History of economic thought

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The history of economic thought deals with different thinkers and theories in subjects that become political and economic economies, from the ancient world to the present day in the 21st century. This field covers many different schools of economic thought. Ancient Greek writers such as the philosopher Aristotle tested the idea of ​​the art of acquiring wealth, and questioned whether property is best left behind in private or public hands. In the Middle Ages, scholastics such as Thomas Aquinas argued that it was the moral duty of the business to sell goods at a fair price

In the West, economics is not a separate discipline, but part of philosophy until the Industrial Revolution of the 18th and 19th centuries and the Great Divergences of the nineteenth century, which accelerated economic growth. Long before that, from the Renaissance at least, economics as an intellectual or science discipline was dominated by Western thinkers and their academic institutions, school economists from outside the West, although there were isolated instances in other societies.

Video History of economic thought

Pemikiran ekonomi kuno (sebelum 500 AD)

Yunani Kuno

Hesiod is active from 750 to 650 BC, a Boeotian who wrote the earliest known work on the origins of a rationale of economic, contemporary with Homer.

China

Fan Li (also known as Tao Zhu Gong) (born 517 BC), advisor to King Goujian of Yue, writes on economic matters and develops a series of "gold" business rules.

India

Chanakya (b. 350 BC) wrote Arthashastra , a treatise on equality, economic policy and military strategy.

The Greco-Roman world

Ancient Athens, advanced city-state civilizations and progressive societies, developed an embryonic model of democracy.

Xenophon's (about 430-354 BC) Oeconomicus (around 360 BC) is a dialogue primarily about household and agricultural management.

The Plato's The Republic dialog (c.380-360 BC) describes an ideal city state run by philosopher-kings containing references to specialization of labor and production. Plato was the first to advocate the theory of money credits, money as a unit of debt accounts.

Aristotle analyzed various forms of state (monarchy, aristocracy, constitutional government, tyranny, oligarchy, and democracy) as a critique of Plato's model of a philosopher-king. Of interest to economists, Plato provides a community blueprint based on shared resource ownership. Aristotle saw this model as an oligarchic curse. Although Aristotle did advocate by holding many similarities, he argued that not all could, simply because of "the evils of human nature".

"Obviously better that property should be private," writes Aristotle, "but its normal use, and the special business of lawmakers is to create this kind man of character." In Political Book I, Aristotle discusses the general nature of household and market exchange. For him there is a certain "acquisition art" or "wealth acquisition," but for that reason many people are obsessed with its accumulation, and the "wealth gain" for one's household is "important and respectable", while the exchange in retail trade for simple accumulation is "only condemned, because it is not honorable ". Writing about people, Aristotle declares that they are as a whole the acquisition of a wealth of thought ( chrematistike ) as one that is equal to, or the principle of oikonomia ("household management" - < i> oikonomos ), with oikos meaning "home" and with ( themis meaning "custom") nomos meaning "law". Aristotle himself strongly disagreed with usury and insulted making money through monopoly.

Aristotle threw away Plato's credit theory of money for metallicism, the theory that money derives its value from the purchasing power of the basic commodity, and only the "instrument," whose sole purpose is the means of exchange, meaning itself "useless... useless means for all necessities of life ".

Maps History of economic thought

Economic thought in the Middle Ages (500-1500 AD)

Thomas Aquinas

Thomas Aquinas (1225-1274) was an Italian economic theologian and writer. He teaches in Cologne and Paris, and is part of a group of Catholic scholars known as Schoolmen, who move their questions outside of theology to philosophical and scientific debates. In Aquinas' Summa Theologica Aquinas deals with the concept of fair price, which he considers necessary for the reproduction of the social order. Similar in many ways to modern concepts of long-term equilibrium, fair prices are only sufficient to cover production costs, including the maintenance of workers and their families. Aquinas argues it is immoral for sellers to raise their prices simply because buyers have an urgent need for a product.

Aquinas discusses a number of topics in the format of questions and answers, substantial tracts relating to Aristotle's theory. Questions 77 and 78 concern economic matters, especially at what price they deserve, and the fairness of the seller who delivers the wrong item. Aquinas opposes any form of cheating and recommends always paying compensation in lieu of good service. While human laws may not impose sanctions for unfair trade, God's law does so, in his opinion.

Duns Scotus

One of Aquinas's main critics is Duns Scotus (1265-1308), originally from Duns Scotland, who teaches in Oxford, Cologne, and Paris. In his Sententiae (1295), he thinks it may be more appropriate than Aquinas to calculate a fair price, emphasizing labor costs and costs, although he admits that the latter may be exaggerated excessively. because buyers and sellers usually have different ideas about fair prices. If people do not benefit from a transaction, in Scotus's view, they will not trade. Scotus says merchants perform a necessary and useful social role by transporting goods and making them publicly available.

Jean Buridan

Jean Buridan ( French: Ã, [by? Id ??] ; Latin Johannes Buridanus Ibn Khaldun

Until Joseph J. Spengler's 1964 work "Islamic Economic Thought: Ibn Khaldun", Adam Smith (1723-1790) is considered the "father of the economy". There is now a second candidate, Arab Muslim expert Ibn Khaldun (1332-1406) from Tunisia, although Khaldun's influence in the West is unclear. Arnold Toynbee mentions Ibn Khaldun a "genius" who "seems to be inspired by his predecessors and finds no common soul among his contemporaries... yet, in Prolegomena (Muqaddimat) with the Universal History he has conceived and designs a historical philosophy which is undoubtedly the greatest work of its kind which has never been created by any mind at any time or place. "Ibn Khaldoun poses the civilization life cycle theory, specialization of work, and the value of money as a medium of exchange rather than as a store of inherent value. His tax ideas have a striking resemblance to the Laffer curve of supply-side economics, which argues that beyond a certain point, higher taxes prevent production and actually cause revenue to fall.

