Economic history of the world - AbsoluteAstronomy.com

For the academic discipline, see Economic history
Economic history
Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...

. For the history of economics see History of economic thought
History of economic thought
The history of economic thought deals with different thinkers and theories in the subject that became political economy and economics from the ancient world to the present day...

. For the wider view of the economics of nature see Ecological Economics
Ecological economics
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The Economic History Of The World is a record of the economic activities (i.e. the production, distribution and consumption of goods and services) of all humans, spanning both recorded history and evidenced prehistory.

Prehistory

The primary economic activities of prehistoric humans were hunting, gathering and the manufacture of tools, clothing and shelter.

Ancient economic legal codes and formula

The city states of Sumer

Sumer

Sumer was a civilization and historical region in southern Mesopotamia, modern Iraq during the Chalcolithic and Early Bronze Age....

developed a trade and market economy

Economy

An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...

based originally on the commodity money

Commodity money

Commodity money is money whose value comes from a commodity out of which it is made. It is objects that have value in themselves as well as for use as money....

of the Shekel

Shekel

Shekel , is any of several ancient units of weight or of currency. The first usage is from Mesopotamia around 3000 BC. Initially, it may have referred to a weight of barley...

which was a certain weight measure of barley

Barley

Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...

, while the Babylonians and their city state neighbors later developed the earliest system of economics

Economics

Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

using a metric

Metric (mathematics)

In mathematics, a metric or distance function is a function which defines a distance between elements of a set. A set with a metric is called a metric space. A metric induces a topology on a set but not all topologies can be generated by a metric...

of various commodities, that was fixed in a legal code. The early law codes from Sumer could be considered the first (written) economic formula, and had many attributes still in use in the current price system

Price system

In economics, a price system is any economic system that affects its distribution of goods and services with prices and employing any form of money. Except for possible remote and primitive communities, all modern societies use price systems to allocate resources...

today... such as codified amounts of money

Money

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...

for business deals (interest rates), fines in money for 'wrong doing', inheritance rules, laws concerning how private property is to be taxed or divided, etc. For a summary of the laws, see Babylonian law

Babylonian law

Archaeological material for the study of Babylonian law is singularly extensive. So-called "contracts" exist in the thousands, including a great variety of deeds, conveyances, bonds, receipts, accounts, and most important of all, actual legal decisions given by the judges in the law courts...

.

Temples are history's first documented creditors at interest, beginning in Sumer

Sumer

Sumer was a civilization and historical region in southern Mesopotamia, modern Iraq during the Chalcolithic and Early Bronze Age....

in the third millennium. By charging interest and ground rent on their own assets and property, temples helped legitimize the idea of interest‑bearing debt and profit seeking in general. Later, while the temples no longer included the handicraft workshops which characterized third‑millennium Mesopotamia

Mesopotamia

Mesopotamia is a toponym for the area of the Tigris–Euphrates river system, largely corresponding to modern-day Iraq, northeastern Syria, southeastern Turkey and southwestern Iran.Widely considered to be the cradle of civilization, Bronze Age Mesopotamia included Sumer and the...

, in their embassy functions they legitimized profit‑seeking trade, as well as by being a major beneficiary.

Greek and Italian city states

Ancient Greek and Roman thinkers made various economic observations, especially Aristotle

Aristotle

Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology...

and Xenophon

Xenophon

Xenophon , son of Gryllus, of the deme Erchia of Athens, also known as Xenophon of Athens, was a Greek historian, soldier, mercenary, philosopher and a contemporary and admirer of Socrates...

. Many other Greek writings show understanding of sophisticated economic concepts. For instance, a form of Gresham’s Law is presented in Aristophanes

Aristophanes

Aristophanes , son of Philippus, of the deme Cydathenaus, was a comic playwright of ancient Athens. Eleven of his forty plays survive virtually complete...

