1.

HISTORY OF ECONOMICS
•1.1. THE BIRTH AND DEVELOPMENT OF ECONOMIC HISTORY
•1.2. ECONOMISTS' AND HISTORIANS' LOOKS ON THE HISTORY OF ECONOMICS
• 1.2.1. THE HISTORIC SCHOOL
• 1.2.2. DEVELOPMENTS IN THE HISTORY OF ECONOMICS IN THE 20TH
CENTURY
• 1.2.3 ECONOMIC DEVELOPMENT AND BACKGROUND
• 1.2.4. THE OBJECTIVE OF THE ECONOMIC HISTORIANS
• 1.2.5. ECONOMISTS' AND HISTORISTS' LOOKS ON THE HISTORY OF
ECONOMICS
•1.3. SUBJECT AND TASK OF THE HISTORY OF ECONOMICS
• 1.3.1. DEFINITION OF ECONOMIC HISTORY
• 1.3.2. PERFORMANCE AND CONSTRUCTION CONCEPTS
• 1.3.3. SOCIAL INSTITUTIONS AND ECONOMIC PERFORMANCE
•1.4 TWO ECONOMIC REVOLUTIONS
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 ENTRANCE

economics , which has become a field of science with

the contributions of the historical school, is to explain
the important changes in the long-term performances
and structures of the past economies with the
concepts and analysis methods developed by the
science of economics.

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 1.1. THE BIRTH AND DEVELOPMENT
OF ECONOMIC HISTORY

The birth of economic history owes much to the Historian school .

This school criticizes the views of the Classical School of Economics
in many ways, making economic history studies one of the basic
methods in economics.
According to the Classical School of Economics, the main driving
force guiding human behavior was the idea of gaining economic
interest. Classical Economists also assumed that man always acted
rationally by choosing appropriate means to achieve this goal.
this reason, according to the Classical Economists, the rules of
economic behavior had universal validity like the laws of physics, and
there was a single economic policy that could be applied to all
economies.

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 1.2. ECONOMISTS' AND HISTORIANS'
LOOKS ON THE HISTORY OF ECONOMICS
One of the important representatives of the classical
school
Thomas Robert Malthus
According to the historical school, the
interpretation of the Classical Economists on the
reasons for human behavior was extremely
inadequate. Apart from the purpose of gaining
benefits, people could also engage in irrational
behaviors with thoughts such as pride, fame,
desire to appear active, sense of duty, compassion
and philanthropy. People's imprisonment for years
for the sake of abstract causes and even willing to
die, donating blood with the thought of charity,
voting, taking part in voluntary organizations are
examples of human behavior that are common
even in modern societies and where self-interest is
out of question or at a very limited level. In
addition, the behavior of people could differ
according to the development level of the society
in which they lived.
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 1.2. ECONOMISTS' AND HISTORIANS'
LOOKS ON THE HISTORY OF ECONOMICS

Three important names of the German Historian school: Roscher , Hildebrand and
perhaps the most famous, Max. weber .

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 1.2.1. THE HISTORIC SCHOOL
• A more important objection of the historical school to the Classical
School of Economics concerned its method.
• The historian school criticized the historical and unrealistic
features of the Classical School of Economics, which made
economics an abstract science based on the deductive method,
and stated that only a caricature of the economic and social
system could be drawn with such a method.
• the historical school, a true science of economics could be
reached by the method of induction after a careful observation of
the economic realities.

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 1.2.1 . THE HISTORIC SCHOOL
• According to the historical school, a country's geographical
features, natural resources, cultural level of its population, moral
and religious attitudes, political regime, economic institutions have
wide and deep effects on the economic behavior of the society.
These features, on the other hand, constantly change over time.
For this reason, an accurate and detailed analysis of the historical
past is needed in order to explain today's economic phenomena.
• The historian school has proposed a method based on observation
and induction in order to reach a correct economic science,
directed its researches to economic life, and gave importance to
comparatively examining the economic structure and historical
development of each society. This critical new approach of the
historical school to the science of economics has enabled the
history of economics to become an independent field of science.

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 1.2.2. DEVELOPMENTS
• In the 20th century, there were two important developments in the
history of economics. The emergence of the history of economics as a
science has affected the science of history and there has been a shift
of interest from traditional political history to
• in this way gave the economic theory the opportunity to get out of its
formal structure disconnected from economic and social institutions
and the science of history to benefit from modern analysis methods .
• of cliometry in the second half of the 20th century The new economic
history movement , which is called the new economic history
movement , gave great importance to the application of the
quantitative methods of social sciences, especially economic theory,
and behavioral models to history. With this new approach, the history
of economics has increasingly approached the science of economics
in terms of both the methods it uses and its areas of interest.