Nicole Oresme

The French philosopher and priest Nicolas d'Oresme (1320-1382) wrote De origine, natura, jure et mutationibus monetarum, about the origin, nature, law, and change of money. This is one of the earliest manuscripts on the concept of money.

Antonin of Florence

Saint Antoninus of Florence (1389-1459), O.P., was a Dominican monk from Italy, who became Archbishop of Florence. Antoninus's writings deal with social and economic development, and argue that the state has an obligation to intervene in trade matters for the common good, and the obligation to help the poor and the needy. In his main work, "summa theologica" he is especially concerned about price, fairness, and capital theory. Like Duns Scotus, he distinguishes between the natural value of a good and its practical value. The latter is determined by its suitability to meet needs (virtuosity), its rarity (rarity) and its subjective value (complaciability). Because of these subjective components there is not only one price alone, but the bandwidth is more or less just the price.

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Mercantilism and international trade (16th to 18th centuries)

Mercantilism dominated Europe from the 16th century to the 18th century. Despite medieval localism, the fading of feudalism saw a new national economic framework begin to strengthen. After the 15th century voyage Christopher Columbus and other explorers opened up new opportunities to trade with the New World and Asia, the new monarchy in power wanted a stronger military state to improve their status. Mercantilism is a political movement and economic theory that advocates the use of state military power to ensure that local markets and supply sources are protected, spawning protectionism.

Trade theorists argue that international trade can not benefit all countries at the same time. Money and precious metals are the only source of wealth in their view, and limited resources must be allocated among countries, therefore tariffs should be used to encourage exports, which carry money domestically, and impede the imports that it sends to overseas. In other words, a positive trade balance must be maintained through an export surplus, often supported by military force. Despite the prevalence of the model, the term mercantilism was not invented until 1763, by Victor de Riqueti, marquis de Mirabeau (1715-1789), and popularized by Adam Smith in 1776, who opposed it vigorously.

Salamanca School

In the 16th century, the Spanish Jesuit School of Salamanca developed economic theory to a high degree, only their contributions were forgotten until the 20th century.

Sir Thomas More

In 1516, British humanist Sir Thomas More (1478-1535) published Utopia , which describes an ideal society in which the land is shared and there is a universal education and religious tolerance inspired the Bad Laws of English ( 1587) and the communism-socialism movement.

Nicolaus Copernicus

In 1517, Polish astronomer Nicolaus Copernicus (1473-1543) published the first known argument for the quantity theory of money. In 1519 he also published the first known form of Gresham's Law: "Bad money encourages kindness".

Jean Bodin

In 1568 Jean Bodin (1530-1596) of France published Reply to Malestroit , which contained the first known inflation analysis, which he claimed was due to imports of gold and silver from South America, supporting quantity theory. Money.

BarthÃÆ' © lemy de Laffemas

In 1598 the French economist mercantilized BarthÃÆ' Â © lemy de Laffemas (1545-1612) published Les TrÃÆ' © sors et richesses pouring mettre l'Estat en splendeur, which denounced those who disliked the French sutras because the industry created employment opportunities for the poor, a mention of the first-known consumption-less theory, later refined by John Maynard Keynes.

Leonardus Lessius

In 1605, Flemish Jesuit theologian Leonardus Lessius (1554-1623) published On i Justice and Law, the deepest moral theology study of economics since Aquinas, whose cost approach he claims is no longer applicable. After comparing the growth of money through avarice with rabbit propagation, he made the first statement about insurance rates based on risk.

Edward Misselden and Gerard Malynes

In 1622 British merchants Edward Misselden and Gerard Malynes began a dispute about free trade and the wishes of corporate government regulations, with Malynes arguing against foreign exchange as under the control of bankers, and Misselden argued that international money exchange and exchange rate fluctuations depended on international trade instead bankers, and that the state should regulate trade to ensure export surplus.

Thomas Mun

The English economist Thomas Mun (1571-1641) described the early mercantilist policy in his book British Treasure by Foreign Trade , which was not published until 1664, although it was widely circulated in manuscript form throughout his lifetime. A member of the East India Company, he writes of his experience in A Trade Discourse from England to the East Indies (1621).

Sir William Petty

In 1662, the British economist Sir William Petty (1623-1687) began publishing short works which applied the rational scientific tradition of Francis Bacon into the economy, which requires that he only use measurable phenomena and seek quantitative precision, unifying the term "political arithmetic" , introduced mathematical statistics, and became the first scientific economist.

Philipp von HÃÆ'¶rnigk

Philipp von HÃÆ'¶rnigk (1640-1712, sometimes spelled Hornick or ) was born in Frankfurt and became a Austria civilian writer in the period when his country was constantly threatened. by the Ottoman invasion. In ÃÆ'â € "sterreich ÃÆ'berber Alles, Wann es Nur Will (1684, Austria Over All, If He Will Only) he puts one of the most prominent statements of trade policy, lists the nine major national economic rules:

"To examine the country's land very carefully, and not to leave the possibility of agriculture from an unknown corner of the earth or earth on earth... All commodities found in a country, which can not be used in their natural state, must be corrected. in the country... Attention must be given to the population, that it may be as big as the state can support... the gold and silver once in that country not under any circumstances should be taken for any purpose... the population should make every effort to get along with their domestic products... [Foreign commodities] must be obtained not for gold or silver, but instead for other domestic goods... and must be imported in unfinished form, and done in the country... Opportunities should be sought after by noon and night to sell useless goods to these foreign countries in manufactured form... No imports are allowed under any circumstances g there is an adequate supply of appropriate quality at home. "

Nationalism, self-sufficiency and national power What is the basic policy of Proposals.