’ Frogs. Bryson of Heraclea

Bryson of Heraclea

Bryson of Heraclea was an ancient Greek mathematician and sophist who contributed to solving the problem of squaring the circle and calculating pi.-Life and work:...

was a neo-platonic who is cited as having heavily influenced early Muslim economic scholarship.

Money, economics and barter

Barter

Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...

like methods may date back to at least 100,000 years ago. Trading in red ochre is attested in Swaziland

Swaziland

Swaziland, officially the Kingdom of Swaziland , and sometimes called Ngwane or Swatini, is a landlocked country in Southern Africa, bordered to the north, south and west by South Africa, and to the east by Mozambique...

, shell jewellery in the form of strung beads also dates back to this period, and had the basic attributes needed of commodity money

Commodity money

Commodity money is money whose value comes from a commodity out of which it is made. It is objects that have value in themselves as well as for use as money....

. To organize production and to distribute goods and services among their populations, before market economies existed, people relied on tradition, top-down command, or community cooperation.

According to Herodotus

Herodotus

Herodotus was an ancient Greek historian who was born in Halicarnassus, Caria and lived in the 5th century BC . He has been called the "Father of History", and was the first historian known to collect his materials systematically, test their accuracy to a certain extent and arrange them in a...

, and most modern scholars, the Lydians

Lydians

The Lydians were the inhabitants of Lydia, a region in western Anatolia, who spoke the distinctive Lydian language, an Indo-European language of the Anatolian group....

were the first people to introduce the use of gold and silver coin. It is thought that these first stamped coins

COinS

ContextObjects in Spans, commonly abbreviated COinS, is a method to embed bibliographic metadata in the HTML code of web pages. This allows bibliographic software to publish machine-readable bibliographic items and client reference management software to retrieve bibliographic metadata. The...

were minted around 650-600 BC. A stater coin was made in the stater (trite) denomination. To complement the stater, fractions were made: the trite (third), the hekte (sixth), and so forth in lower denominations.

The first banknotes were used in Tang Dynasty

Tang Dynasty

The Tang Dynasty was an imperial dynasty of China preceded by the Sui Dynasty and followed by the Five Dynasties and Ten Kingdoms Period. It was founded by the Li family, who seized power during the decline and collapse of the Sui Empire...

China in the 9th century (with expanded use during the Song Dynasty

Song Dynasty

The Song Dynasty was a ruling dynasty in China between 960 and 1279; it succeeded the Five Dynasties and Ten Kingdoms Period, and was followed by the Yuan Dynasty. It was the first government in world history to issue banknotes or paper money, and the first Chinese government to establish a...

), and the first in Europe issued by Stockholms Banco

Stockholms Banco

Stockholms Banco in Sweden was the first European bank to print banknotes. The bank was founded in 1657 by Johan Palmstruch and began printing banknotes in 1661...

in 1661.

In the Western world, a prevalent term for coin-money has been specie, stemming from Latin in specie "in kind".

Middle Ages

In the Middle Ages world economy slowly expanded with the increase of population and trade. The silk road was used for trading between Europe, Central Asia and China. During early period of the Middle Ages Europe was an economic backwater, however, by the later Medieval period rich trading cities in Italy emerged, creating first modern accounting and finance systems.

The Industrial Revolution

Economic history as it relates to economic growth

Economic growth

In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...

in the modern sense first occurred during the industrial revolution

Industrial Revolution

The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

in the West, due to high amounts of energy conversion

Energy conversion

Transforming energy is when the energy changes into another form.In physics, the term energy describes the capacity to produce changes within a system, without regard to limitations in transformation imposed by entropy...

taking place.

