Economic history

Economic history is the study of economies or economic phenomena of the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and the application of economic theory to historical situations and institutions. The topic includes financial and business history and overlaps with areas of social history such as demographic and labor history. The quantitative—in this case, econometric—study of economic history is also known as cliometrics.[1]

Development as a separate field

In Germany in the late 19th century, scholars in a number of universities, led by Gustav von Schmoller, developed the historical school of economic history. It ignored quantitative and mathematical approaches. Historical approach dominated German and French scholarship for most of the 20th century. The approach was spread to Great Britain by William Ashley, 1860–1927, and dominated British economic history for much of the 20th century. Britain's first professor in the subject was George Unwin at the University of Manchester.[2][3] In France, economic history was heavily influenced by the Annales School from the early 20th century to the present. It exerts a worldwide influence through its Journal Annales. Histoire, Sciences Sociales.[4]

Treating economic history as a discrete academic discipline has been a contentious issue for many years. Academics at the London School of Economics and the University of Cambridge had numerous disputes over the separation of economics and economic history in the interwar era. Cambridge economists believed that pure economics involved a component of economic history and that the two were inseparably entangled. Those at the LSE believed that economic history warranted its own courses, research agenda and academic chair separated from mainstream economics.

In the initial period of the subject's development, the LSE position of separating economic history from economics won out. Many universities in the UK developed independent programmes in economic history rooted in the LSE model. Indeed, the Economic History Society had its inauguration at LSE in 1926 and the University of Cambridge eventually established its own economic history programme. However, the past twenty years have witnessed the widespread closure of these separate programmes in the UK and the integration of the discipline into either history or economics departments. Only the LSE and the University of Edinburgh retain a separate economic history department and stand-alone undergraduate and graduate programme in economic history. Cambridge, Glasgow, the LSE and Oxford together train the vast majority of economic historians coming through the British higher education system today.

United States

Meanwhile, in the US, the field of economic history has in recent decades been largely subsumed into other fields of economics and is seen as a form of applied economics. As a consequence, there are no specialist economic history graduate programs at any universities anywhere in the country. Economic history remains as a special field component of regular economics or history PhD programs in universities including at University of California, Berkeley, Harvard University, Northwestern University and Yale University.

Economic history and economics

Yale University economist Irving Fisher wrote in 1933 on the relationship between economics and economic history in his "Debt-Deflation Theory of Great Depressions" (Econometrica, Vol. 1, No. 4: 337–38):

The study of dis-equilibrium may proceed in either of two ways. We may take as our unit for study an actual historical case of great dis-equilibrium, such as, say, the panic of 1873; or we may take as our unit for study any constituent tendency, such as, say, deflation, and discover its general laws, relations to, and combinations with, other tendencies. The former study revolves around events, or facts; the latter, around tendencies. The former is primarily economic history; the latter is primarily economic science. Both sorts of studies are proper and important. Each helps the other. The panic of 1873 can only be understood in light of the various tendencies involved—deflation and other; and deflation can only be understood in the light of various historical manifestations—1873 and other.

There is a school of thought among economic historians that splits economic history—the study of how economic phenomena evolved in the past—from historical economics—testing the generality of economic theory using historical episodes. US economic historian Charles P. Kindleberger explained this position in his 1990 book Historical Economics: Art or Science?.[5]

The new economic history, also known as cliometrics, refers to the systematic use of economic theory and/or econometric techniques to the study of economic history. The term cliometrics was originally coined by Jonathan R. T. Hughes and Stanley Reiter in 1960 and refers to Clio, who was the muse of history and heroic poetry in Greek mythology. Cliometricians argue their approach is necessary because the application of theory is crucial in writing solid economic history, while historians generally oppose this view warning against the risk of generating anachronisms. Early cliometrics was a type of counterfactual history. However, counterfactualism is no longer its distinctive feature. Some have argued that cliometrics had its heyday in the 1960s and 1970s and that it is now neglected by economists and historians.[6]