John Baptiste_Colbert_and_Pierre_Le_Pesant.2C_Sieur_de_Boisguilbert "> Jean-Baptiste Colbert and Pierre Le Beratnya, Sieur Boisguilbert

In 1665-1683 Jean-Baptiste Colbert (1619-1683) was finance minister under King Louis XIV of France, and established national unions to organize large industries. Silk, linen, tapestry, furniture and wine making are examples of crafts in which France specializes, all of which require membership in a guild to operate until the French Revolution. According to Colbert, "This is solely and solely the abundance of money in a country [which] makes a difference in its splendor and strength."

In 1695, the French economist Pierre Le Pesant, sieur de Boisguilbert (1646-1714) wrote an appeal to Louis XIV to end Colbert's mercantilist program, which contained the first idea of ​​an economical market, becoming the first economist to question trade economic policies and value his wealth. a country with the production and exchange of goods, not its assets.

Charles Davenant

In 1696, members of the British Mercantil, Tory Member of the Charles Davenant parliament (1656-1714) published the Essay on East Indian Trade, displaying the first understanding of consumer demand and perfect competition.

Sir James Steuart

In 1767 Scottish mercantilist Sir James Steuart (1713-1780) published a Question about the Principles of Political Economy, the first book in English with the term "political economy" in the title, and the first complete the economic treatise.

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Pre-Classical (17th and 18th centuries)

English Enlightenment

In the seventeenth century, England experienced difficult times, surviving not only in the political and religious divisions of the British Civil War, the execution of King Charles I, and the Cromwellian dictatorship, but also the Great Plague of London and the Great Fire of London. The restoration of the monarchy under Charles II, who had Roman Catholic sympathy, caused chaos and strife, and his Catholic leaning successor, King James II, was quickly dismissed. Invited in its place were William William of Protestantism and Mary, who approved the Bill of Rights 1689, ensured that Parliament was dominant in what was known as the Great Revolution.

The upheaval was accompanied by major scientific advances, including Robert Boyle's invention of constant gas pressure (1660) and Sir Isaac Newton's publication of Philosophiae Naturalis Principia Mathematica (1687), which describes Newton's law of motion and the law of gravity universally.

All these factors spur the advancement of economic thinking. For example, Richard Cantillon (1680-1734) consciously mimics Newton's inertia and gravity in the natural world with human reason and market competition in the world economy. In his essay on General Trade Nature, he argued that rational personal interests in a free market adjustment system would lead to a compatible order and price. However, unlike mercantilist thinkers, wealth is not found in commerce but in human labor. The first person to bind these ideas into the political framework was John Locke.

John Locke

John Locke (1632-1704) was born near Bristol, and was educated in London and Oxford. He is regarded as one of the most important philosophers of his day mainly because of his critique of Thomas Hobbes's absolutist defense in Leviathan (1651) and his social contract theory. Locke believes that people are contracted into society, bound to protect their property. He defines property extensively to include the lives and freedoms of people, as well as their wealth. When people combine their work with their environment, which creates property rights. In his words from Second Treatise on Civil Administration (1689):

"God has given the world to the same man... But every human being has a property in itself. The workforce of his body and the work of his hands we can say is his. Whatever, then, he removes from the state that has been provided by nature and let him in, he has been mixing his workforce with, and joining him something that belongs to him, and thereby making him his own. "

Locke argues that not only does the government stop the interference of people (or their "life, freedom and plantation") but also work positively to ensure their protection. His views on price and money were poured in a letter to MPs in 1691 titled Several Considerations on the Consequences of Interest Arrangement and Increase of Currency Value (1691), arguing that "the price of each commodity rises or falls, by the proportion of the number of buyers and sellers ", a rule that" applies universally in all things to be bought and sold. "

Dudley North

Dudley North (1641-1691) was a wealthy merchant and landowner who worked for Her Majesty's Treasury and opposed the most favorable policy. His Discourse on Trade (1691), published anonymously, arguing with the assumption of a need for a favorable trade balance. Trade, he argues, benefits both sides, promoting specialization, the division of labor and wealth for all. Trade rules disrupt these benefits, he said.

David Hume

David Hume (1711-1776) agrees with Northern philosophy and denounces the mercantilist assumptions. His contributions were set out in Discourse Politics (1752), and subsequently consolidated in his book Essays, Morals, Politics, Literature (1777). Adding to the argument that it was not desirable to fight for a favorable trade balance, Hume argued that it was, in any case, impossible.

Hume argues that the export surplus will be paid with imports of gold and silver. This will increase the money supply, causing the price to rise. Which in turn will cause a decline in exports until equilibrium with imports restored.

Bernard Mandeville

Bernard Mandeville , (1670-1733), was an Anglo-Dutch English philosopher, a political and satirical economist. The main thesis is that human action can not be divided into lower and higher. The higher human life is a mere fiction introduced by philosophers and rulers to simplify government and public relations. In fact, virtue (which he defines as "every show with which man, contrary to the impulse of nature, must seek to benefit others, or subdue his own desires, out of rational ambitions to be good") actually harms the state in its commercial and intellectual progress. This is because of its own bad qualities (ie self-involved acts of man), through the discoveries and circulation of capital (economy) in relation to luxury life, stimulating society to act and move forward.

