Trade analysis is micro-side, international finance is macro-side.?
[log in to unmask]">"I would be very interested to hear a historical answer (along with the methodological answer) to the question of what side of the discipline seems to be foundational."
I would argue that there is no historical answer here. One could certainly argue that the "economic" analysis that we find in Plato and Aristotle was tilted toward the micro side, but they were responding to macroeconomic upheaval. Aquinas, too, had a more micro bent in terms of topics covered, but his concerns and goals were social/macro. Mercantilism? Trade analysis is micro-side, international finance is macro-side. The classical analysis had substantial micro and macro elements, and I would argue that neither was a priori more important or foundational than the other for these authors. Smith was writing a treatise on growth (one could argue), but he grounded it in micro-side phenomena such as the division of labor and the appropriate structuring of the market environment. Someone enamored of micro-foundations of macro might well look at Smith and see someone who made micro foundational. But I believe this is to mis-read Smith—that for Smith, it was a whole, with one side (if one can even speak of such here) no more foundational than the other.
The idea of dividing economic analysis between micro and macro is a much more recent phenomenon, and was by no means universally accepted. Friedman, for one, always resisted the attempt to separate the two, and his price theory course at Chicago included elements that most would put under the "macro" heading. There may or may not be a consensus now (or in recent decades) that the micro side is foundational. But if there is such a consensus, I would expect that it is the first time in the history of economics that there has ever been a consensus on this subject.
Steve Medema
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