Ch1

1. Chapter one
1. Introduction
Compiled by:
Mihret, D
Debre Tabor University, CoBE, Department of
Economics
Mihret,D 1

2. 1.1.Defining History of Economic Thought
History of Economic Thought as the title implies
deals with the origin and development of
economic ideas and their interrelations. It is a
historical account of economic doctrines
Prof. Haney has defined it as “a critical account of
the development of economic ideas, searching
into their origin, interrelations and
manifestations”.
According to Prof. Bell, “It is the study of the
heritage left by the writers on economic
subjects”.
Mihret,D 2

3. Definition ---
Prof. Schumpeter holds that “economic
thought is the sum total of all the opinions
and desires concerning economic subjects
especially concerning with public policies of
different times and places”
 In general history of economic thought as the
name indicates “ it is the investigation of the
origin and growth of economic ideas”
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4. 1.2.The interaction between history of economics,
economic history and history of economic thought
•Although they are all studies of the components of history and
economics, they are separate branches of study having different
subject matters and varying in emphasis on different aspects of the
subject matter.
As such; economic history is an objective study of the
development of commerce, manufacture, trade, banking,
transportation and other economic phenomena of the given society
whereas history of economics and history of economic thought have
an element of subjectivity in studies relating to them but they are
different each other. Mihret,D 4

5. The interaction between…
History of economics “ it is the history of the
intellectual efforts that men have made in order
to understand economic phenomena, simply it is
the scientific aspect of economic thought.”
According to Schumpeter the history of
economic analysis begins only with the Greeks
but it becomes independent science after the
publication of “wealth of the nation” by Adam
Smith.
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6. The interaction between…
History of economic thought has a much wider scope.
It begins with the record of the ancient national
theocratic states.
According to Edmund Whittaker (1950) the history of
economic thought is “only one aspect of the broad
current of man’s thinking and can therefore be traced
to the earliest times when man started to record
ideas”
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7. The interaction between…
While History of Economic Thought deals with
development of economic ideas; Economic
History is the study of economic development of
a nation or a country . On the other hand, History
of Economics deals with the science of
economics
Even thought Economic History and History of
Economic Thought constitute separate branch of study
they are closely related. Economic ideas are directly or
indirectly motivated by economic conditions and
environment of a country
Ideas and environments are very important hence the
close relationship between history of economic
thought and economic history
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8. 1.3. Scope of History of economic thought
•The scope of history of economic thought is very
wide.
It includes the study of human ideas from the time
man started to formulating and expressing them down
to the present times.
From the point view of history of economic thought
all the ancient practices and ideas are important for
the foundation of important theories advocated by the
later economists.
According to Alexander Gray “old doctrines never
die: they only fade away”
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9. Scope…
In addition to this, history of economic thought
include the different approaches of studying
economics which are adapted by different scholars
and philosophers.
These approach includes chronological approach,
conceptual approach, classical deduction approach,
historical approach, neo-classical approach, welfare
approach, institutional approach and Keynesian
approach.
In relation to the time period the development of
economic thought can be divided into three distinct
periods. (1), ancient(before 500AD) (2)
medieval(500-1500AD) and (3) modern(16th to 18th
century).
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10. 1.4. Significance of the study of economic thought
the chief advantage of the study of history of
economic thought have been very well explained
(summed up) by prof. Haney as follows
1. Continuity in the development of economic ideas
is demonstrated by the study of ancient thought.
2. To understand economic ideas which are
developed indifferent ages.
3. It is important to study the origin, development,
scope and interaction of economics with other
fields
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11. Significance…
4. To see the relation between economics and other
social sciences.
5. The study of economic thought leads to the
change in the outlook of the student, the students
become impartial.
6. Such study provides the reader with the broad
basis of understanding and comparison.
7. The study of history of economic thought
enables the reader to develop some sort of
“objective point of view.”
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12. 1.5. The five major questions that we need to beat in
mind in considering the various school of thought
1. What is the historical background of the school or
the pushing factors to develop this school?
2. What were the basic tenets of the school? and who
were forerunners of that school.
3. Whom did the school benefit? or seek to benefit?
4. How was the school valid, useful, or correct in its
time?
5. Which tenet of the school become long lasting
contributions. Mihret,D 12

13. 1.6. Historical situation in the case of Ethiopia
Most economics ideas in Ethiopia were recoded and
developed by the well known economist Gebrehiwot
Baykedagn (1886-1919)
 Gebrehiwot Baykedagn (GHB) was born in 1886
in Adwa
He attended elementary school at the Swedish
missionary school at Minkulu, near Red Sea port of
Massawa in the present day Eritrea
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14. Historical situation…
GHB fled to Hamasen (Eritrea) at the age of
seven
During a trip to the Red Sea port of Massawa,
GHB and his friends got permission from the
captain of a German ship to visit the ship
on departure, GHB stowed away; on arrival in
Europe, the captain entrusted him to a rich
Austrian family that adopted him.
He studied medicine at Berlin University in
Germany.
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15. Historical situation…
Until his death in July 1919 at an age of 33, GHB
held two post in the government: first he was
assigned as Inspector of the Addis Ababa-Djibouti
Railway and then held the post of Naggadras (Chief
of Commerce and Customs) of Dre Dawa (an
important import-export trade hub).
GHB wrote two books in Amharic
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16. Historical situation…
Atse Menilik na Ethiopia (published in Asmara
by Berhan Yihun in 1912):just about 28 pages
which was specially written as an advice piece
to Eyasu Michael as a Policy proposal and idea
for reforming the Ethiopian state of the time.
His emphasis on the importance of Education,
building of constitutional and legal systems
and institutions of good governance, domestic
production of necessities rather than importing
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17. Con………
In his work titled Mengiest Na Yehizbe Astedader
(published in 1924 by the Berhanena Selam Press)
Gebre-Hiwot has raised various issues, and the book is
a pioneering work on development Economics, political
economy of Ethiopia and Trade and environment
studies.
Ethiopian historian characterized him as a reformist
intellectual of the early twentieth century Ethiopia
Ethiopian economists take him as a pioneer
development economist and
environmental students of Ethiopia viewed him as the
first Ethiopian thinker on environment and development
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18. Mihret,D 18