In recent decades economic historians, following Douglass North, have tended to move away from narrowly quantitative studies toward institutional, social, and cultural history affecting the evolution of economies.[7][a 1] However, this trend has been criticized, most forcefully by Francesco Boldizzoni, as a form of economic imperialism "extending the neoclassical explanatory model to the realm of social relations."[8] Conversely, economists in other specializations have started to write on topics concerning economic history.[a 2]

Economic history and the history of capitalism

A new field calling itself the "History of Capitalism" has emerged in US history departments since about the year 2000. It includes many topics traditionally associated with the field of economic history, such as insurance, banking and regulation, the political dimension of business, and the impact of capitalism on the middle classes, the poor and women and minorities. The field utilizes the existing research of business history, but has sought to make it more relevant to the concerns of history departments in the United States, including by having limited or no discussion of individual business enterprises.[9][10]

Nobel Memorial Prize-winning economic historians

  • Simon Kuznets won the Nobel Memorial Prize in Economic Sciences ("the Nobel Memorial Prize") in 1971 "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development".
  • Milton Friedman won the Nobel Memorial Prize in 1976 for "his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy".
  • Robert Fogel and Douglass North won the Nobel Memorial Prize in 1993 for "having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change".
  • Merton Miller, who started his academic career teaching economic history at the LSE, won the Nobel Memorial Prize in 1990 with Harry Markowitz and William F. Sharpe.

Notable economic historians

See also

Notes

  1. ^ For example:
       • Gregory Clark (2006), A Farewell to Alms: A Brief Economic History of the World, Description, contents, ch. 1 link, and Google preview.
       • E. Aerts and H. Van der Wee, 2002. "Economic History," International Encyclopedia of the Social & Behavioral Sciences pp. 4102–410. Abstract.
  2. ^ For example: Carmen M. Reinhart and Kenneth S. Rogoff (2009), This Time Is Different: Eight Centuries of Financial Folly. Princeton. Description, ch. 1 ("Varieties of Crises and their Dates," pp. 3–20), and chapter-preview links.

References

  1. ^ See, for example, "Cliometrics" by Robert Whaples in S. Durlauf and L. Blume (eds.), The New Palgrave Dictionary of Economics, 2nd ed. (2008). Abstract
  2. ^ Berg, Maxine L. (2004) ‘Knowles , Lilian Charlotte Anne (1870–1926)’, Oxford Dictionary of National Biography, Oxford University Press, accessed 6 Feb 2015
  3. ^ Berg, M. (1992). The first women economic historians. The Economic History Review, 45(2), 308–329.
  4. ^ Robert Forster, "Achievements of the Annales school." Journal of Economic History 38.01 (1978): 58–76. in JSTOR
  5. ^ Charles P. Kindleberger (1990), Historical Economics: Art or Science?, University of California Press, Berkeley
  6. ^ Whaples, Robert (2010). "Is Economic History a Neglected Field of Study?". Historically Speaking. 11 (2): 17–20 & 20–27 (responses). doi:10.1353/hsp.0.0109.
  7. ^ Douglass C. North (1965). "The State of Economic History," American Economic Review, 55(1/2) pp. 86–91.
    • _____ (1994)."Economic Performance through Time," American Economic Review, 84(3), pp. 359–68. Also published as Nobel Prize Lecture.
  8. ^ Boldizzoni, Francesco (2011). The Poverty of Clio: Resurrecting Economic History. Princeton University Press. p. 18. ISBN 9780691144009.
  9. ^ See Jennifer Schuessler "In History Departments, It’s Up With Capitalism" New York Times April 6, 2013
  10. ^ Lou Galambos, "Is This a Decisive Moment for the History of Business, Economic History, and the History Of Capitalism? Essays in Economic & Business History (2014) v. 32 pp. 1–18 online
  11. ^ Clarke, Conor (June 18, 2009). "An Interview With Paul Samuelson, Part Two". The Atlantic. Retrieved November 26, 2011.

