Origin and Development of Economics
Origin and Development of Economics
Economics originates from the Greek word Oikonomous, meaning “one who manages a household.” In essence, economics involves managing limited resources to meet various needs — just as a household budget must be balanced. The roots of economic thought trace back to ancient Greece, with philosophers like Plato and Aristotle around 400 BC laying foundational ideas about value, trade, and governance.
The formal study of economics evolved significantly over time and is generally divided into three key periods:
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Classical Period (1776–1890): Initiated by Adam Smith’s The Wealth of Nations, this era emphasized free markets, the role of self-interest, and limited government intervention.
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Neo-classical Period (1890–1932): This phase focused on marginal analysis, utility, and the mathematical modeling of individual decision-making. Economists like Alfred Marshall played a major role.
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Modern Period (1932–present): Marked by John Maynard Keynes and the Great Depression, this era expanded economics to include macroeconomic policies, unemployment, and government roles in stabilizing the economy.
Today, economics is a dynamic social science that explains human behavior, market systems, and policy outcomes.