How and When Economics Originated?

 

How and When Economics Originated? 

Let me tell all of those who have ventured to know about economics that Adam Smith is the one who founded economics. Economics as a discipline, did not exist before Adam Smith. In 1776 he wrote a book named “The Wealth of Nations”, in which he defined economics for the first time. He called economics the science of wealth. Wealth of Nations was first comprehensive written work on political economy which resulted in the emergence of new subject of study, now called economics.

To say that there was no economics of any form before Adam Smith, would be absolutely wrong. We got history consists of societies who actually used to practice the principles of economics. Moreover, history also witness the fact that so many prominent scholars had written on many economic issues and policies which were trending that time. Of course, any theoretical work done before The Wealth of Nations is in the shape of essays and small pamphlets. For that reason, Adam Smith earned the title of the father of economics.

Without, having some sense of what economics is and what it studies, one cannot properly understand its history and more importantly its origin. One can say that scarcity is the basis of the study of economics. All humans have wants irrespective of their race, nationality, age, gender, language and their location. That is why all individuals are busy in different activities with the aim to satisfy their wants. On the one hand, human wants are unlimited but on the other hand, resources which are used to fulfill these wants, are limited. These two conditions create scarcity which compels humans to make choices. Study of economics revolves around scarcity and choice. With the absence of any of the two conditions, scarcity would vanish and if it happens, economics would not exist.

Applied or Practical Form of Economics

After reading the above paragraph, I am sure, you have got some idea about the origin of economics. Economics studies the imbalance between human wants and the resources available at our disposal. This situation is called economic problem which is the centre of the study of economics. In this sense, economics is as old as the human race. Humans are facing this situation since the very start. The very first human couple on the earth, Adam and Eve, has also faced it. They used to make efforts to get food, shelter and fulfill other material wants. Since then, human wants have always increased.

Economics has gone through many stages in the past. History tells that centuries ago principles of economics were practically applied by the ancient societies. Essentially, what they were doing was practical or applied economics. Individuals and societies of that era were quite familiar with the laws of demand and supply. They knew that if demand for a particular product rises in the market, price will also rise. But when greater supply of any product is delivered to the market, price of that product tends to fall. People of that time knew the importance of saving and investment for the kick start of businesses. They used to take loans for their business promotion and advertisement. For advertisement they used to apply different promotion methods and ad campaigns for publicity. Trade fares were arranged in different regions where consumers and businessmen from diverse locations used to buy and sell. In addition to that, people individually and collectively used to transport goods to other locations to offer for sell. Regional trade was promoted as they were aware of its benefits.

Ancient Greek City State

Well, history of economics can also be traced in the emergence of the institution of state. There are different theories of the origin of state. But there were also some economic motives behind that evolutionary origination of the institution of state. Different nations wanted to protect their populations, their economic interests and trade routes so that their economic expansion would not come to a halt. Human civilization was evolving rapidly. Producing and finding new resources was the major objective of the nations. Many wars took place, among which most of them were over getting extra economic resources like expanding territories and snatching other resources.  At the same time, migrations by different nations to different regions were also taking place which had the same purpose, to get resources. A mentionable example is the Aryans migration to India.

Development of Economics As a Subject

After the origination of states, human civilization started to move ahead more rapidly and at the same time, prominent scholars of that time started to write about economics. Up to now, economics was in applied shape. It happened almost with every discipline, that first it is understood and applied by the people and afterwards they begin to write the theory. The same happened to economics. Reviewing the history, we find that different concepts of economics were under discussion during that time. Trade, production and value are the concepts which Plato and Aristotle discussed. The major Islamic teaching, The Holy Quran and Hadith have lots of information about economic topics like interest, circulation of money, wages, price quoting, production, lending and borrowing, problems of inheritance, consumption and more. Up to 16th century, Islamic scholars did lot of work on economics. Scholars like Ibn-E-Khuldun debated the prevailing economic problems of unemployment, wage rates, just pricing, inflation and other monetary issues, division of labour, and the governments’ role in bettering the economic conditions.

These writings were scattered and less comprehensive that it did not constitute any economic school of thought nor did any scholar define economics. Comparatively, more organized work is found in the writings of Mercantilists and Physiocrats of 16th and 18th century. They wrote abundantly about their economic policies. 

Illustration of Economics Colonialism

In the writings of Mercantilist school of thought which originated in Europe in 16th century, it is found that they supported economic imperialism, piling up huge amounts of metals like gold and silver and positive net exports. Similarly, Physiocrats originated in France in 1757. There is huge conflict between these two schools of thought. Physiocrats argued that improving agricultural production will bring betterment in the economy rather than collecting and holding gold and silver. They called land the most important source of wealth. Now these writings are more specific and the writers have put much attention and focus to the documentation of their economic policies. 

Adam Smith 1723-1790

Although the theoretical work of Mercantilists and Physiocrats were in depth discussions about their economic policies but no definition of economics as a separate discipline was seen. It was Adam Smith, who for the first-time defined economics and declared it as a separate subject of study. He deeply discussed a huge number of economic principles and theories. It was enough for economics to emerge as a separate subject. Soon after, other scholars also started to talk about economics. So many economists contributed to the literature of economics and since then, the literature of economics has grown a lot and is still growing. 

Conclusion

The story of the development of economics as a subject is interesting and it talks about the fact that disciplines do not develop over night. It takes efforts from a large number intellects and requires a huge amount of time. Just like economics it is true with any other discipline that first its tools are applied and are practically used by the societies and after that people who have great knowledge about it grounds the basis for its literature. Thus, the subject starts to grow and the growth of literature never ends. New methods of study, theories and tools are invented and are added to the existing literature.