics

  • Philosophers
  • Agricultural writers
  • Jurists
• Cicero


  Condemned usury on the ground that it incurs people's ill will, wrote in praise of agriculture and in dispraise of other occupations
• Seneca


  Views money as the root of most evils, believes envy and greed are the sources of all injustice
• Cicero and Seneca's ideas are not original but largely an echo of Greece
• Agricultural writers (Cato, Varro, Columella)

  • Concerned above all with the technique of agriculture and only incidentally with the economics of agriculture, had a high regard for agriculture
• Jus gentium


  The body of law common to different nations, readily passes into the idea of natural law
• Roman law


  Promoted harsh individualism, the belief that everyone has the right to do what they like with what is their own
• The Middle Ages are synonymous with the feudal system
• Feudalism


  • Society held together by mutual obligations and services, each had their place assigned with obligations and privileges
  • Members of society held their places on condition that they rendered certain specified services to their fellows
  • Considerable element of status, rank imposed obligations but also conferred privileges
• The Middle Ages lived in a 'national economy' with small trade volume, self-supporting units, limited money transactions, and few enterprise opportunities
• The Church in the Middle Ages

  • Sought to regulate all human relationships on the postulate that this earthly life is but a preparation for another, and that the only reality is eternal solution
  • A cosmopolitan organization that conferred a certain unity on Europe
• St. Thomas Aquinas


  An Italian theologist and writer whose thought governed an epoch, his views on economic matters highly influenced by Aristotle and Christianity
• St. Thomas Aquinas' views

  • Principle of human equality in the sight of God, acceptance of inequality as part of the arrangement ordained by the Almighty, changed attitude towards the dignity of work
• Just Price


  The idea that each should receive that to which he is entitled, no one should take advantage of his neighbors
• Prohibition of usury


  Interrelated with the notion of just price, based on the understanding that we are brothers and should behave as brothers
• Private property


  Not contrary to natural law, added to natural law by human reason, owners are administrators of their possessions in the general interest
• Wealth is good if it helps for spiritual life, poverty may be good if it frees men from the burdens of wealth
• Property rights


  The power of acquisition and administration (i.e., the right to acquire and administer property)
• Property rights


  The right to use
• With St. Thomas, the harshness of the Roman conception of property has gone. The owner is the administrator of their possessions in the general interest, even though the administration of the property is left to the judgment of each individual.
• Wealth


  Good if it helps for spiritual life
• Poverty


  Good if it frees men from the burdens in which many are entangled by wealth
• Just price


  Rendering to each one what belongs to him, implying equality in exchange
• St. Thomas did not clearly show how to determine the value of a thing, but seems to have had a cost-of-production theory in mind
• Just price


  Largely the customary price, natural in a customary age
• The just price was not exempt from modifications by external circumstances, such as the loss the seller would incur or the urgency of need on the part of the buyer
• There must be a certain margin allowed with regard to the just price, as it cannot be fixed with complete accuracy but must depend on a certain process of estimation
• In the Middle Ages, sellers were required to reveal defects in the thing to the purchaser, and no one would take advantage of others
• Just wage


  The rate of remuneration required to enable the worker to live decently in the station of life in which they were placed
• Usury


  The use of money, which was properly merely a means of exchange, as a device for making more money, which was condemned as unnatural
• The early condemnation of usury rested in part on the authority of the Bible and Aristotle, being compounded of the Aristotelian doctrine of sterility and the view that usury represents a grinding of the faces of the poor in their distress
• St. Thomas' argument against usury

  Use and consumption are inseparable for money, so it is inadmissible to sell money and charge for its use
• St. Thomas outlined four exceptions where an extra payment could be justified: damnum emergens (definite loss to the lender), lucrum cessans (loss of a source of gain), poena conventionalis (penalty for late repayment), and periculum sortis (risk of non-payment)
• These exceptions did not undermine the principle that economic interest, the payment for the use of money pure and simple, continued to be regarded as illegitimate. However, in practice they were sufficient to break down the prohibition of usury, especially with the development of industry and financial technique.
• Physiocracy


  A school of economic thought that appeared in France towards the end of the mercantilist epoch
• Francois Quesnay published his first article on economics in the Grande Encyclopede


  1756
• Publication of Adam Smith's Wealth of Nations and the downfall of Anne Robert Jacques Turgot


  1776
• Physiocracy was not just a furthering and refinement of the mercantilist doctrine or a modification of it. It was basically a reaction against mercantilism and was offering an alternative political and social system.