The 20th Century

Economic growth spread to all regions of the world during the 20th century, when world GDP per capita quintupled. The highest growth occurred in the 1960s during post-war reconstruction and in the early 2000s, driven by new technology and globalization

Globalization

Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

Economic theory developments

By the 20th century, the industrial revolution had led to an exponential increase in the human consumption of resources. The increase in health, wealth and population was perceived as a simple path of progress. However, in the 1930s economists began developing models of non-renewable resource

Non-renewable resource

A non-renewable resource is a natural resource which cannot be produced, grown, generated, or used on a scale which can sustain its consumption rate, once depleted there is no more available for future needs. Also considered non-renewable are resources that are consumed much faster than nature...

management (see Hotelling's Rule

Hotelling's rule

Hotelling's rule states that the most socially and economically profitable extraction path of a non-renewable resource is one along which the price of the resource, determined by the marginal net revenue from the sale of the resource, increases at the rate of interest...

) and the sustainability of welfare in an economy that uses non-renewable resources (Hartwick's Rule

Hartwick's Rule

In resource economics, Hartwick's rule defines the amount of investment in produced capital that is needed to exactly offset declining stocks of non-renewable resources. This investment is undertaken so that the standard of living does not fall as society moves into the indefinite future...

).

Concerns about the environmental and social impacts of industry were expressed by some Enlightenment

Age of Enlightenment

The Age of Enlightenment was an elite cultural movement of intellectuals in 18th century Europe that sought to mobilize the power of reason in order to reform society and advance knowledge. It promoted intellectual interchange and opposed intolerance and abuses in church and state...

political economists and in the Romantic

Romanticism

Romanticism was an artistic, literary and intellectual movement that originated in the second half of the 18th century in Europe, and gained strength in reaction to the Industrial Revolution...

movement of the 1800s. Overpopulation was discussed in an essay by Thomas Malthus

Thomas Malthus

The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

(see Malthusian catastrophe

Malthusian catastrophe

A Malthusian catastrophe was originally foreseen to be a forced return to subsistence-level conditions once population growth had outpaced agricultural production...

), while John Stuart Mill

John Stuart Mill

John Stuart Mill was a British philosopher, economist and civil servant. An influential contributor to social theory, political theory, and political economy, his conception of liberty justified the freedom of the individual in opposition to unlimited state control. He was a proponent of...

foresaw the desirability of a "stationary state" economy, thus anticipating concerns of the modern discipline of ecological economics

Ecological economics

Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...

.

Ecological economics was founded in the works of Kenneth E. Boulding

Kenneth E. Boulding

Kenneth Ewart Boulding was an economist, educator, peace activist, poet, religious mystic, devoted Quaker, systems scientist, and interdisciplinary philosopher. He was cofounder of General Systems Theory and founder of numerous ongoing intellectual projects in economics and social science. He was...

, Nicholas Georgescu-Roegen

Nicholas Georgescu-Roegen

Nicholas Georgescu-Roegen, born Nicolae Georgescu was a Romanian mathematician, statistician and economist, best known for his 1971 magnum opus The Entropy Law and the Economic Process, which situated the view that the second law of thermodynamics, i.e., that usable "free energy" tends to disperse...

, Herman Daly

Herman Daly

Herman Daly is an American ecological economist and professor at the School of Public Policy of University of Maryland, College Park in the United States....

and others. The disciplinary field of ecological economics also bears some similarity to the topic of green economics.

According to ecological economist Malte Faber, ecological economics is defined by its focus on nature, justice, and time. Issues of intergenerational equity

Intergenerational equity

Intergenerational equity in economic, psychological, and sociological contexts, is the concept or idea of fairness or justice in relationships between children, youth, adults and seniors, particularly in terms of treatment and interactions. It has been studied in environmental and sociological...

, irreversibility

Irreversibility

In science, a process that is not reversible is called irreversible. This concept arises most frequently in thermodynamics, as applied to processes....

of environmental change, uncertainty

Uncertainty

Uncertainty is a term used in subtly different ways in a number of fields, including physics, philosophy, statistics, economics, finance, insurance, psychology, sociology, engineering, and information science...

of long-term outcomes, and sustainable development

Sustainable development

Sustainable development is a pattern of resource use, that aims to meet human needs while preserving the environment so that these needs can be met not only in the present, but also for generations to come...

guide ecological economic analysis and valuation.

