The psychological underpinnings of economics: Economic psychology according to Gabriel Tarde

Economic psychology had its original focus on the rationality assumptions underlying economic theory. A much broader view of the psychological underpinnings of economics was presented in the voluminous La psychologie économique by Tarde (1902a). This work was neglected or rejected by economists. Basing his innovative thinking on his experience as a judge and avid reading of scientific and philosophic literature, Tarde developed a theory of society which he also applied to political economy. In his view, economic psychology should provide a foundation for all areas of political economy. He dealt with implications for such diverse economic issues as capital, money, labor (organization), invention and human imagination, diffusion of innovation, pricing, advertising and selling. Long before Schumpeter he emphasized the role of inventors and entrepreneurs for social and economic progress.