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WORLDS GREATEST

ECONOMISTS

Adam Smith (1723-1790)

Adam Smith was a British political


economist and philosopher. He is
also at preset considered the
Father of Economists because
he was above all a system builder.
He is best known for The Wealth Of
Nations, his 1776 landmark book
on economics, published at the
dawn of the Industrial Revolution
- and was even consulted on
economic matters by Pitt The Elder,
the Whig politician and Prime
Minister. There is a proof that he
began to make a general system of
analysis two decades before the
publication of The Wealth Of
Nations, and summary of that
system were clearly visible before
1776.

The central proposition of The Wealth of the Nation is


that capital is best utilized for the production of and
distribution of wealth in accordance with the government
noninterference, or laissez-faire, and free trade. In Smiths
range of vision, the production and exchange of goods can
made more active, and a resulting improvement in the general
standard of living reached, only through the efficient functions
of private industrial and commercial entrepreneurs acting with
a minimum power of restraining or regulating governments. To
explain this idea of government upholding a laissez-faire action
in relation to commercial endeavors, Smith promulgated the
principle of the Invisible Hand: Every individual in attaining
his or her own good led, as if by an invisible hand, to achieve
the best good for all. For that reason, any interference with free
competition by government is virtually certain for injurious.

KEY CONCEPTS OF
THE WEALTH OF
NATIONS
1. Division of Labor
2. Wage Rates
3. Distribution of Wealth
4. Natural and Market Prices
5. Smith and Mercantilism
6. Law of Diminishing Returns
7. Smith and Physiocracy
8. Natural Products
9. Governments
10.Human Conduct

Thomas Robert Malthus (1766Malthus was English economist and


1834)

demographer who is best known for


his theory that population growth
will always tend to outrun the food
supply and that betterment of
humankind is impossible without
stern limits on reproduction. This
thinking is commonly referred to as
Malthusianism. He is also the one
whose research encouraged the first
established demographic studies. His
most important contribution to
economics was his theory of
population. It was established in his
book. An Essay on the Principle of
Population written in 1798.

In 1798 Malthus published anonymously


the first edition of An Essay on the
Principle of Population as It Affects the
Future Improvement of Society, with
Remarks on the peculations of Mr.
Godwin, M. Condorcet, and Other
Writers. The work received wide notice.
Briefly, crudely, yet strikingly, Malthus
argued that infinite human hopes for
social happiness must be vain, for
population will always tend to outrun the
growth of production. The increase of
population will take place, if unchecked,
in a geometric progression, while the
means of subsistence will increase in
only an arithmetic progression. excessive
growth.

MALTHUS ON THE SOCIAL CHANGE


Malthus makes convincing reasons put forward against certain
government policies that were connected to socio-economic issues,
Specially, he argues against the Poor Laws and Parish Laws that were
made during his lifetime. In brief, Malthus infers that giving
government assistance to the poor does not make or become better
their condition but worsens it by causing sense of dependency and a
lack of responsibility to ones action.

MALTHUS IDEAS ON PHYCHOLOGY


AND SCIENCE
Malthus responds to some of the writers of his time who proposed
that mankind was advancing towards perfection and immorality. His
contentions reflect his range of visions on human nature and the
development of scientific progress.

THE EFFECTS OF MALTHUS


WORK
Malthus ideas influenced government policymakers political
theorists, and scientists. His concepts influenced and spelled out
the opinion of both those who expressed approval of and those ho
find fault with his work.
Malthus influenced communist social and economic
philosophers in their negative statement of his Essay. Karl Marx
and Friedrick Engels were Malthus most ardent and influential
critics.
Throughout the 19th century the government generally take no
notice of the predictions of Malthus. The world population rose,
and his rise were directly or indirectly embolded by the
governments.

David Ricardo(1772-1824)
British political economist - the third
of 17 children from a Sephardic
Jewish family of Portuguese origin Ricardo was a huge influence on
19th-century economics. After
making a fortune as a stockbroker,
he became fascinated by economics
- and wrote the influential The
Principles Of Political Economy
And Taxation (1817). He was one of
the very significant figures in the
development of economic theory. He
clearly and consistently formulated
the Classical system of political
economy. The legacy of Ricardo
influenced over economic thinking
throughout the 19th century.

MAJOR WORKS OF
DAVID RICARDO
1. The High Price of Bullion
2. Essay on the Influence of a Low Price of Corn
on the Profits of Stock.
3. On the Principles of Political Economy and
Taxation
4. On Protection of Agriculture
5. On International Trade Theory

Karl Marx(1818 1883)

Karl Marx, in full Karl Heinrich


Marx(born May 5, 1818, Trier, Rhine
province, Prussia[Germany]died March14,1883, London, England)
,revolutionary, sociologist, historian,
and economist. He published (with
Friedrich Engels)Manifest der
Kommunistischen Partei (1848),
commonly known as The Communist
Manifesto, the most celebrated
pamphlet in the history of the socialist
movement. He also was the author of
the movements most important
book, Das Kapital. These writings and
others by Marx and Engels form the
basis of the body of thought and belief
known as Marxism.