Francis Hutcheson

Francis Hutcheson (1694-1746), Adam Smith's teacher from 1737 to 1740 was considered the end of a long tradition of thought about economics as "household or family (?????) management", derived from the work of Xenophon Oeconomicus .

The Physiocrats and circular flow

Similarly disenchanted by trade regulation inspired by mercantilism, a Frenchman named Vincent de Gournay (1712-1759) has been famous for asking why it is so difficult to laissez faire (laughs), laissez passer ("let it pass "), advocating free enterprise and free trade. He was one of the earliest Physiocrats, the Greek word for "natural government", which argued that agriculture is the source of wealth. As the historian David B. Danbom writes, the Physiocrats "cursed cities for their sake and praised a more natural way of life, celebrated the peasants." In the late seventeenth and early eighteenth centuries, major advances in the natural sciences and anatomy included the discovery of blood circulation through the human body. This concept is reflected in the theory of physiocratic economics, with the idea of ​​a circular flow of income throughout the economy.

FranÃÆ'§ois Quesnay (1694-1774) was a court physician for King Louis XV of France. He believes that trade and industry are not a source of wealth, and vice versa in his book Tableau ÃÆ' Â © conomique (1758, Economic Table) argues that agricultural surplus, by flowing through the economy in the form of rent, wages, and purchases is a real economic driver. First, Quesnay says, regulation impedes the flow of income across all social classes and therefore economic development. Secondly, taxes on productive classes, such as farmers, should be reduced for an increase in unproductive classes, such as landowners, because their lavish way of life distorts the income stream. David Ricardo then pointed out that the tax on land is non-transferable to tenants in his Law of Rent.

Jacques Turgot (1727-1781) was born in Paris to an old Norman family. His most famous work, Résésésésésésésésélésélésélés et des Distribution Riches ( Reflections on Wealth Formation and Distribution ) (1766) developed Quesnay's theory that land is the only source wealth. Turgot views society in three classes: the agricultural productive class, the salaried craftsman class and the landowner class ( classe disponible ). He argues that only the net product of the land should be taxed and support the full freedom of trade and industry.

In August 1774, Turgot was appointed finance minister, and within two years he introduced many anti-feudal and anti-feudal measures supported by the king. His guiding principle statement, given to the king was "no bankruptcy, no tax increase, no loans." Turgot's main desire was to have a single tax on land and to abolish all other indirect taxes, but his earlier steps met with the overwhelming opposition of landed interests. Two decrees in particular, a corvette pressing (the cost of the peasants to the aristocrats) and other secularizing rights are granted to the guild, inflaming opinion affects. He was forced from office in 1776.

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Classic (18th and 19th centuries)

Ferdinando Galiani and About Money

In 1751, the Neapolitan philosopher Ferdinando Galiani published an almost complete treatise on money called Della Moneta, 25 years before Adam Smith's The Wealth of Nations, and was therefore seen as the first truly modern economic analysis- correct. In its five parts, Della Moneta encompasses all the modern aspects of monetary theory, including the value and origin of money, its regulation, and inflation. This text is still quoted by various economists for centuries, as extensive lists such as Karl Marx and Austrian economist Joseph Schumpeter. Adam Smith and The Wealth of Nations

Adam Smith and The Wealth of Nations

Adam Smith (1723-1790) is popularly seen as the father of modern political economy. His 1776 Publication The Investigation into Nature and Cause of Nations coincided not only with the American Revolution, shortly before the European revolution of the French Revolution, but also the dawn of a new industrial revolution that allowed more wealth to be created on a scale which is bigger than before.

Smith was a Scottish moral philosopher, whose first book was Theory of Moral Sentiments (1759). He argues in it that the ethical system of people develops through personal relationships with other individuals, that right and wrong are felt through the reaction of others to one's behavior. This earned Smith more popularity than the next work, The Wealth of Nations , which was initially ignored by the general public. But Smith's economic policy opus succeeds in a meaningful circle.

Adam Smith's Invisible Hand

Smith argues for "a system of natural freedom" in which the individual's efforts are producers of social goods. Smith believes that selfish people in society remain in control and work for the good of all when acting in a competitive market. Prices often do not represent the true value of goods and services. Following John Locke, Smith assumes the true value of things derived from the amount of labor invested in them.

Every rich or poor person in accordance with the degree to which he is able to enjoy the needs, harmony, and entertainment of human life. But once the division of labor has really taken place, it is only a very small part of these things by which human labor can provide it. The much larger part of them must come from the work of others, and he must be rich or poor in accordance with the quantity of labor he can command, or which he can afford. The value of each commodity, therefore, to the one who owns it, and which means not to use or consume itself, but to exchange it with another commodity, equal to the quantity of labor that allows it to buy or give orders. Therefore, labor is a real measure of the exchange rate of all commodities. The real price of every thing, what is really valuable to people who want to get it, is the effort and difficulty to get it.

When the butchers, brewers and bakers act under the restraints of the open market economy, pursuing their personal interests, Smith thought, paradoxically pushing the process of fixing real-life prices to their fair values. His classic statement of competition goes as follows.