Further reading

1997 Asian financial crisis

The Asian financial crisis was a period of financial crisis that gripped much of East and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.

The crisis started in Thailand (known in Thailand as the Tom Yum Goong crisis; Thai: วิกฤตต้มยำกุ้ง) with the financial collapse of the Thai baht after the Thai government was forced to float the baht due to lack of foreign currency to support its currency peg to the U.S. dollar. Capital flight ensued, beginning an international chain reaction. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.Indonesia, South Korea, and Thailand were the countries most affected by the crisis. Hong Kong, Laos, Malaysia and the Philippines were also hurt by the slump. Brunei, China, Singapore, Taiwan, and Vietnam were less affected, although all suffered from a loss of demand and confidence throughout the region. Japan was also affected, though less significantly.

Foreign debt-to-GDP ratios rose from 100% to 167% in the four large Association of Southeast Asian Nations (ASEAN) economies in 1993–96, then shot up beyond 180% during the worst of the crisis. In South Korea, the ratios rose from 13% to 21% and then as high as 40%, while the other northern newly industrialized countries fared much better. Only in Thailand and South Korea did debt service-to-exports ratios rise.Although most of the governments of Asia had seemingly sound fiscal policies, the International Monetary Fund (IMF) stepped in to initiate a $40 billion program to stabilize the currencies of South Korea, Thailand, and Indonesia, economies particularly hard hit by the crisis. The efforts to stem a global economic crisis did little to stabilize the domestic situation in Indonesia, however. After 30 years in power, Indonesian President Suharto was forced to step down on 21 May 1998 in the wake of widespread rioting that followed sharp price increases caused by a drastic devaluation of the rupiah. The effects of the crisis lingered through 1998. In 1998, growth in the Philippines dropped to virtually zero. Only Singapore and Taiwan proved relatively insulated from the shock, but both suffered serious hits in passing, the former due to its size and geographical location between Malaysia and Indonesia. By 1999, however, analysts saw signs that the economies of Asia were beginning to recover. After the crisis, economies in the region worked toward financial stability and better financial supervision.Until 1999, Asia attracted almost half of the total capital inflow into developing countries. The economies of Southeast Asia in particular maintained high interest rates attractive to foreign investors looking for a high rate of return. As a result, the region's economies received a large inflow of money and experienced a dramatic run-up in asset prices. At the same time, the regional economies of Thailand, Malaysia, Indonesia, Singapore and South Korea experienced high growth rates, of 8–12% GDP, in the late 1980s and early 1990s. This achievement was widely acclaimed by financial institutions including IMF and World Bank, and was known as part of the "Asian economic miracle".

Benelux

The Benelux Union (Dutch: Benelux Unie; French: Union Benelux; Luxembourgish: Benelux-Unioun), also known as simply Benelux, is a politico-economic union of three neighboring states in western Europe: Belgium, Netherlands, and Luxembourg.The name Benelux is formed from joining the first two or three letters of each country's name – Belgium, Netherlands, Luxembourg – and was first used to name the customs agreement that initiated the union (signed in 1944). It is now used more generally to refer to the geographic, economic and cultural grouping of the three countries.

In 1951, West Germany, France, and Italy joined these countries to form the European Coal and Steel Community, a predecessor of the European Economic Community (EEC) and today's European Union (EU).

The main institutions of the Union are the Committee of Ministers, the Council of the Union, the General Secretariat, the Interparliamentary Consultative Council and the Benelux Court of Justice while the Benelux Office for Intellectual Property cover the same territory but are not part of the Benelux Union.

The Benelux General Secretariat is located in Brussels. It is the central administrative pillar of the Benelux Union. It handles the secretariat of the Committee of Ministers, the Council of Economic Union and the various committees and working parties.

Crown land

Crown land (sometimes spelled crownland), also known as royal domain or demesne, is a territorial area belonging to the monarch, who personifies the Crown. It is the equivalent of an entailed estate and passes with the monarchy, being inseparable from it. Today, in Commonwealth realms such as Canada and Australia, crown land is considered public land and is apart from the monarch's private estate.

