This section will briefly introduce the evolution of economics since the 18th century. Being very introductory, it will superficially touch on the main concepts that evolved through each era of economics as a science.
All the concepts mentioned here at an introductory level will be developed further into the syllabus. Do not worry if a concept is not fully understood now, come back to it after you are done with the syllabus!
Adam Smith (1723-1790), often called the "Father of Economics," introduced foundational ideas to modern economics in his book, The Wealth of Nations (1776).
Adam Smith argued for minimal government intervention. He mainly advocated for:
Adam Smith advocated for minimal government intervention in the economy, a concept closely aligned with the term laissez-faire (meaning "let it do" in French), popularised by French Physiocrats in the 19th century.
The 19th century saw significant advancements in economic thinking, building on the foundational ideas of Adam Smith. The ideas develop during this century are referred to as classical economics.
In the 19th century, philosophers like Jeremy Bentham and John Stuart Mill developed utilitarianism.
Utility
The satisfaction obtained from consuming a good or service.
Classical economists were concerned with the concept of value. They wondered what exactly determined the pricing of goods and services:
Economist agreed that utility was central to the idea of the value of a good determining its pricing. However:
Marginal utility
The satisfaction obtained from consuming one more unit of a good or service.
The economists that developed the concept of marginal utility were:
They all arrived to the same concept of marginal utility determining the prices of goods independently.
Classical economists sought to understand:
Originally, it was believed that the market system inherently adjusted itself to prevent prolonged periods of unemployment (or economic stagnation). This concept, formalised by Jean Baptiste Say,
This perspective was formalised by Jean-Baptiste Say, became the building principle of classical macroeconomics: Say’s Law. This law suggests that supply creates its own demand:
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