succeeded Communist governments in many Eastern European countries and the Soviet Union.

5/-THE DEVELOPMENT OF ECONOMICS

Early beginnings. People have been interested in economic problems since earliest times. One of the earliest socio-economic systems (systems that involve both social and economic factors) was manorialism. Under the manorial system, landlords rented out land to tenants or employed people to do work on the land in return for wages. This system still operates in some countries today. Manorialism started at the end of the Roman Empire and became widespread in western Europe.

The first major theories about a nation's economy were not developed until the 1500's, the beginning of the period of mercantilism. The mercantilists believed that a government should regulate economic activities to establish a favourable balance of trade. They said nations could increase money supply by exporting more products than they imported.

During the 1700's, a group of French writers known as physiocrats attacked mercantilism. The physiocrats believed that governments should interfere less in economic life. They were the first economists to use the term laissez faire to mean noninterference by the government. The physiocrats also began the first organized study of how economies work.

The classical economists. Most economists today consider Adam Smith to be the father of modern economics. Smith, a Scottish professor of philosophy, built on some of the ideas of the physiocrats.