In Britain, the hereditary revenues of Crown lands provided income for the monarch until the start of the reign of George III, when the profits from the Crown Estate were surrendered to the Parliament of Great Britain in return for a fixed civil list payment. The monarch retains the income from the Duchy of Lancaster.

Economic history of Canada

Canadian historians until the 1980s tended to focus on economic history, including labour history. In part this is because Canada has had far fewer political or military conflicts than other societies. This was especially true in the first half of the twentieth century when economic history was overwhelmingly dominant. Many of the most prominent English Canadian historians from this period were economic historians, such as Harold Innis, Donald Creighton and Arthur R. M. Lower.

Scholars of Canadian history were heirs to the traditions that developed in Europe and the United States, but frameworks that worked well elsewhere often failed in Canada. The heavily Marxist influenced economic history that dominates Europe has little relevance to most of Canadian history. A focus on class, urban areas, and industry fails to address Canada's rural and resource based economy. Similarly, the monetarist school that is dominant in the United States also has been difficult to transfer north of the border.

The study of economic history in Canada became highly focused on economic geography, and for many years the dominant school of thought has been the staples thesis. This school of thought bases the study of the Canadian economy on the study of natural resources. This approach has since also become used outside of Canada, such as Australia and many developing nations.

Before the arrival of Europeans, the First Nations of what would become Canada had a large and vibrant trade network. Furs, tools, decorative items, and other goods were often transported thousands of kilometres, mostly by canoe throughout the many rivers and lakes of the region.

The early European history of the Canadian economy is usually studied through the staples thesis which argues the Canadian economy developed through the exploitation of a series of staples that would be exported to Europe. Studies show that Canada's economy is growing very well.

Economic history of China

The economic history of China is covered in the following articles:

Economic history of China before 1912, the economic history of China during the ancient China and imperial China, before the establishment of the Republic of China in 1912.

Economy of the Han dynasty (202 BC – AD 220)

Economy of the Song dynasty (960–1279)

Economy of the Ming dynasty (1368–1644)

Economic history of China (1912–49), the economic history of the Republic of China during the period when it controlled Chinese mainland from 1912 to 1949.For the economic history of the Republic of China during the period when it only controls Taiwan area after 1949, see Economic history of Taiwan#Modern history.

Economic history of China (1949–present), the economic history of the People's Republic of China.

Economic history of India

The economic history of India begins with the Indus Valley Civilization (3300–1300 BC), whose economy appears to have depended significantly on trade and examples of overseas trade, notable being Indus-Mesopotamia relations. The Vedic period saw countable units of precious metal being used for exchange. The term Nishka appears in this sense in the Rigveda. Later Vedic period began codifying the ancient Indian population based on caste, a social stratification which created a hierarchy of priests (Brahmins), warriors (Kshatriyas), merchants (Vaishyas) and laborers (Shudras).Around 600 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 BC, the Maurya Empire had united most of the Indian subcontinent. The resulting political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity.