When the quantity of any commodity brought to market is less than effective demand, all who are willing to pay... can not be supplied with the quantity they want... Some of them will be willing to give more. A competition will start between them, and market prices will rise... When quantity brought into the market exceeds effective demand, it can not all be sold to those who are willing to pay the entire rental value, wages and profits, to be paid to bring it to there... Market prices will sink...

Limitations

Smith's vision of a free-market economy, based on secure property, capital accumulation, market widening and the division of labor contrasted with mercantilist tendencies to try to "manage all evil human actions." Smith believes that there are three legitimate functions of government. The third function is...

... establish and maintain certain public works and certain public institutions, which can never be for the benefit of individuals or a small number of individuals, to establish and maintain... Every system that is incapable of... to attract in particular direction. larger industrial species are part of the public's capital than what will naturally go to it... impede, rather than accelerate, the progress of society towards wealth and real greatness.

In addition to the need for public leadership in certain sectors, Smith argues, secondly, that the cartel is undesirable because of their potential to limit the production and quality of goods and services. Third, Smith criticized the government's support for any monopoly that always imposes the highest price "that can be squeezed out of the buyer". The existence of a monopoly and potential cartel, which will form the core of competition law policy, can turn the benefits of free markets into business profits at the expense of consumer sovereignty.

William Pitt the Younger

William Pitt the Younger (1759-1806), Tory Prime Minister in 1783-1801 based his tax proposal on Smith's ideas, and advocated free trade as a devoted disciple of The Wealth of Nations. Smith was appointed as a customs commissioner and in twenty years Smith has a new generation of followers who intend to build political economics.

Edmund Burke

Adam Smith expressed his interest in the opinion of Irish lawmaker Edmund Burke (1729-1797), widely known as a political philosopher:

"Burke is the only person I've ever known who thinks about economic subjects exactly as I do without the previous communication that has passed between us.

Burke is a self-established political economist, known for his book Mind and Detail on Scarcity . He was very critical of liberal politics, and condemned the French Revolution which began in 1789. In the Reflections of the Revolution in France (1790) he wrote that "the age of chivalry is dead, that of sophisters, economists and calculators have succeeded , and the glories of Europe are extinguished forever. "Contemporary Smith's influences include FranÃÆ'§ois Quesnay and Jacques Turgot whom he met while visiting Paris, and David Hume, a Scottish compatriot. The times generating the common need among thinkers to explain the social upheaval of the Industrial Revolution that took place, and in apparent chaos without the feudal and monarchical structures of Europe, suggest there is still order.

Jeremy Bentham

Jeremy Bentham (1748-1832) was probably the most radical thinker of his time, and developed the concept of utilitarianism. Bentham is an atheist, a prison reformer, an animal rights activist, a believer in universal suffrage, freedom of speech, free trade and health insurance at a time when some people dare to argue for these ideas. She was sent to school from an early age, completed university and was called to the bar at the age of 18. His first book, A Fragment of Government (1776), published anonymously, is a sharp critic of William Blackstone Comments on English Law . It gained widespread success until it was discovered that young Bentham, and not the respected Professor had written it. In Introduction to Moral Principles and Legislation (1789) Bentham sets out his utility theory.

Jean-Baptiste Say

Jean-Baptiste Say (1767-1832) was a French born in Lyon who helped popularize the work of Adam Smith in France. His book The Treatise on Political Economy (1803) contains a brief passage, which later became orthodoxy in the political economy until the Great Depression, now known as Say Market Law. Say argue that there will never be a lack of general demand or a general excess of commodities across the economy. People produce goods, to fulfill their own desires rather than others, therefore production is not a supply issue but is an indication of producers demanding goods.

Say agree that some of the income is saved by the household, but in the long run, savings are invested. Investment and consumption are two elements of demand, so production demand is , therefore it is impossible for production to exceed demand, or because there must be a "general satiety" supply. Say also argue that money is neutral, because its only role is to facilitate exchange, therefore, people ask for money only to buy commodities; "Money is the veil".

David Ricardo

David Ricardo (1772-1823) was born in London. At the age of 26, he has become a rich stock market trader, and bought constituent seats in Ireland to get a platform in the British parliament. Ricardo's famous work is on the Principles of Political Economy and Taxation (1817), which contains his critique of international trade barriers and a description of the way in which income is distributed in the population. Ricardo makes the distinction between workers, who receive a fixed wage at the rate at which they can survive, the landowners, the rents, and the capitalists, who have the capital and receive the profits, the residual portion of the income.

If the population grows, it is necessary to cultivate additional soil, whose fertility is lower than the cultivated land, due to the law of decreasing productivity. Therefore, the cost of wheat production increases, as well as the price of wheat: Rent also increases, wages, indexed into inflation (because they have to let the workers survive) as well. Profits decrease, until capitalists can no longer invest. The economy, Ricardo concludes, is bound to lead to steady state. Jean Charles LÃÆ' Â © onard de Sismondi

Jean Charles LÃÆ' Â © onard de Sismondi (1773-1842) The author of the early theory of systemic Crisis.

John Stuart Mill

John Stuart Mill (1806-1873) was the dominant figure of political economy thought of his time, as well as Member of Parliament for the seat of Westminster, and a prominent political philosopher. Mill was a child prodigy, reading Ancient Greek from the age of 3, and educated energetically by his father, James Mill. Jeremy Bentham is a mentor and close family friend, and Mill is heavily influenced by David Ricardo. Mill's textbook, first published in 1848 and titled Principles of Political Economy is essentially a summary of economic thought in the mid-nineteenth century.

