Read the text History of economic thought

Malcolm Humphrey

Word origin

At leisure 1. Read the article without a dictionary, try to retell it.

Robot: a slave

A long familiar word, but brought into wide notice by the play «R.U.R.» (Rossum’s Universal Robots) written by Karel Čapek in 1929. In his play these manmade mechanical robots overpower human beings. The term robot is from the Czech word robotnik, «slave», which goes back to the term robota, «work».

2. Translate the proverbs, think of Russian equivalents, give a
situation using them

— First catch your hare, then cook him

— Friends are thieves of time

3. The poem to enjoy. Try to learn it by heart.

This warm September Day

Orchards are apple scented, Mists across the meadow lie, The sun is soft and golden In the blue and kindly sky.

Asters, pinks and roses Make the gardens gay. Loveliness is everywhere. This warm September day!

Unit 2

Pre-text exercises

1. To have no problems with pronunciation of new words from the
text find their transcription in a dictionary, try to read them fluently:
wealth, precious, medieval, merchant, experience, scarcity, abundance,
echo.

2. Word-building
Complete and translate:
produce υ. + -tion →
skill n. + -ful →
think υ. + -er →

base n. + -ic →

weak a. + -ness →

relation n. -ship →

satisfy υ. + -tion → consume υ. + -er → Consult a dictionary for correct spelling

Economic thought goes back thousands of years. The ancient Greek, Xenophon, used the word oikonomikos (from oikos, meaning family, household, estate, and nomos, for usage, law). He was talking about skilful or clever ways to manage land and households. We could call many of Aristotle’s political writings economics, although he did not use the word. The English word economics first appeared in the 19th century two and a half thousand years after Xenophon.

Early economic thought was all about the meaning of wealth or being rich. These early thinkers asked, «what makes a state or a country wealthy?» For nearly 2,000 years, the answer was very simple: gold. A country or nation’s wealth depended on its owning precious metals. This simple view of the economy remained until medieval times.

During medieval times the period between 1100 and 1500 AD, trading between nations grew, and a new social class appeared. These were merchants, people who made their money through the buying and selling of goods, and they began to write their own thoughts on the economy. They saw the economy as a way to make the state strong. For them, the nation’s wealth depended on stocks of gold and the size of the population. More people meant bigger armies and a stronger state.

These were still simple ideas. However, daily experience had also taught people many basic economic concepts. For example, they under­stood the importance of trade with other states. They realised that scarcity makes things more expensive and abundance makes them cheaper.

Modern economics was really born in the 19th century. At this time, thinkers like Adam Smith wrote down ideas that are still important today. Adam Smith is often called the Father of Modem Economics, although the science was called political economy then. Smith realised

that a nation’s wealth depended on its ability to produce goods. The value of these goods depended on the cost of production. The cost of production depended on the cost of workers, raw materials and land. This was really the first example of macroeconomics.

Smith and other classical economists were writing at a time of great changes. The industrial revolution had begun. Paper money began to replace precious metals. The middle classes were growing stronger. Economists’ theories echoed these changes. They wrote about the division of labour (each worker taking their part in the production process). They discussed the problems of population growth. They influenced thinking about social classes.

For classical economists, the value of goods depends on the cost of production. However, the price of goods is not always the same as their real cost. Later economists developed new theories to explain this weakness in classical economics. These are known as the neoclassical economists and they were writing at the end of the 19th and early 20th centuries.

In neoclassical economics, supply and demand make the economy work. In other words, the price of goods depends on how much people want them and how easily they can be found. Consumers want satisfaction from their resources (time and money). Firms want profit. In neoclassical economics, this is the basic relationship in the economy. These ideas are still the basis of economic thinking today.

Words:

household — домашнее goods — товары

хозяйство to replace — заменять

precious — драгоценный to influence — влиять

to depend on — зависеть to echo — вторить

medieval — средневековый weakness — слабость

merchant — купец consumer — покупатель, клиент

own — собственный satisfaction — удовлетворение

to mean — значить profit — прибыль

stocks — запасы supply and demand — предложение

scarcity — нехватка и спрос

abundance — изобилие (в русском языке принят обратный по-
ability — способность рядок слов — спрос и предложение)

Post-text exercises

Working on the text

I. Find the answers in the text:

I. When did the English word «economics» first appear? 2. How do we call the period between 1100 and 1500 AD? 3. Who made their money through the buying and selling of goods? 4. Whom do we call the Father of Modern Economics? 5. According to Smith on what does a nation’s wealth depend? 6. What had taught people basic economic concepts? 7. Does abundance make things more expensive? 8. By what was paper money replaced after the industrial revolution? 9. How can you call the situation when each worker took his part in the production process? 10. What makes the economy work?

II. Complete the sentences as in the tex t.

— The English word «economics» first appeared…

— Early economic thought was…

— Scarcity makes thing more…

— The value of goods depends on…

— Later economists developed new theories to explain…

III. Complete each sentence with a word or phrase from the
box.

— Abundance — Precious metals

— Concept — Production process

— Consumer — Profit

— Firm — Raw materials

— Industrial revolution — Satisfaction

— Population — Scarcity

1. The ……………………began in the late 18^th century when
machines started to replace human workers.

2. Sand and limestone are the ……………………………. needed to make glass.

3. The …………………………..to make a car involves many people and machines.

4. The extra money a company makes is called…………………...

5. People want ………………..from the products they buy.

6. …………………………… is when there is very little of
something.

7. …………………………… is when there is lots of something.

8. Gold and silver are examples of ………………………………….

9. Another word for idea is …………………………………..

10. The …………………………. is the number of people a country
has.

11. A business or company is sometimes called a ………………………..

12. When we buy things or use services we are a …………………….

IV. Now read the text again and decide whether these statements
are true or false.

1. Aristotle did not use the word «economics», but he did write about economic ideas.

2. Early economists thought that a nation without gold was poor.

3. People in medieval times didn’t understand anything about
economics.

4. In classical economics, the value of something was measured in gold.

5. Economists later found a problem with the classical model.

6. In neoclassical economics, supply and demand control price.

V. Say what you have learned about:

— Merchants, people who made …

— Father of modern economics

— Supply and demand

— Appearance of paper money

— Social classes

— Neoclassical economics

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