Financial economic growth reverses

The world economy was predicted to shrink by between 0.5% and 1.0% in 2009, the first global contraction in 60 years. In its forecast the International Monetary Fund (IMF) said that developed countries will suffer "deep recession".

Energy in economics

Energy accounting

Energy accounting is a system used within industry, where measuring and analyzing the energy consumption of different activities is done to improve energy efficiency.-Energy management:...

is proposed in the early 1930s as a scientific alternative to a price system

Price system

, or money method of regulating society. Joseph Tainter

Joseph Tainter

Joseph A. Tainter is a U.S. anthropologist and historian.Tainter studied anthropology at the University of California and Northwestern University, where he received his Ph.D. in 1975. He is currently a professor in the Department of Environment and Society at Utah State University...

suggests that diminishing returns of the EROEI

EROEI

In physics, energy economics and ecological energetics, energy returned on energy invested ; or energy return on investment , is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource...

is a chief cause of the collapse of complex societies. Falling EROEI due to depletion of non-renewable resources also poses a difficult challenge for industrial economies. Sustainability

Sustainability

Sustainability is the capacity to endure. For humans, sustainability is the long-term maintenance of well being, which has environmental, economic, and social dimensions, and encompasses the concept of union, an interdependent relationship and mutual responsible position with all living and non...

becomes an issue as survival is threatened due to climate change.

Thermoeconomists claim that human economic system

Economic system

An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...

s can be modeled as thermodynamic system

Thermodynamic system

A thermodynamic system is a precisely defined macroscopic region of the universe, often called a physical system, that is studied using the principles of thermodynamics....

s. Then, based on this premise, they attempt to develop theoretical economic analogs of the first

First law of thermodynamics

The first law of thermodynamics is an expression of the principle of conservation of work.The law states that energy can be transformed, i.e. changed from one form to another, but cannot be created nor destroyed...

and second

Second law of thermodynamics

The second law of thermodynamics is an expression of the tendency that over time, differences in temperature, pressure, and chemical potential equilibrate in an isolated physical system. From the state of thermodynamic equilibrium, the law deduced the principle of the increase of entropy and...

laws of thermodynamics. In addition, the thermodynamic quantity exergy

Exergy

In thermodynamics, the exergy of a system is the maximum useful work possible during a process that brings the system into equilibrium with a heat reservoir. When the surroundings are the reservoir, exergy is the potential of a system to cause a change as it achieves equilibrium with its...

, i.e. measure of the useful work energy of a system, is the most important measure of value

Value theory

Value theory encompasses a range of approaches to understanding how, why and to what degree people should value things; whether the thing is a person, idea, object, or anything else. This investigation began in ancient philosophy, where it is called axiology or ethics. Early philosophical...

. In thermodynamics, thermal systems exchange heat

Heat

In physics and thermodynamics, heat is energy transferred from one body, region, or thermodynamic system to another due to thermal contact or thermal radiation when the systems are at different temperatures. It is often described as one of the fundamental processes of energy transfer between...

, work

Work (thermodynamics)

In thermodynamics, work performed by a system is the energy transferred to another system that is measured by the external generalized mechanical constraints on the system. As such, thermodynamic work is a generalization of the concept of mechanical work in mechanics. Thermodynamic work encompasses...

, and or mass

Mass

Mass can be defined as a quantitive measure of the resistance an object has to change in its velocity.In physics, mass commonly refers to any of the following three properties of matter, which have been shown experimentally to be equivalent:...

with their surroundings; in this direction, relations between the energy

Energy

In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...

associated with the production

Production, costs, and pricing

The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...

, distribution

Distribution (business)

Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...

, and consumption

Consumption (economics)

Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...

of goods and services can be determined.