HISTORY OF ECONOMIC THOUGHT AND POLICY

The course will provide an opportunity for better understanding how economic theories have dealt with major economic issues, especially growth and development, technology and innovation, unemployment and the role of the state in the economy. The main purpose is to acquaint the student with a comparative approach to a wide, although inevitably selected, set of major theories in the history of economic thought. The period considered covers almost two centuries, but with a more specific focus on the last one hundred years, in the attempt to show that economics has underwent a process of significant change before becoming what it is today. In this process of change, economics acquired new perspectives and methods of investigation, but also lost useful insights and approaches. In order to highlight this concept, the course will make frequent comparisons between current mainstream economics, itself subject to a process of change and criticism, and past theories. The course will follow a chronological order, beginning with the French and English authors of the 18th century who, at the same time as capitalism was spreading, tried to understand the main features and long-term trends of the market economy. Turgot, Smith and Ricardo fought for Free Trade, against the protectionist views of the Ancien Régime. We will then move to Marx and the issue of power relations in the economy and Mill’s political economy and philosophical radicalism. The economics of Marshall and Walras will provide the subject for a comparison between general and partial equilibrium theories and their methodological underpinnings at the beginning of the marginal revolution. The part of the course on Schumpeter will present a conceptualization of the dynamic of capitalism, innovation, growth and entrepreneurship that had a long-lasting influence on economics. The final part will focus on Keynes who did not believe in the self-adjusting properties of the economy. His approach to economics is based on the awareness that most crucial decisions in economics are made under uncertainty. In contrast to Keynes, we will also examine different views of liberism, including Hayek, the Austrian School and the ordoliberalism that shaped the constitution of the European Monetary Union .

Basic knowledge of micro and macroeconomics.

Knowledge and understanding: The course will offer a comparative approach to the history of economic thought, showing that economics as it exists today is a relatively recent acquisition. Covering almost two centuries, but with a focus on the last one hundred years, the course will enable the students to compare different economic theories, both from the point of view of their inner logic and explanatory power as well as for their applications to policy. Applying knowledge and understanding Students will be able to: i) contextualize economic theories, examining the relationship that exists between the emergence of a new theory or paradigm and the economic issues of the time and place in which the new approach is developed ii) compare economic theories, viewed as alternative explanations of economic phenomena as well as intellectual toolkits that can shape economic choices Making judgements: In the examination and comparison of different theories, students are expected to judge their logical coherence and evaluate the empirical conditions that make for their application to individual or social choice. They are also encouraged to evaluate how different approaches to economic analysis give more emphasis to certain economic phenomena (e.g. growth, distribution, business cycle, etc.) while implicitly treating other phenomena as less relevant. Communications skills As the language and concepts of economics evolved through history, students are expected to be able to explain each theory in its own terms, to convey the meaning of a new concept when it is introduced and to explain how the same concept evolved through history. Learning skills We expect students to acquire a new and more critical perspective on economics, based on the idea that economics as it exists today is not just the outcome of a cumulative scientific process but also the result of choices that were made as to what is relevant and what is not from the point of view of professional economists.

1. Introduction; 2. Classical political economy 3. Marx 4. From Classical political economy to the Marginalist Revolution 5. Walras and Pareto on general equilibrium theory and the role of psychology in economics 6. Marshall’s partial equilibrium theory and industrial analysis 7. Schumpeter on entrepreneurship, economic development and the future of capitalism 8. Keynes’s theory of employment, interest and money 9. Macroeconomics after Keynes. 10. Liberism in the 20th century 11. Current trends in economic thought

Roncaglia, Alessandro. A Brief History of Economic Thought, Cambridge University Press, 2017 Medema, Steven G. and Warren J. Samuels. The History of Economic Thought: A Reader. Second ed. New York;London;: Routledge, 2013, selected chapters Hayek, F. A. 'The use of Knowledge in Society.' The American Economic Review 35, no. 4 (1945): 519-530. The slides with the course lectures are available on the Luiss Learn platform. Any additional readings will be indicated and made available during the course.

Each lesson consists of a presentation of the topic that will be discussed with the class - active student participation is required. In some cases, students will be required to read in advance items in the reading list.

Compulsory written examination. For those who only take the final written examination, the evaluation method consists of the final examination (written examination (compulsory), 90%) + an evaluation of participation in the course (10%). Students may also choose to take an intermediate (non-compulsory) written test on the first part of the programme. In this case, the assessment method consists of an intermediate test (written test only, 45%) and a final test (written test (compulsory), 45%) + an assessment of participation in the course (10%). The mid-term test and the final examination consist of open questions (i.e. the questions are not multiple-choice) The following assessment criteria will be taken into account when awarding the final grade in thirtieths: knowledge and understanding of the course content (60% of the final grade); ability to independently apply the comparative approach used during the course (30% of the final grade); active participation in the lessons (10% of the final grade).

A minimum grade of 27