MSc Maritime Economics and Logistics

Economic Principles & History

Lecture: Economic Principles & History

(1) Ten principles of Economics?

(2) Thinking like an Economist?

(3) History of Economics

(4) Conclusion

Koen G. Berden PhD

Sheet 1

MSc Maritime Economics and Logistics

Economic Principles & History

(1) Ten Principles of Economics?

Koen G. Berden PhD

Sheet 2

MSc Maritime Economics and Logistics

Economic Principles & History

(2) Thinking like an Economist

Observation, theory, more observation

Science
Assumptions
Economics and policy advice

Koen G. Berden PhD

Sheet 3

MSc Maritime Economics and Logistics

Koen G. Berden PhD

Economic Principles & History

Sheet 4

MSc Maritime Economics and Logistics

Economic Principles & History

(3) History of Economics

Classical Economists

David Hume
- rebellion against Mercantilism
- not the trade surplus but trade as such is good for
growth

Adam Smith: Wealth of Nations

- high levels of saving and investment stimulate
growth DIRECTLY through accumulation of
capital but also INDIRECTLY through labour
productivity, exchange and trade
- trade stimulates growth: both foreign and
domestic
- in favour of education: spillovers to society:
higher efficiency
- what matters for growth is output per capita
- So two major sources of growth:
(a) increased quantity of capital through
saving and investment
(b) improved quality of labour, capital and
land

Thomas Malthus, David Ricardo, John Stuart Mill

- Malthus: added population
- Ricardo: distribution of wealth, how does foreign
trade increase efficiency: comparative advantage
- Mill: production as main focus of economic
growth, amend laissez-faire by taxes and
subsidies

Koen G. Berden PhD

Sheet 5

MSc Maritime Economics and Logistics

Economic Principles & History

Karl Marx
- economic mechanisms for production and
distribution closely related
- economic growth profit-hungry capitalists
replace men by machines technological
unemployment cycles: ups and downs with
each crisis deeper hate of the masses
capitalism would collapse

Neo-Classical Economists

Alfred Marshall
- fourth factor of production: organisation
- 'Knowledge is our most powerful engine of
production and organisation aids knowledge'
- distribution of income and wealth matter for
growth

Joseph Schumpeter
- growth through technology through invention,
innovation and entrepreneurship
- entrepreneurs are rent-seekers motivated by
monopoly-profits continue to invent/innovate
as long as there is profit
- perfect competition efficient from a static point of
view but not from a dynamic

John Maynard Keynes

- stimulate demand
- growth optimist

Koen G. Berden PhD

Sheet 6

MSc Maritime Economics and Logistics

Economic Principles & History

Modern Economists
Mundell: original models on Trade Theory,
Optimum Currency Area, Factor Mobility
Solow: growth
Akerlof: game theory, market for lemons
Stiglitz: credit rationing, game theory
Simon: bounded rationality
Solow/Romer: growth
Coase: industrial organisation

Koen G. Berden PhD

Sheet 7