Economists Do It With Models

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The Birth Of Capitalism…

May 14th, 2012 · 7 Comments
Economic Growth · Just For Fun

Greg Mankiw refers to this as “Economic Principle Number 5: Trade can make everyone better off”:

Trade is important because, without it, it would be pretty difficult for some of us to survive only consuming what we produce well, especially those of us who haven’t figured out how to eat economics lessons yet. Technically, however, trade only gets us part of the way to what we would consider capitalism, since direct trade (i.e. barter) still requires a double coincidence of wants. The guys in the example above are fortunate in that each wants what the other has (hence double), but this isn’t usually the case, since, as far as I know, I don’t see a plethora of farmers and house builders consuming my economics lessons. (Holler if you’re out there, though.) Therefore, I’m guessing things really started taking off when these guys figured out how to use some of the smaller rocks as money.

Tags: Economic Growth · Just For Fun

7 responses so far ↓

  • 1 Punditus Maximus // May 14, 2012 at 11:06 pm

    Isn’t the first known money cuneiform tablets?

  • 2 melaku // May 21, 2012 at 1:34 am

    good clarification

  • 3 Nate // May 29, 2012 at 1:52 am

    It’s a bit outside my area of study, but I think the first example known example of what we would recognize as money were shells, in… China maybe? Asia at the very least.

  • 4 A origem da economia de mercado | Macroeconomia: teoria e prática // Jun 2, 2012 at 11:09 pm

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  • 5 Garima Siwach // Jun 7, 2012 at 3:20 am

    Shells, beads, even livestock for that matter, and all over the world. Though the first forms go back to Babylonian Civilization in around 1700 B.C. I think. It better be right, else my sleepless nights over the last paper I wrote will have proved a waste!
    (Oh and I know that wasn’t really the point you were trying to make)

  • 6 Steve Lasseter // Aug 30, 2012 at 8:36 pm

    If both of the Cavemen believe they got the better deal did their economy improve?

  • 7 raze-123.com // Dec 29, 2014 at 3:44 am

    You’ll also need to take into account the punishing effect of unhappiness on your civilization if you conquer too many cities.
    Mad – World is just the latest addition to their original soundtrack offerings.
    If you can afford it I’d advise allying with any City State, especially those closest
    to you, because they’ll also give you military assistance.

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