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JEREMY BENTHAM and his Utilitarianism self-interest is considered the sole stimulus to human endeavor and the pursuit of happiness is the individuals primary concern The purpose of government should be to maximize the sum of happiness of the greatest number of individuals A. Proposed an artificial identity of interests based on the recognition that individuals have different concepts and degrees of pain and pleasure UNLIKE a natural identity of interests that present a homogeneous concept of pain and pleasure B. Money is the chosen measurement of pain and pleasure C. Proposed a system for quantifying pain and pleasure that would, in the end result, be able to generally describe the experience as painful or pleasurable referred to this as felicific calculus II. THOMAS ROBERT MALTHUS the first economists to formulate a theory of diminishing returns as the explanation to land rent published his major work An Essay on the Principle of Population as it Affects the Future Improvement of Society, with Remarks on the Speculations of Mr. Godwin, M. Condorcet and Other Writers in 1798 A. On Population 1. population growth was buy no means desirable and had a tendency to increase faster than the means of subsistence ( i.e., food supply) population increased geometrically while food supply increased arithmetically only this race between population and food supply helped keep the standard of living down and gave rise to famine, pestilence and war 2. population growth can be controlled through birth control, general misery and even restraint from marriage 3. a perfect society was never attainable utopia was pure nonsense 4. believed that the principle of population (the relationship between population growth and increases in the food supply) was a natural law but its ill effects must be addressed through social and individual action 5. everyone should practice moral restraint all forms of population control must stem from morality. No artificial forms of restraint are to be imposed 6. the first economist to propose a theory on social development 7. his population theory can easily be manipulated to contain endorsement of the current status quo (of that time) 8. proposed the utilization of positive checks ( means of increasing the death rate) and preventive checks ( means of lowering the birth rate) in order to control increases in the population

III. Early Monetary Issues A. Preclassical Monetary Theory 1. composed of the usual mercantilist justification that money stimulates trade given a certain volume of trade, an appropriate amount of money is required for transactions purposes a. money important in determining aggregate spending b. critics ignored the effects of too much money supply to price levels - disregarded the effect of expectations in making decisions 2. David Hume attempted to reconcile the money-stimulates-trade theory with the quantity theory of money as a further explanation of the workings of mercantilism - was also able to observe that changes in the money supply had an impact on unemployment, output, productivity and even prices 3. During the 1700s, the emphasis was on labor and resources as fundamentals of wealth, as opposed to the mercantilist emphasis on specie/hard money/gold B. Classical Monetary Theory 1. The Bullion Report the first official argument AGAINST liberal monetary policy a. believed that an excessive amount of bills issued influences the value of paper money b. convertibility was an effective means of restoring confidence in the value of the circulating medium 2. Henry Thornton made two important contributions: a) the difference the natural rate of interest and the bank rate of interest and b) forced saving a. the rate of return on invested capital regulates the bank interest rates on loans investment and savings are determined by thrift and productivity and changes in one or the other will shift the variable a difference between the natural rate and the loan rate would result in unlimited demand for loans this can only be controlled again if the loan rate is brought back to its former level b. forced saving because an increase in money yields an increase in capital as well as prices - Thornton believed that under general unemployment, an increase in circulating notes lead to an increase in output and generated employment rather than increases in prices