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 1.2.2 . DEVELOPMENTS

• Today, the aim of economic history research is not only to shed

light on the economic past, but also to contribute to economic
theory by providing an analytical framework that will enable us to
understand economic change.
• As a matter of fact, the main study subjects of economic historians
are economic growth, the roles of institutions in economic
development and the historical roots of today's economic
problems, which are also closely related to economists.

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 1.2.3. ECONOMIC DEVELOPMENT
AND BACKGROUND
• One of the most fundamental economic problems of today's world
is the difference in economic development, or in other words, the
phenomenon of uneven development . Two thousand years ago,
there was no difference in economic development between regions
in the world. In 1000 BC, due to the economic decline after the
collapse of the Roman Empire, Europe fell behind other parts of
the world in terms of per capita income.
• From 1000 years to 1820, economic development was slow.
Despite the significant increase in production, the increase in per
capita income in the world remained at the level of 50% due to the
increase in the population by 4 times during the period. By 1820,
the per capita income level of Western Europe and the USA, which
were the fastest growing regions of the world, was only twice that
of other regions.

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 1.2.3 . ECONOMIC DEVELOPMENT
AND BACKGROUND

• Although the world population increased 5.6 times between 1820

and 1998, when economic development was more dynamic as a
result of industrialization, per capita income increased 8.5 times. In
these two centuries, there has been a significant difference in the
level of economic performance between various regions of the
world.
• Western Europe, USA, Canada, Australia, New Zealand and
Japan, it remained at the level of 5.4 times in the rest of the world.
• these regional development differences, the per capita income
difference between developed countries and others increased to
7/1 by the end of the 20th century.

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 1.2.4. THE OBJECTIVE OF THE
ECONOMIC HISTORIANS

The main effort of today's economic historians is to apply the

concepts and analysis methods developed by economic theory to
historical events, on the one hand, to investigate the causes of
economic growth, and on the other hand, to try to understand and
explain the sources of the phenomenon of uneven economic
development.
Thus, it will be possible to make various suggestions by making
determinations and evaluations about the path that today's poor
countries and industrial societies can follow in order to reach a high
income level and standard of living.

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 1.2.5. ECONOMISTS' AND HISTORISTS'
LOOKS ON THE HISTORY OF ECONOMICS
Two disciplines closely related to the history of economics are
economics and historical sciences. However, historians and
economists have approached the subject of economic history
differently.
Historians see economic history as a special branch of general
history dealing with economic events. John Clapham stated that the
history of economics is a science that “explores the economic
aspects of social institutions of the past”.
G. Unwin , also from the group of historians , identifies the history of
economics as "investigating the economic conditions of human
beings throughout the written history"; NSB Gras , on the other hand,
defined it as a science that "orders economic events chronologically
and reveals the relationships between these events".

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 1.2.5. ECONOMISTS' AND HISTORISTS'
LOOKS ON THE HISTORY OF ECONOMICS

Economists, on the other hand, have seen the history of economics

as an auxiliary science that collects historical data that will enable the
economic theory to be tested against the facts, based on the criteria
they use while defining their fields .
For example , according to the famous economist Sir John R. Hicks ,
“economics is the applied economics of past ages”. Eli Heckscher ,
on the other hand, stated that the purpose of the history of economics
is "to investigate how scarce and insufficient resources have been
used for the purposes of people throughout the ages and how the
changes in this field have affected human life and societies".

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 1.3. SUBJECT AND MISSION OF THE
HISTORY OF ECONOMICS
• The main task of economic history is to explain the important
changes in the performances and structures of economies in the
long run . The subject of economic history is economies. Today,
the most common economic examples are national economies.
Since the nineteenth century, data on many macroeconomic
magnitudes, especially population and national income, have been
organized on the scale of national economies.
• However, there have been many examples of other economies
apart from national economies in history. Empires are large-scale
units that express both a political and an economic unity. The
world economy that emerged in modern times, unlike empires, is a
large-scale social system consisting of many political units and
based on the international division of labor.