The Political Economy Principle (1848) was used as the standard text by most universities as early as the twentieth century. Regarding the issue of economic growth, Mill sought to find a middle ground between Adam Smith's view of the ever-growing opportunity for trade and technological innovation and Thomas Malthus's view of the inherent population boundaries. In his fourth book, Mill establishes a number of possible outcomes in the future, rather than predicting them specifically.

Classic political economy

The classical economist is referred to as the group for the first time by Karl Marx. One part that unifies their theories is the theory of value of labor, contrary to the value derived from general supply and demand equilibrium theory. These economists have seen the first economic and social transformation brought about by the Industrial Revolution: rural depopulation, dangers, poverty, the appearance of the working class.

They were wondering about population growth, because the demographic transition had begun in Great Britain at that time. They also ask a lot of fundamental questions, about the source of value, the cause of economic growth and the role of money in the economy. They support the free market economy, arguing it is a natural system based on freedom and property. However, these economists are divided and do not form a unified flow of thought.

An important current in classical economics is the theory of consumption-less, as proposed by the Birmingham School and Thomas Robert Malthus in the early 19th century. It argues for government action to reduce unemployment and economic decline, and is an intellectual precursor of what became the Keynesian economy of the 1930s. Another important school is Manchester capitalism, which advocates free trade, against previous mercantilism policies.

Capitalism,

Just as the term "mercantilism" has been created and popularized by critics such as Adam Smith, the term "capitalism" invented by Karl Marx (1818-1883) was used by his critics. Socialism emerged in response to the miserable living and working conditions of the working class in the new industrial era, and the classical economy from which it emerged. The economic and political theories published in The Communist Manifesto (1848) and Das Kapital (1867) were combined with the historical dialectic theory inspired by Friedrich Hegel (1770-1831) revolutionary criticism of nineteenth-century capitalism.

In 1845 the German radical Friedrich Engels (1820-1895) published the Work Class Conditions in England in 1844, describing workers in Manchester as "the most untouched peak of social woes of our time." After Marx died, Engels completed the second volume of Capital from his record.

Capital Dot

Marx wrote his magnum opus Das Kapital (1867) in the library of the British Museum in London. Karl Marx begins with the concept of commodities. Prior to capitalism, Marx said, production was based on slavery - in ancient Rome for example - later slavery in feudal society in medieval Europe. The current mode of labor exchange has resulted in an erratic and unstable situation that allows conditions for revolution. People buy and sell their labor as people who buy and sell goods and services. People themselves have become a disposable commodity. As Marx wrote in the Communist Manifesto ,

The history of all existing societies is the history of the class struggle. Freeman and slaves, patricians and plebeians, masters and slaves, guildmasters and day workers, in one word, oppressors and oppressed, stand in constant opposition to each other... Modern bourgeois society that has grown from the ruins of the feudal society has not yet finished away with antagonism class. He has set up new classes, new conditions of oppression, new forms of struggle to replace the old.

From the first page Capital Dot :

The wealth of societies in which the capitalist mode of production prevails, presents itself as an accumulation of a very large commodity, its unit being a single commodity. Therefore our investigation must begin with the analysis of a commodity.

Marx uses the word "commodity" in an extensive metaphysical discussion of the nature of material wealth, how the objects of wealth are understood and how they can be used. Commodities contrast with objects of the natural world. When people mix their energy with an object, it becomes a "commodity". In the natural world there are trees, diamonds, iron ore and humans. In the economic world they become seats, rings, factories, and workers. However, Marx says, commodities have multiple properties, multiple values. He distinguishes the value of using an object from its exchange rate, which can be quite different. The value of using a commodity exists only when it is used or consumed. If the commodity is considered to be completely isolated from its useful properties, the general property is human labor in the abstract . In this sense, value is human power and is the most abstract and common property contained in commodities. It follows the classical economists in the theory of work value. He believes that values ​​can also originate from nature's goods and sharpen their value definition into "socially necessary work time", by which he intends when people need to produce things when they are not lazy or inefficient. Furthermore, people subjectively inflated the value of goods, for example, because there are commodities of amulets for glittering diamonds, and the oppressive power relationships involved in commodity production. Both of these factors mean the exchange rate is very different. An oppressive power relation, says Marx applying the use/exchange of distinction to work itself, in the wage-employment offer comes from the fact that employers pay their workers less in "exchange rates" than those produced by workers in "use value". The difference makes capitalist gains, or in Marx's terminology, "more value". Therefore, says Marx, capitalism is a system of exploitation.

Marx's work changed the theory of the value of labor, as the classists call it, above his head. The dark irony goes deeper by asking what time of work is socially necessary for the production of work (ie the worker) itself. Marx replied that this is minimal for people to live and reproduce with the necessary skills in economics.

Therefore people are alienated from the fruit of production and the means to realize their potential, psychologically, by their oppressed position in the labor market. But the story told with exploitation and alienation is one of capital accumulation and economic growth. Employers are constantly under pressure from market competition to push their workers harder, and at the limit of investing in technology that replaces labor, by replacing the assembly line assembly, for example. with robots. This increases profitability and expands growth, but only for the benefit of those who have a personal property in this means of production. Meanwhile the working class faces progressive blurring, once the product of their work is exploited from them, because it is alienated from the means of production. And after being fired from their jobs and replaced by machines, they end up unemployed. Marx believes that the reserve forces of the unemployed will grow and grow, pushing downward pressure on wages as desperate people accepting jobs for less. But this will result in a demand deficit due to people's power to buy lagging products. The abundance of unsold products will result, production will be reduced, and profits decrease until capital accumulation stops in an economic depression. When the glut is cleared, the economy will skyrocket again before the next cycle begins. With every boom and bust, with every capitalist crisis, thinking Marx, the tension and conflict between the capitalist class and the more polarized workers will increase. In addition, smaller firms are being hit by larger ones in every business cycle, because power is concentrated in the hands of a handful of people and away from the many. Finally, led by the Communist party, Marx envisions a revolution and the creation of a classless society. How this society can work, Marx never suggested. His main contribution is not the blueprint for what the new society will be, but the criticism of what he sees.

