It has been shown above that there
is a close relationship between economic history and the history of economic
thought. The question arises about the importance of the study of the latter –
a history spread over a lengthy period of about 2,500 years, at a time when we
are already faced with numerous economic problems awaiting solution. It is
important as it has the following advantages:-
a)The history of economic thought
clearly demonstrates a continuous development of economic ideas from the very
early times of human civilization down to the present day. It also enable one
to realize the true position of economic as a separated subject , related to
other social science. Sometimes people demand beautiful things, here economic
is related to aesthetics. What is
uneconomical is immoral because
economics and ethics are closely related. In the beginning social values
were the same. Therefore, in order to have a clear picture of the economic life
of the ancients and medieval one has to study this subject.
b)Economic ideas, as they have
development from time to time, have been instrumental in shaping the economic
and political policies of different countries. The study will , therefore ,
reveal the various phases of their economic development which makes possible
the study of a comparative history.
c)It is a fact that history repeats itself. The history of
economic thought provides the modern generation with the solutions to modern
problem. Even nation has a separate political economic entity. Its interests
and conditions are quite different from those of others. Hence, the importance
of economic nationalization which was propounded by mercantilism. When the
U.S.A, Germany and India were faced with the deadly ghost of foreign
competition, in the 18th, 19th, and 20th centuries honor, the same policy
was advocated, in a modified from by H.C Carey, Frederic list and M.G, Ranade.
It is the preservation of the history of economic thought that handed down the
old remedy of protection to the generations.
d)Ideas when they are judged by
the criterion of dogmatic absolutism, are not studied properly as they are not
applicable to modern social conditions. But when the same economic ideas are
studied by the criterion of relativity I, e, in relation to time and place,
their critical examination reveals their utility. They become real. Medieval
thinkers were not wrong when they condemned the realization of interest because
in those days money was borrowed for consumption purposes. As religion
dominated economic thought and as morality was highly appreciated , profit
earning in the form of interest was not considered justified. In modern tines.
When industrial and commercial development have taken place, Money is mostly
borrowed for investment as a result of which businessmen and investor high
profits. The lender must get remuneration for his waiting and sacrifice. It is,
then, the changed circumstances in which the theories of profit have been
proceed and the charging of interest is justified , thus, the concept of
relativity provides a sense of realistic approach. The history of economic
thought brings out an important truth-that emphasis should be laid on the
development of economic ideas and not on personalities.