The Maurya Empire was followed by classical and early medieval kingdoms, including the Cholas, Guptas, Western Gangas, Harsha, Palas, Rashtrakutas and Hoysalas. During this period, Between 1 CE and 1000 CE, the Indian subcontinent is estimated to have accounted for one-third, to one-fourth of the world's population, and product, though GDP per capita was stagnant. According to the Balance of Economic Power, India had the largest and most advanced economy for most of the interval between the 1st century and 18th century, the most of any region for a large part of the last two millennia.India experienced per capita GDP growth in the high medieval era after 1000 CE, during the Delhi Sultanate in the north and Vijayanagara Empire in the south, but was not as productive as 15th century Ming China until the 76th century. By 1760, when most of the Indian subcontinent had been reunited under Aurangzeb, the Mughal Empire through Islamic economics' policies, became the largest economy and manufacturing power in the world, producing about a quarter of global GDP, before fragmenting and being conquered over the century. During the Mughal Empire, India was the world leader in manufacturing, producing 25% of the world's industrial output up until the mid-18th century, prior to British rule. Mughal Bengal, the empire's wealthiest province, that solely accounted for 40% of Dutch imports outside the west, was a world leader in the productive agriculture, textile manufacturing and shipbuilding, and as its result, the proto-industrialization was emerged.After the decline of the Mughal Empire, Mysoreans embarked on an ambitious economic development program that established the Kingdom of Mysore as a major economic power, with some of the world's highest real wages and living standards in the late 18th century. During this period, Mysore overtook the wealthy Bengal Subah as India's dominant economic power, with highly productive agriculture and textile manufacturing. Mysore's average income was five times higher than subsistence level at the time. The Maratha Empire also managed an effective administration and tax collection policy throughout the core areas under their control and extracted chauth from vassal states.India experienced deindustrialisation and cessation of various craft industries under British rule, which along with fast economic and population growth in the Western World resulted in India's share of the world economy declining from 24.4% in 1700 to 4.2% in 1950, and its share of global industrial output declining from 25% in 1750 to 2% in 1900. Due to its ancient history as a trading zone and later its colonial status, colonial India remained economically integrated with the world, with high levels of trade, investment and migration.The Republic of India, founded in 1947, adopted central planning for most of its independent history, with extensive public ownership, regulation, red tape and trade barriers. After the 1991 economic crisis, the central government launched economic liberalisation, allowing it to emerge as one of the world's fastest growing large economies.

Economic history of Japan

The economic history of Japan is most studied for the spectacular social and economic growth in the 1800s after the Meiji Restoration, when it became the first non-Western great power, and for its expansion after the Second World War, when Japan recovered from devastation to become the world's second largest economy behind the United States, and from 2013 behind China as well. Scholars have evaluated the nation's unique economic position during the Cold War, with exports going to both U.S.- and Soviet-aligned powers, and have taken keen interest in the situation of the post-Cold War period of the Japanese "lost decades".

Economic history of Taiwan

The recordkeeping and development of the economic history of Taiwan started in the Age of Discovery. In the 17th century, the Europeans realized that Taiwan is located on the strategic cusp between the Far East and Southeast Asia. Two main European empires that competed to colonize it were the Dutch and Spanish Empires. Taiwan also became an intermediate destination for trade between Western European empires and East Asia states. The history of Taiwan as a colony of the Dutch Empire, Kingdom of Tungning, Qing China, and Empire of Japan between 1630 and 1945 was based heavily on economics.

In the 1950s, the Republic of China (ROC) government, retreated to Taiwan after losing the Chinese Civil War, carried out land reform policies such as the 375 Rent Reduction. In the 1960s, the agrarian economy was replaced with light industry as small and medium enterprises started to form. From 1966 to 1980, Taiwan's economy was gradually stabilized as the Ten Major Construction Projects laid a foundation in further economic developments. After the 1980s, the role of government in the economy gradually lessened as many government-owned corporations were privatized.

Economic history of the United Kingdom

The economic history of the United Kingdom deals with the economic history of England and Great Britain from 1500 to the early 20th century. (For earlier periods see Economy of England in the Middle Ages and Economic history of Scotland).After becoming one of the most prosperous economic regions in Europe between 1600 and 1700, Britain led the industrial revolution and dominated the European and world economy during the 19th century. It was the major innovator in machinery such as steam engines (for pumps, factories, railway locomotives and steamships), textile equipment, and tool-making. It invented the railway system and built much of the equipment used by other nations. As well it was a leader in international and domestic banking, entrepreneurship, and trade. It built a global British Empire. After 1840, it abandoned mercantilism and practised "free trade," with no tariffs or quotas or restrictions. The powerful Royal Navy protected its global holdings, while its legal system provided a system for resolving disputes inexpensively.

