Atlantic Slave Trade 15th to 19th Centuries
Took place across the Atlantic Ocean from the 15th through to the 19th centuries. The vast majority of those enslaved that were transported to the New World were West Africans from the central and western parts of the continent sold by other western Africans to western European slave traders, with a small minority being captured directly by the slave traders in coastal raids, and brought to the Americas.
The numbers were so great that Africans who came by way of the slave trade became the most numerous Old World immigrants in both North and South America before the late 18th century. More than 12 million people were taken according to one estimate, with 1.5 million of them dying onboard the slave ships and perhaps another 4 million deaths in Africa after capture. Far more slaves were taken to South America than to the North.
The South Atlantic and Caribbean economic system centred on producing commodity crops, and making goods and clothing to sell in Europe, and increasing the numbers of African slaves brought to the New World. This was crucial to those western European countries – mainly England, Portugal, France and Holland – which were vying with each other to create overseas empires in the late 17th and 18th centuries.
The First Atlantic system was the trade of enslaved Africans to, primarily, South American colonies of the Portuguese and Spanish empires from about 1500 to 1580; it accounted for slightly more than 3% of all Atlantic slave trade.
The Second Atlantic system was the trade of enslaved Africans by mostly English, Portuguese, French and Dutch traders. The main destinations of this phase were the Caribbean colonies and Brazil, as European nations built up economically slave-dependent colonies in the New World. About 16% of people abducted as slaves were taken in the 17th century, and about 50% of the entire slave trade took place in the 18th century.
Following the British and United States’ bans on the African slave trade in 1808, it declined, but the 19th century still accounted for about 28 to 29% of the total volume of the Atlantic slave trade. Slavery itself continued in the New World well into the latter half of the century.
The Austrian School is a school of economic thought that is based on methodological individualism – the view that social phenomena result from the motivations and actions of individuals.
It originated in late 19th and early 20th century Vienna with the work of Carl Menger, Eugen Böhm von Bawerk, Friedrich von Wieser and others. It was methodologically opposed to the Prussian Historical School (in a dispute known as Methodenstreit ). Current day economists working in this tradition are located in many different countries, but their work is still referred to as Austrian economics.
Among the early theoretical contributions of the Austrian School are the subjective theory of value, marginalism in price theory, and the formulation of the economic calculation problem, each of which has become an accepted part of mainstream economics.
Since the mid-20th century, many economists have been critical of the modern day Austrian School and consider its rejection of econometrics and aggregate macroeconomic analysis to be outside of mainstream economic theory, or heterodox. Austrians are likewise critical of mainstream economics.
The Austrian School began to attract renewed interest in the 1970s, after Friedrich Hayek shared the 1974 Nobel Memorial Prize in Economic Sciences.
Constant Returns to Scale
A production function or process exhibits constant returns of scale if changing all inputs (e.g. raw materials, machinery, labour) by a positive proportion factor has the effect of increasing outputs by that factor.
This may be true only over some range, in which case one might say that the production function has constant returns over that range.
Endogenous and Exogenous
Terms usually used in Biology; in economics they refer to the origin of factors or phemomena making up an economic system, or part of a system.
Endogenous factors develop or originate within the system.
Exogenous factors develop or originate externally; outside the system.
Greshams Law
Is a monetary principle stating that ‘bad money drives out good’; that is if there are two forms of commodity money in circulation of the same legal face value, but it is believed that one has a higher intrinsic value than the other, then the higher value money will disappear from circulation, as people hang on to it.
Named in 1860 after St Thomas Gresham (1519-1517), an English financier, there were in fact a number of antecedents including the astronomer Copernicus. The ‘law’ is usually associated with debasement of the coinage; In Tudor times governments commonly reduced the precious metal content of coin issues, or the public clipped the edges of coins.
Modern day examples pertained until recently in Canada and USA. For example, in Canada, until the Coinage Act of 1968, Silver coins were in wide circulation, and the Government debased the coin by switching to cheaper metal content. The purer silver coins disappeared from circulation as citizens retained them, to cash in on the intrinsic value of the silver, and used the cheaper newer coins in day to day purchases.
An index number is an economic data figure reflecting price or quantity, usually over time, compared with a standard or base value. The best known index numbers are probably measures of inflation, or of stock market movements.
Problems with index numbers can include the selection of a valid base value, or changes in the nature of the issue being measured; e.g. a ‘basket of goods’ for inflation measures may lose its validity after a number of years.
There is a substantial body of economic analysis concerning the construction of index numbers, desirable properties of index numbers and the relationship between index numbers and economic theory.
Normative and Positive economics
Normative economics is that which is concerned with economic fairness, or with what economic outcomes or public policy goals ought to be.
Positive economics is concerned with the description and explanation of economic phenomena; sometimes known as value-free economics.
Opportunity Cost
A concept from neoclassical (marginalist) economics that refers to a benefit that a person could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative given up when a decision is made.
In investing, it is the difference in return between a chosen investment and one that is necessarily passed up.
Opportunity Cost = Return of Most Lucrative Option – Return of Chosen Option
Parable
A short story that uses familiar situations to illustrate a religious or moral point.
In economics the word is often used to describe the illustrations or examples of rival theories, apparently to imply the theory is unrealistic.
Say’s Law
The simple version of this ‘law’ is that in an economy – ‘Supply creates its own demand’.
The basic idea is that after a cycle of production, all factors (participants) will be paid – profits, rents and wages – such that there is sufficient purchasing power in the economy to buy all of the output. It is recognized that Say did not think that things would work like this in practice. For example, money could be hoarded, or purchases deferred until a later date.
For Robbins, Say was describing a feature of market behaviour over the ‘long term’, such that there could be, over time, a very considerable expansion of production per head without causing any permanent congestion. This for the reason that a rise in production per head gives at the same time a rise in income, and in the long run, the probability – not certainty – that that income would be spent.
Thirty Years’ War 1618 – 1648
Was a series of wars in Central Europe between 1618 and 1648. It was one of the longest and most destructive conflicts in European history as well as the deadliest European religious war, resulting in 8 million casualties. It devastated entire regions, accompanied by famine and disease resulting in high mortality in the populations of the German and Italian states.
Initially a war between various Protestant and Catholic states in the fragmented Holy Roman Empire, it gradually developed into a more general conflict involving most of the great powers. These states employed relatively large mercenary armies, and the war became less about religion and more of a rivalry for European political influence and pre-eminence.
In the 17th century, religious beliefs and practices were a much larger influence on an average European than they are today. During that era, almost everyone was vested on one side of the dispute or another, which was also closely tied to people’s ethnicities and loyalties, as religious beliefs affected ideas of the legitimacy of the political status of rulers.
Quantity Theory of Money
In monetary economics, the (QTM) states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. The theory was challenged by Marx, and by Keynes, but updated and reinvigorated by the monetarist school
of economics. While mainstream economists agree that the quantity theory holds true in the long run, there is still disagreement about its applicability in the short run.
Marx was only a qualified supporter of the theory, claiming that commodity prices are basically determined by the labour time socially necessary for their production.
Whilst Keynes accepted the theory in the long run, he argued that prices respond to the actual money people have to spend (aggregate demand), and that in the short term an increase in money supply doesn’t necessarily find its way into people’s pockets, it may be hoarded by banks for example. He also thought that velocity of circulation was highly variable, and thus not important in driving prices.
Friedman agreed with Keynes that what matters is the total spending that is independent of current income, identified in practice, he said, with business investment and government spending. But he differed on velocity of money, arguing that velocity rose and fell with quantity, thus reinforcing it. He thus gave more support to the straightforward QTM.
Profit, Wealth and Value 