MARXS ECONOMIC IDEAS


The concept of labor is essential in Marxs thought. Marx
asserted hat it is human nature to transform nature, and he calls
this system of transformation labor and dimension to transform
nature labor power. Marx states that this is a natural capacity for
physical activity, but it is inseparable to the imagination of the
humankind.
Marxs detailed study of history is grounded on his
differentiation between the means of production - those things
like land and natural resources, and technology, that are essential
for the production of material goods, and the social relations of
production the social relationship people go thought as they get
possession and use of the means of production. Together these
consist the mode of production.

MARXS CRITICAL VIEWS ON


CAPITALISM
Marx claimed that the alienation of labor power is particularly
the defining attribute of capitalism. Earlier to capitalism, market
took place in Europe where manufacturers and trades purchased
and sod commodities. Marx states that a capitalist system of
production developed in Europe where labor itself became a
commodity when peasants became free to sell their own labor
power, and obliged to sell their own labor because they no longer
have in possession of their own labor because they have no longer
their own land or tools needed to produce.
The capitalist system of production is capable of large
development because the capitalist can, and has an impetus to
reinvest profits in new technologies.

Thorstein Bunde Veblen(1857


Thorstein Veblen, in full Thorstein
1929)
Bunde Veblen (born July 30,
1857, Manitowoc county, Wisconsin,
U.S.died Aug. 3, 1929, near Menlo
Park, California), American economist
and social scientist who sought to
apply an evolutionary, dynamic
approach to the study of economic
institutions. With The Theory of the
Leisure Class (1899) he won fame in
literary circles, and, in describing the
life of the wealthy, he coined phrases
conspicuous
consumption and pecuniary emulation
that are still widely used. Veblens
theories are still relevant and taught in
many universities around the world.

VEBLENS THEORY ON THE LEISURE


CLASS
Veblens utilitarian ideas as expressed in The Theory of the Leisure
Class. At Missouri Veblen enjoyed a productive period. In The Instinct of
Workmanship and the State of the Industrial Arts (1914), he elaborated
on his idea that business enterprise was in fundamental conflict with the
human propensity for useful effort; too much of humankinds energy was
wasted through inefficient institutions. In Imperial Germany and the
Industrial Revolution(1915), he suggested that Germany had an
advantage over democratic states such as the United Kingdom and France
because its autocracy was better able to channel the gains of modern
technology toward the service of the state. He conceded that the advantage
was only temporary, however, because the German economy would
eventually develop its own system of conspicuous waste. He maintained
that modern wars were caused mainly by the competitive demands of
national business interests and that an enduring peace could be had only at
the expense of the rights of ownership, and of the price system in which
these rights take effect.

THE THEORY OF BUSINESS OF


ENTERPRISE
Veblen stated that the non-mechanical factors of culture, e.g.,
politics, religion, and even business enterprise is in very large
degree compared with that prevailed on the Continent of Europe
in the seventeenth century and in Central Europe in the
eighteenth century. The modern situation is drawn on a larger
scale; but that is due to the new technology and not to transform
range of political, religions, business ideas.
The factor in the modern situation is the machine technology.
The new start from which the current situation takes its rise, in
Europe and elsewhere, as given t the Continental people by the
English, ready made, in the so-called Industrial Revolution.

John Maynard Keynes(1883


John Maynard Keynes, (born June 5,
1946)
1883, Cambridge, Cambridge shire,
Eng.died April 21, 1946, Firle,
Sussex), English economist, journalist,
and financier, best known for
his economic theories(Keynesian
economics) on the causes of
prolonged unemployment. His most
important work, The General Theory
of Employment, Interest and
Money (193536), advocated a remedy
for economic recession based on a
government-sponsored policy of full
employment. It was probably the most
authoritative social science treatise of
the 20th century, in that it quickly and
perpetually changed the way the world
scrutinized the economy and role of
government in society.

KEYNES THEORY ON
ECONOMICS
Keynes made clear the level of output and employment in
the economy as being affected by Aggregate Demand. In an
opposite of Says Law(supply creates its own demand), Keynes
in substance asserted that demand creates its own supply, up
to the margin set full employment.
Aggregate demand is the total desired purchases by al the
buyers of an economys output. In hat Keynes called
classical economic theory, fluctuations in prices, in certain
wage and interest rates, would make aggregate demand
propensity to the full employment level or what was called
potential output.

In classical theory, two essentials of an economic


organization were believed to bring forward a state of
full employment.
First, push and pull of supply and demand determine
the price of labor, and the continual changing of its
price, that is wages, allowed the two forces to make or
become equal.
Second, when the system produces additional income,
it could be either kept for the future use or invested in
future prospect of economic condition. The supply of
saving and he demand for investment capital would
arrive at evenly matched in equilibrium through
adjustment of interest rates.

KEYNES ON WAGES AND


SPENDING
In the worst part of the depression, the classical theory
explained economic collapse as the misplacing of impetus to
produce. The appropriate solution was to lessen the cost of
labor, in order that employment would get better. Saving not
paid out in remunerations would be used for investment; it may
be in other sectors.
Keynes theory asserted that cutting expenditures would
make worse the underlying problem. By slashing spending or
increasing taxes, the government would be curtailing spending,
thus decreasing demand.

To Keynes, the process of deciding wages is


more difficult than the classics accepted. First, he
asserted that it is not real but minimal wages that
are set in negotiations between employers and
workers.
The important in the modeling of Keynesian
system: It implies the economy can be perceived
as equilibrium between the effective demand and
the level of employment, both real variables,
these result in a supply and demand curve of
Aggregate Supply and Aggregate Demand Price.

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