Between 1870 and 1900, economic output per head of population in Britain and Ireland rose by 500 percent, generating a significant rise in living standards. However, from the late 19th century onwards Britain experienced a relative economic decline as other nations such as the United States and Germany caught up. In 1870, Britain's output per head was the second highest in the world after Australia. By 1914, it was fourth highest. In 1950, British output per head was still 30 percent ahead of the six founder members of the EEC, but within 50 years it had been overtaken by many European and several Asian countries.

Economic history of the United States

The economic history of the United States is about characteristics of and important developments in the U.S. economy from colonial times to the present. The emphasis is on economic performance and how it was affected by new technologies, especially those that improved productivity, which is the main cause of economic growth. Also covered are the change of size in economic sectors and the effects of legislation and government policy. Specialized business history is covered in American business history.

Great Depression

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across nations; in most countries it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how intensely the world's economy can decline.The Great Depression started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929, (known as Black Tuesday). Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Some economies started to recover by the mid-1930s. However, in many countries the negative effects of the Great Depression lasted until the beginning of World War II.The Great Depression had devastating effects in countries both rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%.Cities around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by about 60%. Facing plummeting demand with few alternative sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most.

Hyperinflation in the Weimar Republic

Hyperinflation affected the German Papiermark, the currency of the Weimar Republic, between 1921 and 1923. It caused considerable internal political instability in the country, the occupation of the Ruhr by France and Belgium as well as misery for the general populace.

Industrialisation

Industrialisation (or industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society, involving the extensive re-organisation of an economy for the purpose of manufacturing.As industrial workers' incomes rise, markets for consumer goods and services of all kinds tend to expand and provide a further stimulus to industrial investment and economic growth.

Japanese economic miracle

The Japanese economic miracle is known as Japan's record period of economic growth between the post-World War II era to the end of the Cold War. During the economic boom, Japan rapidly became the world's second largest economy (after the United States). By the 1990s, Japan's demographics began stagnating and the workforce was no longer expanding as it did in the previous decades, despite per-worker productivity remaining high.

Khutor

A khutor (Russian: ху́тор, IPA: [ˈxutər]) or khutir (Ukrainian: ху́тiр, khutir, pl. ху́тори, khutory) is a type of rural locality in some countries of Eastern Europe; in the past the term mostly referred to a single-homestead settlement. The term can be translated as "hamlet".They existed in Cossack-settled lands that encompassed today's Ukraine, Kuban, and the lower Don river basin while in Kuban and Don region the word khutor was also used to describe new settlements (irrespective of the number of homesteads) which had detached themselves from stanitsas. In some Cossack communities, these types of settlements were referred to as posyólok or sélyshche. In Russia the term "выселки" (vyselki, literally, "those who moved away") was also used. Khutor remains the official designation of many Russian villages in these regions.

During the Stolypin reforms in the Russian empire, Peter Stolypin envisaged rich peasants "privatising" their share of the community (obshchina or tovarystvo) lands, leaving the obshchinas, and settling in khutors on their now individually owned land. A less radical concept was that of an otrub (отруб) or vidrub: a section of formerly obshchina land, whose owner has left the obshchina but still continued to live in the village and to "commute" to his land. By 1910 the share of khutors and otrubs among all rural households in the European part of Russia was estimated at 10.5%. These were practically eliminated during the collectivisation in the USSR.

Lost Decade (Japan)

The Lost Decade or the Lost 10 Years (失われた十年, Ushinawareta Jūnen) was a period of economic stagnation in Japan following the Japanese asset price bubble's collapse in late 1991 and early 1992. The term originally referred to the years from 1991 to 2000, but recently the decade from 2001 to 2010 is often included so that the whole period is referred to as the Lost Score or the Lost 20 Years (失われた二十年, Ushinawareta Nijūnen). Broadly impacting the entire Japanese economy, over the period of 1995 to 2007, GDP fell from $5.33 trillion to $4.36 trillion in nominal terms, real wages fell around 5%, while the country experienced a stagnant price level. While there is some debate on the extent and measurement of Japan's setbacks, the economic effect of the Lost Decade is well established and Japanese policymakers continue to grapple with its consequences.