Marx's students

The first volume Capital Dot is the only one published by Marx himself. The second and third volumes are produced with the help of Friedrich Engels; Karl Kautsky, who had become Engels's friend, saw the publication of volume four. Is published as three volumes of 'Theory of Surplus Value'.

Marx began the traditions of economists who became political activists, including Rosa Luxemburg (1871-1919), a member of the German Social Democrats who later turned to the German Communist Party for their opposition to the First World War, and Beatrice Webb (1858-1943) of England , a socialist who helped found the London School of Economics (LSE) and the Fabian Society and the main re-articulator of the Henryk Grossman Crisis theory (1881-1950).

London School of Economics

In 1895, the London School of Economics (LSE) was founded by members of Fabian Society, Sidney Webb (1859-1947), Beatrice Webb (1858-1943), and George Bernard Shaw (1856-1950), joined the University of London 1900.

In the 1930s, members of LSE, Sir Roy G.D. Allen (1906-1983) popularized the use of mathematics in economics.

Neoclassical (19th century and early 20th century)

Neoclassical economics developed in the 1870s. There are three main independent schools. Cambridge School was founded with the 1871 publication of Jevons' Theory of Political Economy, developing partial equilibrium theory and focusing on market failures. Its main representatives are Stanley Jevons, Alfred Marshall, and Arthur Pigou. The Austrian School of Economics consists of Austrian economist Carl Menger, Eugen von BÃÆ'¶hm-Bawerk, and Friedrich von Wieser, who developed the capital theory and tried to explain the economic crisis. It was founded with the publication of 1871 Menger Principles of Economics . The Lausanne School, led by LÃÆ' Â © on Walras and Vilfredo Pareto, developed Pareto's general equilibrium theory and efficiency. It was founded with the 1874 publication of Walras' Pure Economic Elements . Anglo-American neoclassical

American economist John Bates Clark (1847-1938) promoted the marginalist revolution, the publication of The Distribution of Wealth (1899), which proposed Clark's Capitalism Law: "Given the competition and homogeneous factors of production and capital labor, repartition the social product will be in accordance with the last physical input productivity of the work unit and capital ", also expressed as" What the social class gains is, under natural law, what contributes to the general output of the industry. "In 1947, the John Bates Clark Medal was established in his honor.

William Stanley Jevons

In 1871, Menger's English colleague Stanley Jevons (1835-1882) separately published the Political Economy Theory (1871), which stated that on the margins of goods and services satisfaction declined. An example of Theory of Diminishing Marginal Utility is that for every single orange to eat, a person gets a bit of fun until someone stops eating oranges completely.

Alfred Marshall

Alfred Marshall (1842-1924) is also credited with attempting to put the economy on a more mathematical footing. The first professor of economics at the University of Cambridge, his 1890 working Principles of Economics abandoned the term "political economy" for his favorite "economy". He views mathematics as a way of simplifying economic reasoning, although he has an objection as revealed in a letter to his student Arthur Cecil Pigou:

"(1) Use math as a short language, rather than as an investigation machine. (2) Keep it until you are finished. (3) Translate it into English. (4) Then illustrate with important examples in real life. Burn mathematics. (6) If you do not succeed in 4, burn 3. This often I do. "

New institutional school

In 1972, American economist Harold Demsetz (1930-) and Armen Alchian (1914-2013) published Production, Information Costs and Economic Organizations, founded the New Economic Institution, renewed the work of Ronald Coase (1910 - 2013) with mainstream economy.

Neoclassical Continental

LÃÆ' Â © in Walras

In 1874 again working independently, the French economist LÃÆ' Â © on Walras (1834-1910) generalized the marginal theory throughout economics in Pure Economical Elements: Small changes in people's preferences, eg shifting from beef to mushrooms , will cause a rise in mushroom prices, and beef prices fall; this stimulates producers to shift production, increase mushrooming investment, which will increase market supply and new price equilibrium among products, eg. lowering the mushroom price to the level between the first two levels. For many products throughout the economy, the same thing happens if one considers a competitive market, people choose on the basis of self-interest, and there is no cost to shift production.

Austrian economic school

While the economics of the late nineteenth and early twentieth centuries were dominated by mathematical analysis, the followers of Carl Menger (1840-1921) and his disciples Eugen von BÃÆ'¶hm-Bawerk (1851-1914) and Friedrich von Wieser (1851-1926) (coiner of the long "marginal utility") follows a different route, advocating the use of deductive logic instead. The group is known as the Austrian School of Economics, reflecting Austrian origin from many early adherents. Thorstein Veblen in The Neonology of Neoclassical contrast in Alfred Marshall's tradition with the philosophy of the Austrian School.

Carl Menger

In 1871, Austrian School economist Carl Menger (1840-1921) restated the basic principle of marginal utility in the GrundsÃÆ'¤tze der Volkswirtschaftslehre ( Principles of Economics): Consumers acting rationally by seeking to maximize the satisfaction of all their preferences; people allocate their expenses so that the last unit of purchased goods does not create more satisfaction than the last unit that bought something else.

