Development of Economy Through History

This article summarizes development of economy through history mentioning important names from philosophy like Socrates, Homer, Xenophon and others. The article goes back to the cradle of economy up to this day explaining its beginnings and further development.

Development of Economy Through History

History of Economic Development Through Ages

372 - 289 BC (MENCIUS)

Mencius was a Chinese thinker who dealt with various nature of economic problems of society, such as the division of labor, and relations based on the superiority of "highly born people" over the common people. It was thought that people could be divided into those who do the physical and mental types of work.

He criticized the despotic way of governing the system, which encourages uprisings because the people are not provided with the means to survive. He created the utopian agrarian - the so-called square or circular fields. He was the first to systematize the doctrine of the Mandate of Heaven.

1150 - 685 BC (HOMER)

The ancestral organization of society, ruled by the Aristocratic class, is based on natural products with the private possession of cattle, slaves, land, gold, and other goods. Gold is already used in trade, which does not represent the area of ​​activity of the free Greek, but it still serves the ruling class to increase its wealth by sporadic sales of war-accumulated goods.

430-354 (XENOPHON)

He wrote his main economic ideas in his work "Ekonomikos". He proclaimed the natural economy, and especially slave-owning agriculture, which he puts against trade and the city's money economy in general. This means that every company is responsible for producing everything one needs whereas the trade and exchange should be reduced to the bare minimum - which means that economy does not depend on trade and exchange but rather on the development and grooming of one's own goods. Exchange and trade are rather seen as a secondary-source of good than primary.


Plato (427-347 BC)

Greek philosopher, a disciple of Socrates, and teacher of Aristotle. His philosophical thoughts are interwoven with economic ideas.

One of his thoughts is the division of labor:

  1. workers should work,
  2. soldiers should guard,
  3. rulers should rule.

He was an opponent of wealth and trade, as was Xenophon, and he was a supporter of the natural economy. He felt that virtue and wealth were incompatible. Trade should be done only by foreigners because it is not worthy of an Athenian. His important works are the Republic and the Laws.

Aristotle (384-322 BC)

Greek philosopher and student of Plato. He was a supporter of commodity production, within the framework of which he defined the concept of goods, value, and money. He wrote his economic ideas in the writings of Politics, Ethics, and Economics. He is the founder of the modern understanding of the value of goods, exchange, money, and wealth.

He distinguished between Economy and Chrematistics.

According to Aristotle economics is natural enrichment within the host, and chrematistics is commodity enrichment outside the host. Chrematistics aims to provide wealth for its owner. The skill of acquiring wealth is twofold.

Aristotle was a teacher of Alexander the Great, and a supporter of commodity production and trade.


At the heart of Roman writers are no longer the philosophical problems of the economy, but the specific issues of agricultural production, especially the use of municipal land and the regime of private property.

At that time, there were discussions about public land, which was obtained on the basis of conquest. The land was sold at auctions, given to the colonists, or distributed to the citizens.

Marco Porcius Cato (234-149 BC)

Roman writer, landowner, and large slave owner. He wrote about how to make the best use of slaves. According to him, slaves should be procured by young people, in order to be easily educated for work, and they should be kept separate, so as to prevent conspiracies. According to Marco they should be fed and dressed separately as well. Cato is considered to be the forerunner of Mercantilist ideas.

Marcus Tullius Cicero(106-43 BC)

A philosopher politician and a representative of the big landowners so-called "optimata". He was the one who condemned the petty, and approved big trade, considering it to be socially useful. He was also an opponent of artisan work as he believed it can only turn humans into slaves.


Thomas Aquinas (1225-1274)

From the economic categories, he discussed wealth, fair price, division of labor. His teachings and views were valid as the official philosophy of the Catholic Church. The canonists saw agriculture and crafts as positive because they were intended to satisfy human needs, which is in accordance with God's will. While they perceive trade negatively because that is the goal of enrichment, which is contrary to God's will. Thomas Aquinas does not reject trade as an activity, but he does not accept that market prices are formed from supply and demand. He strongly proposed that selling or buying something different from the original price was illegal and utterly wrong and thereafter unfair.

Martin Luther (1483-1546)

A founder of Protestantism in Germany and an economist who advocated the natural economy and simple commodity production. He fought against the greens and the merchant capital emphasizing the authority of the princes and authorities in managing the economy. It was believed that everyone has a duty to work and to be obedient. With his teaching about work, he influenced creating ideological preconditions for the formation of classical conceptions o values.

Niccolò Machiavelli (1469-1527)

During the Renaissance, he was an Italian political philosopher in Florence and became a key figure in real political theory, crucial for later studies in political science. His most famous book, The Principle (Ruler), whose purpose was to be a handbook for rulers. Machiavelli is also the author of "Discussion" regarding political life in the Vatican, Florence, and other states, which demonstrates the superiority of its own observations.


The term originated from the Latin word "mercatura" which means trade, and it was an economic philosophy of traders and civil servants in the 16th and 17th centuries. Trade has shaped the idea of the only source of national wealth and welfare. Wealth is expressed in the number of precious metals, which will acquire as the surplus of gold obtained from the sale of their products abroad. State introduces the single currency, general tax, protectionist measures, and especially bookkeeping. Antonio Sera thought it was achievable by selling finished products abroad, which he explained in his part "The Debate on the Causes and Solutions of Economic Crises in the Viceroyalty of Naples" where he laid the foundations for state intervention in the economy.

Mercantilism is divided into two phases:

  • a) Early mercantilism
  • b) Developed mercantilism

a) Early mercantilism lasted throughout the 15th and 16th centuries. The idea of ​​early mercantilists was a cash surplus balance sheet, which was advocating for higher exports of goods which would thereafter increase the wealth of the state. It meant - the smaller import because it would affect the outflow of money from the country. According to their opinion, the state should even ban its import of goods.

b) Developed mercantilism lasted throughout the 17th century. Its idea advocated a positive trade balance in the foreign trade of a country. Representative of mercantilism Jean-Baptiste Colbert advocated the conquest of new colonies. Antoine de Montchrestien in his work on political economy, dedicated in 1615 to the king and the queen mother, was the first who defined political economy, while Thomas Mann advocated the development of foreign trade.


Physiocracy originates in France in the middle of the 18th century, as a reaction against mercantilism. Name physiocrats comes from the word physiocracy, which means the rule of nature. The economic policy mercantilists pursued brought agriculture to an extremely difficult position because its import agricultural products were allowed, and export-prohibited. Because of this difficult situation, followers of physiocracy were put in the foreground of agriculture. Marcie de la Riviera represented the idea of economic freedom, according to which the economy should be left to itself by the so-called the principle of "faisser faire - laisser passer" - let things go their own way. Francois Kenneth the main representative of physiocracy, who is in his work "Economic Tables" (1758) showed social production as a whole for the first time.


BOOK: Osnovi Ekonomije - Zoran Milenkovic, I,II,III ... 97886682371267

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