Gianni Vaggi

The rich and the poor: A note on countries’ classification

With respect to the official thresholds of development in terms of GNI per capita, all developing countries have made remarkable progress; between 1987 and 2015 the number of Low Income Countries has decreased from 42 to 31, while that of High Income Countries has increased from 25 to 79. This rosy picture is largely due to the specific way in which the thresholds have been updated. This paper revises the thresholds according to the increase in the world income per capita during those 28 years. The revised thresholds give a less optimistic description of the economic improvements that occurred during these 28 years, but they provide a better classification of the changes in relative income per capita levels. According to the World Bank’s classification, middle-income countries host the majority of the poor. With the methodology proposed in this paper this is still true, but only because India marginally belongs to the LMICs group. The paper discusses the implication of the proposed thresholds for the extreme poverty line, which in 2015 has been updated to 1.90 US

Structural Change and Social Transformation in Physiocracy

a day at 2011 Purchasing Power Parity prices.

Knut Wicksell, 1851–1926: Interest and Prices

The influence of political developments on the evolution of economic thought is the main theme behind this book. As the authors reveal throughout the book, history has shown many times that political events can trigger the formulation of new economic conceptions that in turn influence the future economic development of a country.

Thomas Mun, 1571–1641: from Bullion to Foreign Trade

Wicksell was born on 20 December 1851 in Stockholm, the youngest of six children. His parents died while he was still young but left sufficient funds to secure him a good education. He attended the University of Uppsala from 1869 to 1873 to study mathematics, physics and astronomy and in 1875 made himself eligible for doctoral studies in mathematics. By the early 1880s, he switched to the social sciences, spurred by a growing concern over social issues about population and drunkeness; earning his living from journalism and public lectures. In 1885–86 he visited London, to study economics, and became actively involved in the neo-Malthusian movement. The Loren Foundation in 1886 provided a grant to study economics in Germany and assisted with the publication of his early books: Value, Capital and Rent (1893), Studies in the Theory of Public Finance (1896) and Interest and Prices (1898). In 1901, he was appointed first as associate professor, and in 1904 as full professor, at the University of Lund. At this time, he prepared his Lectures on Political Economy for publication. These elaborated and improved on his earlier work on capital, production and distribution theory (vol. 1, published in 1901) and on monetary theory (vol. 2, published in 1906). His academic career was highly productive and controversial. Many articles, pamphlets and tracts on population, socialism, money, banking, taxation and international trade flowed from his pen. In 1910 he was sent to jail for blasphemy. The many fine students (among whom Sommarin, Lindahl, Ohlin, the Akerman brothers) he attracted, formed the influential Swedish school of the 1930s. He died suddenly in 1926, before the international acclaim his work obtained in the 1930s through Keynes and the English translation of some of his major books, the Lectures and Interest and Prices.

David Hume, 1711–76 and the Scottish Enlightenment

Thomas Mun’s grandfather was a provost in the Royal Mint, his father was a Mercer. He himself was a very successful merchant and became a Director of the East India Company in 1615. The East India Company was much criticised because its trade involved the export of bullion (in order to purchase spices). In 1621 Mun wrote a pamphlet, A Discourse of Trade, from England to East Indies, in order to defend the Company from the accusation of being detrimental to Britain’s prosperity because it exported bullion in order to import goods. In the pamphlet he described the benefits derived from this type of trade.

Karl Marx, 1818–83: the Critique of Political Economy

This chapter illustrates further aspects in the formation of classical political economy of special relevance to the writing of the Wealth of Nations. The contributions of the various authors mentioned are evaluated relative to Smith’s achievement in the Wealth.

Introduction: the Coming of Marginalism and Macro-economics

This chapter concludes Part I of this study in the history of economic thought. Apart from dealing with Marx’s contributions, it provides a more general summary view on theories of surplus.

Vilfredo Pareto, 1848–1923 and Lionel Robbins, 1898–1984: Critique and Decline of Utility theory

The second half of this history of economics is called modern developments because it covers the period during which the foundations were laid for much of the contemporary mainstream theory of economics, both in its micro-, and in its macro-parts. The essentials of modern micro-economics can be said to have emerged from the theoretical developments which took place during the ‘marginal revolution’ of the 1870s, which were consolidated and expanded during the closing decades of the nineteenth century. Sections I and II are specifically devoted to describing the highlights of this process by way of looking at some of the major contributions in Europe and across the Atlantic from the early 1870s onwards. Macro-economics, the theory of aggregates such as output and employment as a whole, the price level, rather than the individual decision-making which is the focus of micro-economics, was developed as a specific and direct consequence of the Keynesian revolution of the 1930s. The history of economics to be covered in Part II is therefore clustered around two major ‘revolutions’ in economic thought, the so-called ‘marginal’ and ‘Keynesian’ revolutions. This introduction briefly explores the meaning of these terms.

Pierre le Pesant Sieur de Boisguilbert, 1646–1714: France at the turn of the century

The marginal revolution of the 1870s had only one thing in common for the three economists with whom that revolution was associated (see Chapter 17 above). This was the development of a theory of value based on marginal utility. The essence of that revolution was the introduction of marginal analysis, particularly useful for the solution of resource allocation problems and used as well in the development of relative price theory, including that of factor prices. It was the marginal aspect which became important, not the utility aspect.

Joan Robinson, 1903–83 and Edward Chamberlin, 1899–1967: Theory of the Firm

The introductory outline presented Pierre le Pesant, Sieur de Boisguilbert, as the most interesting author in a group of economists who worked in France in the last years of the seventeenth century and the first decades of the eighteenth. Vauban, John Law, a Scotsman, and Boisguilbert investigated the French economy at the turn of the century to discover solutions to its many economic problems.