Francis Ysidro Edgeworth

In 1881, Irish economist Francis Ysidro Edgeworth (1845-1926) published Psychology Mathematics: An Essay on Mathematical Applications for Moral Sciences, which introduced indifference curves and general utility functions, along with Edgeworth's Limit Theorem, expanded Bertrand's model to handle capacity constraints, and proposes Edgeworth's Paradox for when there is no limit to what the company can sell.

Friedrich Hayek

Ludwig von Mises's loud criticism of socialism had a major influence on the economic thinking of the Austrian School economist Friedrich Hayek (1899-1992), who, although initially sympathetic, became one of the leading academic critics of collectivism in the 20th century. In the echo of Smith's "natural freedom system", Hayek argues that the market is a "spontaneous order" and actively underestimates the concept of "social justice." Hayek believes that all forms of collectivism (even theoretically based on voluntary cooperation) can only be maintained by the central authorities. But he argues that centralized economic decision-making will lead not only to violation of freedom but also to a depressed standard of living because centralized experts can not collect and assess the knowledge necessary to allocate scarce resources efficiently or productively. In his book The Road to Serfdom (1944) and in his later works, Hayek claims that socialism requires central economic planning and that such planning will in turn lead to totalitarianism. Hayek attributes the birth of civilization to private property in his book The Fatal Conceit (1988). According to him, price signals are the only way to enable any economic decision-maker to communicate tacit knowledge or knowledge spread to one another, to solve the economic calculation problem. Together with contemporary Swedish socialists and his opponent Gunnar Myrdal (1898-1987), Hayek was awarded the Nobel Prize in Economics in 1974.

Alternative school (19th century)

Business cycle theory

In the early 19th century German-born German astronomer Sir William Herschel (1738-1822) notes the relationship between the 11-year sunspot cycle and the price of wheat. In 1860, the French economist ClÃÆ' Â © ment Juglar (1819-1905) put forward a business cycle of seven to eleven years. In 1925, Soviet economist Nikolai Kondratiev (1892-1938) proposed the existence of Kondratiev waves in Western capitalist economies for fifty to sixty years.

German historical economic school

In the mid-1840s, the German economist Wilhelm Roscher (1817-1894) founded the school of German economic history, which promoted the cycle theory of nations - economies through youth, virility, and senility - and spread through academics in England and the United States, for the rest of the 19th century.

Thorstein Veblen and American Way

Thorstein Veblen (1857-1929), who came from rural Central America and worked at the University of Chicago was one of the most famous early critics of "The Way of America". In Theory of the Leisure Class (1899) he derided the materialistic culture and the rich people who conspicuously depleted their wealth as a way of showing success. In The Theory of Business Enterprise (1904), Veblen distinguishes production for people using goods and production for pure profit, arguing that the former is often hindered by the latter's pursuing business. Output and technological advances are limited by business practices and monopoly creation. Businesses protect existing capital investments and use excessive credit, leading to depression and increasing military spending and war through business control of political power. Both of these books, which focus on consumerism criticism and profiteering do not advocate change. However, in 1918 he moved to New York to begin work as a magazine editor named The Dial , and later in 1919, along with Charles A. Beard, James Harvey Robinson, and John Dewey he helped find New School for Social Research, known today as the New School) She is also part of the Technical Alliance, created in 1919 by Howard Scott. From 1919 to 1926 Veblen continued to write and engage in various activities at The New School. During this period he wrote The Engineers and the Price System (1921).

World wars, revolutions, and great depression (beginning to mid 20th century )

At the outbreak of World War I (1914-1918), Alfred Marshall was still working on his final revision of the Principles of Economics. The initial climate of twentieth-century optimism was soon cut hard in the Western Front's trenches. During the war, production in England, Germany, and France was transferred to the military. In 1917 Russia collapsed into a revolution led by Vladimir Lenin and who promoted the Marxist theory and gathered the means of production. Also in 1917 the United States entered the Allied war (France and England), with President Woodrow Wilson claiming "making the world safe for democracy", drafting a peace plan of the Fourteen Points. In 1918 Germany launched a failed spring raid, and when allies attacked and millions more were massacred, Germany slid into the German Revolution, its interim government demanding peace on the basis of Wilson's Fourteen Points. After the war, Europe lay in ruins, financially, physically, psychologically, and its future depended on the orders of the Versailles Conference in 1919.

After World War I, Europe and the Soviet Union collapsed, and the British Empire came to an end, leaving the United States as a superior global economic power. Before World War II, American economists had played a minor role. During this time, institutional economists have been very critical of the "American Way" of life, especially the conspicuous consumption of the Roaring Twenties before Wall Street Crash of 1929 . The most important development in economic thought during the Great Depression was the Keynesian revolution, including the publication in 1936 The General Theory of Employment, Interest, and Money by John Maynard Keynes. (See Keynesianism below.) Furthermore, a more orthodox body of thought takes hold, reacts to Keynes's clear style of debate, and rearranges his profession. The orthodox center was also challenged by the more radical group of scholars based at the University of Chicago, who advocated "freedom" and "freedom", looking back at the 19th century non-interventionist government.

Econometrics

In the 1930s, the Norwegian economist Ragnar Frisch (1895-1973) and Dutch economist Jan Tinbergen (1903-1994) pioneered the Econometrics, receiving the first Nobel Prize in Economics in 1969. In 1936, e

Source of the article : Wikipedia