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1.3.1. DEFINITION OF ECONOMIC HISTORY
• The concept of performance in the definition refers to problems
that are typical of economists, such as how much is produced,
how costs and benefits are distributed, and whether production is
stable. Total production, per capita output and income distribution
of the society are the main indicators that can be used to explain
the performance.
• Economists subject the factors that provide production to a triple
distinction as land, labor, and capital. Sometimes
"entrepreneurship" is considered as a fourth factor of production to
express the effort and ability to organize by bringing these three
together. Indeed, in the short run, total production in the economy
depends on the amount of production factors used.

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1.3.1. DEFINITION OF ECONOMIC HISTORY

However, this approach, where variables such as population, tastes,

technology, economic, social and political institutions are taken as
constants or data, is extremely insufficient in terms of understanding
and explaining the performances of economies in the long run.
Because, historically, all these factors that greatly affect the
production process change. Indeed, changes in population,
technology, and social and economic institutions are the most
dynamic sources of changes in the economy in the long run.

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 1.3.2. PERFORMANCE AND
CONSTRUCTION CONCEPTS
The rate and rate of change in total production in an economy in the
long run will vary as a function of the structural characteristics of the
economy such as population, resources, technology, and social and
economic institutions.
population includes not only its total amount, but also many features
that affect the economic performance of the population, such as age
and gender composition, biological characteristics, knowledge and
abilities, labor force participation rate.
If people work harder, longer, more regularly and more skillfully, or if
the proportion of the actively working population increases, this
results in the production of more goods and services.

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 1.3.2. PERFORMANCE AND
CONSTRUCTION CONCEPTS
• includes elements such as the climate, topography , water
resources, geographical location and natural environment of the
region, as well as the amount of soil and fertility and natural
resources .
• Recently, technological innovations have been the most dynamic
source of economic change and development. However,
technological change has not always occurred so quickly in
history. Stone age technology has survived for thousands of years
without much change.
• certain technological level set the upper limits of its economic
success. However, these limits could be expanded with
technological change, discovery of new resources, more efficient
use of production factors and especially labor.

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 1.3.3. SOCIAL INSTITUTIONS AND
ECONOMIC PERFORMANCE

The relationships among population, resources, and technology in an

economy are also influenced by social and economic institutions,
including value judgments and attitudes.
national economies or other larger political units such as empires,
social institutions consist of complex elements such as the political
system, the ideological tendencies of the dominant groups and
masses, as well as the characteristics of the social structure,
including the number, size, economic base and
economic institutions, the degree of state control over property rights
and economic resources is of great importance.

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 1.3.3. SOCIAL INSTITUTIONS AND
ECONOMIC PERFORMANCE
• The most important social function of institutions is their contribution
to continuity and stability. In this respect, while performing these
functions, institutions can prevent economic development by
preventing rational use of resources, preventing innovation or
delaying the spread of new technologies.
• On the other hand, institutional innovations can enable more
effective and intensive use of material resources such as
technological changes, human energy and creativity. Examples of
such institutional innovations include organized markets, coins,
patents, insurance, and various forms of enterprise .
• The concept of explanation is to establish a theory with a high
informative content and understandable. means to presuppose the
falsifiability of this theory . By testing the theories in the field of
economic history with historical data, a conclusion can be reached
about their correctness or inaccuracy.
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 1.4. TWO ECONOMIC REVOLUTIONS

• Human economic history can be written within the framework of two

fundamental changes that fundamentally change the economic
performance of societies and enable long-term economic growth.
• these two changes was BC. The agricultural revolution that emerged
in the 8th millennium B.C. and transformed human groups that
previously lived by hunting and gathering into farming and shepherd
societies; the second one, which started in the 18th century and
radically reduced the world's population engaged in agriculture in a
short period of two centuries (from 80-90% in the 1950s to 50-60% in
the 1950s), which made people increasingly a producer of services
and manufactured goods. is the industrial revolution.

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 1.4. TWO ECONOMIC REVOLUTIONS
It is possible to see the results of these two major changes most
clearly in the development of the world population. M.O. Around 10
000 years, the world population was around 5-10 million. Before the
agricultural revolution, the upper limit that the world's population
could reach was estimated to be 20 million. With the agricultural
revolution, man managed to cross this limit for the first time.
The world population increased rapidly in the 10-12 thousand years
until the industrial revolution and reached around 750 million in 1750.
This was the maximum the world's population could reach in the pre-
industrial era. The industrial revolution, which is the second greatest
material success of man in dominating his natural environment,
caused an explosion in the world population, and the world
population of 750 million in 1750 was 1.2 billion in 1850, 1.6 billion in
1900 and 2 in 1950. reached nearly 5 billion.

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