Easy Economics – Learning Economics can be Easy and Fun

Do You Want to Learn Economics? Let’s Start Here!

Economics is for Everyone

Economics Empowers You as an Individual

Economics and Society

Different Schools of Economics

Timeline of the Evolution of Sound Economics

This timeline explores the key figures and ideas that shaped classical and Austrian economics, starting with Adam Smith in the 18th century and concluding with Saifedean Ammous today. These economists, through their groundbreaking works, developed essential concepts such as the invisible hand, the theory of comparative advantage, subjective value, and the role of entrepreneurship in markets.

Classical economists like Smith, Ricardo, and Say laid the foundation for modern economic thought, advocating for free markets and minimal government intervention. Austrian economists, beginning with Carl Menger, introduced radical ideas like marginal utility, the theory of the business cycle, and the importance of sound money.

Figures such as Ludwig von Mises, Friedrich Hayek, and Milton Friedman further refined these theories, influencing debates on central planning, monetary policy, and the role of government in the economy. This timeline offers a glimpse into how each thinker built upon and expanded the ideas of their predecessors, ultimately shaping today’s economic landscape.

Adam Smith (1723-1790)

• Key Principles: The invisible hand, the division of labor, the importance of self-interest in economic activity, and free markets.
• Key Work: The Wealth of Nations (1776)
• Impact: Smith is often considered the father of economics. He laid the groundwork for free-market capitalism, arguing that individuals acting out of self-interest would unintentionally promote the public good, driven by the invisible hand. He also emphasized the benefits of specialization and trade.
• Improvement: Smith built upon earlier mercantilist ideas by arguing that wealth is derived from labor and production, rather than gold or silver. He advocated for less government intervention in trade, promoting the idea of free markets.

David Ricardo (1772-1823)

• Key Principles: Comparative advantage, theory of rent, labor theory of value.
• Key Work: On the Principles of Political Economy and Taxation (1817)
• Impact: Ricardo expanded on Smith’s ideas and introduced the theory of comparative advantage, which explains how trade between nations can be beneficial even if one country is less efficient in all industries. He also contributed to understanding land rent and its impact on income distribution.
• Improvement: Ricardo refined Smith’s labor theory of value and expanded on the implications of international trade.

Jean-Baptiste Say (1767-1832)

• Key Principles: Say’s Law (supply creates its own demand).
• Key Work: A Treatise on Political Economy (1803)
• Impact: Say argued that production creates income, which in turn creates demand. He is credited with popularizing the idea that economies are self-correcting and that overproduction or demand shortages do not typically occur in a healthy market economy.
• Improvement: Say clarified and popularized classical ideas on markets, stressing the importance of supply-side factors in economic equilibrium.

Carl Menger (1840-1921)

• Key Principles: Subjective theory of value, marginal utility, methodological individualism.
• Key Work: Principles of Economics (1871)
• Impact: Menger founded the Austrian School of economics, emphasizing that value is subjective and determined by individual preferences rather than labor. His theory of marginal utility revolutionized economic thought by focusing on the individual’s decision-making process.
• Improvement: Menger challenged the labor theory of value by highlighting the role of individual utility in determining value, which was a sharp break from classical economic thought.

Ludwig von Mises (1881-1973)

• Key Principles: Praxeology (the study of human action), the impossibility of economic calculation under socialism, the Austrian Business Cycle Theory.
• Key Work: Human Action (1949)
• Impact: Mises advanced Austrian economics by emphasizing the role of individual choices in driving economic phenomena. He strongly argued against socialism, positing that without market prices, socialist economies cannot allocate resources efficiently.
• Improvement: Mises critiqued classical economists’ failure to recognize the limitations of central planning and socialism, strengthening the case for individual liberty and free markets.

Henry Hazlitt (1894-1993)

• Key Principles: The importance of understanding the long-term consequences of economic policies, the fallacy of broken windows.
• Key Work: Economics in One Lesson (1946)
• Impact: Hazlitt popularized Austrian economics and highlighted the importance of considering the long-term effects of economic decisions. He is well-known for explaining the “broken window fallacy,” which argues that destruction does not benefit the economy, as it overlooks the unseen costs.
• Improvement: Hazlitt made complex Austrian ideas accessible to the general public, advocating for free markets and explaining the hidden costs of economic policies in a simple and clear manner.

Friedrich Hayek (1899-1992)

• Key Principles: Spontaneous order, the knowledge problem, the role of prices in disseminating knowledge.
• Key Work: The Road to Serfdom (1944)
• Impact: Hayek expanded on Mises’ ideas about central planning, arguing that central planners cannot have the local, dispersed knowledge required to make efficient economic decisions. He also introduced the concept of spontaneous order, where complex systems emerge without central control.
• Improvement: Hayek further refined Austrian theories on the limits of government intervention in the economy, emphasizing the importance of decentralized decision-making.

Milton Friedman (1912-2006)

• Key Principles: Monetarism, the importance of controlling money supply, the relationship between inflation and unemployment (the Phillips curve).
• Key Work: A Monetary History of the United States (1963) (co-authored with Anna Schwartz)
• Impact: Friedman challenged Keynesian economics by emphasizing the role of monetary policy in controlling inflation and economic cycles. He argued that government intervention in the economy, especially in monetary matters, should be minimized.
• Improvement: Friedman refined classical economic ideas with a focus on the control of money supply, shifting away from Keynesian emphasis on fiscal policy and advocating for less government intervention in markets.

Murray Rothbard (1926-1995)

• Key Principles: Anarcho-capitalism, the non-aggression principle, private property rights.
• Key Work: Man, Economy, and State (1962)
• Impact: Rothbard extended Austrian economics into a radical form of libertarianism, advocating for a stateless society where all services, including law enforcement and national defense, are privatized. He was a vocal proponent of individual rights and free markets
• .Improvement: Rothbard blended Austrian economic principles with a moral philosophy of individual liberty, challenging the notion of government authority in all its forms.

Israel Kirzner (1930-)

• Key Principles: Entrepreneurial alertness, market process, the role of entrepreneurship in economic equilibrium.
• Key Work: Competition and Entrepreneurship (1973)
• Impact: Kirzner contributed to Austrian economics by focusing on the entrepreneurial function in markets. He argued that entrepreneurs spot opportunities and correct market inefficiencies, leading to a more dynamic understanding of economic processes.
• Improvement: Kirzner shifted the focus from static equilibrium to the dynamic process of market discovery, enhancing the Austrian theory of entrepreneurship.

Hans Hermann-Hoppe (1949-)

• Key Principles: Argumentation ethics, the critique of democracy, the importance of private property.
• Key Work: Democracy: The God That Failed (2001)
• Impact: Hoppe is known for his work on the ethics of property rights and his argument that democracy inevitably leads to government expansion and the erosion of individual liberty.
• Improvement: Hoppe’s work integrated Austrian economic theory with political philosophy, arguing for a system of government based on voluntary agreements rather than coercion.

Saifedean Ammous (1980-)

• Key Principles: Sound money (Bitcoin), Austrian business cycle theory, the role of hard money in economic stability.
• Key Work: The Bitcoin Standard (2018)
• Impact: Ammous is known for his work on Bitcoin as a form of sound money, arguing that hard money like Bitcoin is essential for preventing inflationary policies and economic instability. He applies Austrian business cycle theory to explain how inflation and fiat currency lead to boom-and-bust cycles.
• Improvement: Ammous brings Austrian economic principles into the modern age by integrating them with the rise of digital currencies, particularly Bitcoin, emphasizing their role in restoring economic stability and decentralizing monetary policy.