Write 8 page essay on the topic The Development of Economic Thought: Absolutism and Relativism.Download file to see previous pages... These are all anchored on the capacity to understand what has tran

Write 8 page essay on the topic The Development of Economic Thought: Absolutism and Relativism.

These are all anchored on the capacity to understand what has transpired in the past. To borrow the words of Backhouse, “we should judge the works of past economists… we should ask whether the writings of the economists we consider were original, influential and logically consistent. we should criticize economists for claiming to have shown things they did not show. and we should praise writers for explaining reality well” (p.32). This is the reason why relativism and absolutism are critical in economic thought. The first offers a systematic mechanism to evaluate economic theories, emphasizing their contributions to the present prevailing system whereas the latter has the capability to organize such theories according to periods and their efficiencies in this context. Historical Evaluation The historical development of economic thought follows a structured progression not unlike those found in formal scientific fields like physics, although significantly simpler in nature. Colander (2000) summarized the development in a straightforward descriptive account: It all began with Adam Smith’s insight of the invisible hand. Classical economics developed that insight, attempting to derive an acceptable theory of value based on all costs or on labor alone. It failed in that attempt, but in the process developed seeds of many ideas that were later expanded by Neoclassical economists [who]… who stopped looking for value on the cost side, and developed a supply/demand theory of value (p.32). The next stage in the timeline of development is marked by the breakthroughs introduced by economists like Leon Walras and Maynard Keynes. The former developed the general equilibrium theory, a school of thought that explained economic behavior that is typified by several interacting markets. Keynes, on the other hand, proposed his alternative macroeconomic theory, which brought together a host of factors in a general explanation of how an economy works. While Keynes’ theory has been taken up by next generation economists, his macro theory eventually diminished in prominence. Walras’ general equilibrium theory fared better and has endured to become the basis of modern economics. Many contemporary theorists expanded and modified his work, incorporating many variations and finally established the dominant framework of explaining the modern world (Colander, p.32). The series of developments summarized above can be told in differing perspectives. For relativist scholars, economic thought focus on the side roads, stressing the absence of a coherent and general roadmap that follows a cohesive all-encompassing theory. The absolutists, on the other hand, would emphasize the scientific dimension and arguing that there is a thread of development. Interpreting Mercantilism An excellent depiction of how relativist and absolutist positions differ is in their interpretations of mercantilism. From the sixteenth to the eighteenth century, the mercantilist economic doctrine became the norm in Western Europe as trading empires flourished.