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 The slides with the course lectures are available on the My.luiss 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.

Mandatory written exam. Student evaluation will be based on a 90-minute, closed-book written exam consisting of six open questions. In addition, there will be a mid-term exam after six weeks of classes. This will consist of three open questions to be answered within 45 minutes. It will cover material from weeks 1 to 6. Students who take and pass both the mid-term and final exams will have their final grade calculated as an equal combination of the two (50% each). Students who skip, fail or refuse to take the midterm exam will only take the final exam. The final exam will last 90 minutes and consist of two parts. Part 1 will cover weeks 1 to 6, while Part 2 will cover weeks 7 to 12. Revision questions will also be practised in class.

A minimum grade of 27