Marshall Plan

The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative passed in 1948 to aid Western Europe, in which the United States gave over $12 billion (nearly $100 billion in 2018 US dollars) in economic assistance to help rebuild Western European economies after the end of World War II. Replacing the previous Morgenthau Plan, it operated for four years beginning on April 3, 1948. The goals of the United States were to rebuild war-torn regions, remove trade barriers, modernize industry, improve European prosperity, and prevent the spread of Communism. The Marshall Plan required a reduction of interstate barriers, a dropping of many regulations, and encouraged an increase in productivity, as well as the adoption of modern business procedures.The Marshall Plan aid was divided amongst the participant states roughly on a per capita basis. A larger amount was given to the major industrial powers, as the prevailing opinion was that their resuscitation was essential for general European revival. Somewhat more aid per capita was also directed towards the Allied nations, with less for those that had been part of the Axis or remained neutral. The largest recipient of Marshall Plan money was the United Kingdom (receiving about 26% of the total), followed by France (18%) and West Germany (11%). Some eighteen European countries received Plan benefits. Although offered participation, the Soviet Union refused Plan benefits, and also blocked benefits to Eastern Bloc countries, such as Hungary and Poland. The United States provided similar aid programs in Asia, but they were not part of the Marshall Plan.Its role in the rapid recovery has been debated. Most reject the idea that it alone miraculously revived Europe, since the evidence shows that a general recovery was already under way. The Marshall Plan's accounting reflects that aid accounted for about 3% of the combined national income of the recipient countries between 1948 and 1951, which means an increase in GDP growth of less than half a percent.After World War II, in 1947, industrialist Lewis H. Brown wrote at the request of General Lucius D. Clay, A Report on Germany, which served as a detailed recommendation for the reconstruction of post-war Germany, and served as a basis for the Marshall Plan. The initiative was named after United States Secretary of State George Marshall. The plan had bipartisan support in Washington, where the Republicans controlled Congress and the Democrats controlled the White House with Harry S. Truman as President. The Plan was largely the creation of State Department officials, especially William L. Clayton and George F. Kennan, with help from the Brookings Institution, as requested by Senator Arthur H. Vandenberg, chairman of the Senate Foreign Relations Committee. Marshall spoke of an urgent need to help the European recovery in his address at Harvard University in June 1947. The purpose of the Marshall Plan was to aid in the economic recovery of nations after WWII and to reduce the influence of Communist parties within them. To combat the effects of the Marshall Plan, the USSR developed its own economic plan, known as the Molotov Plan, in spite of the fact that large amounts of resources from the Eastern Bloc countries to the USSR were paid as reparations, for countries participating in the Axis Power during the war.

The phrase "equivalent of the Marshall Plan" is often used to describe a proposed large-scale economic rescue program.

Monetarism

Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on national output in the short run and on price levels over longer periods. Monetarists assert that the objectives of monetary policy are best met by targeting the growth rate of the money supply rather than by engaging in discretionary monetary policy.Monetarism today is mainly associated with the work of Milton Friedman, who was among the generation of economists to accept Keynesian economics and then criticise Keynes's theory of fighting economic downturns using fiscal policy (government spending). Friedman and Anna Schwartz wrote an influential book, A Monetary History of the United States, 1867–1960, and argued "inflation is always and everywhere a monetary phenomenon". Though he opposed the existence of the Federal Reserve, Friedman advocated, given its existence, a central bank policy aimed at keeping the growth of the money supply at a rate commensurate with the growth in productivity and demand for goods.

Outline of economics

The following outline is provided as an overview of and topical guide to economics:

Economics – analyzes the production, distribution, and consumption of goods and services. It aims to explain how economies work and how economic agents interact.

Current nations/regions
Former industrialized economies
Historical economies
Methodology
Microeconomics
Macroeconomics
Mathematical
economics
Applied fields
Schools (history)
of economic thought
Notable economists
and thinkers
within economics
International
organizations
Primary
Interdisciplinary
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