Schools of economic thought Wikipedia

Instead of marginal units or even specific goods markets and prices, Keynesian macroeconomics presents the economy in terms of large-scale aggregates that represent the rate of unemployment, aggregate demand, or average price-level inflation for all goods. Moreover, Keynes’s theory says that governments can be influential players in the economy—saving it from recession by implementing expansionary fiscal and monetary policy to increase economic output and stability. In 1958 American economists Alfred H. Conrad (1924–1970) and John R. Meyer (1927–2009) founded New Economic History, which in 1960 was called Cliometrics by American economist Stanley Reiter (1925–2014) after Clio, the muse of history.

French historical school

They wondered about population growth, because demographic transition had begun in Great Britain at that time. They also asked many fundamental questions, about the source of value, the causes of economic growth and the role of money in the economy. They supported a free-market economy, arguing it was a natural system based upon freedom and property. However, these economists were divided and did not make up a unified current of thought.

Georgist economics

The upheaval was accompanied by a number of major scientific advances, including Robert Boyle’s discovery of the gas pressure constant (1660) and Sir Isaac Newton’s publication of Philosophiae Naturalis Principia Mathematica (1687), which described Newton’s laws of motion and his universal law of gravitation.

The times produced a common need among thinkers to explain social upheavals of the Industrial Revolution taking place, and in the seeming chaos without the feudal and monarchical structures of Europe, show there was order still. To draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it… Retards, instead of accelerating, the progress of the society toward real wealth and greatness. When the butchers, the brewers and the bakers acted under the restraint of an open market economy, their pursuit of self-interest, thought Smith, paradoxically drives the process to correct real life prices to their just values. Smith was a Scottish moral philosopher, whose first book was The Theory of Moral Sentiments (1759). He argued in it that people’s ethical systems develop through personal relations with other individuals, that right and wrong are sensed through others’ reactions to one’s behaviour.

Ecological economics

Opportunities should be sought night and day for selling the country’s superfluous goods to these foreigners in manufactured form… No importation should be allowed under any circumstances of which there is a sufficient supply of suitable quality at home. Other viewpoints on economic issues from outside mainstream economics include dependency theory and world systems theory in the study of international relations.

Like Duns Scotus, he distinguishes between the natural value of a good and its practical value. The latter is determined by its suitability to satisfy needs (virtuositas), its rarity (raritas) and its subjective value (complacibilitas). Due to this subjective component, there cannot only be one just price, but a bandwidth of more or less just prices. Problems of asymmetric information and moral hazard, both based around information economics, profoundly affected modern economic dilemmas like executive stock options, insurance markets, and Third-World debt relief.

The American Economic Association

1. Classical economics focuses on the tendency of markets to move to equilibrium and on objective theories of value.
2. Other longstanding heterodox schools of economic thought include Austrian economics and Marxian economics.
3. Many economic theories today are, at least in part, a reaction to Smith’s pivotal work in the field, namely his 1776 masterpiece «The Wealth of Nations.» In this treatise, Smith laid out several mechanisms of capitalist production, free markets, and value.
4. In 1696 British mercantilist Tory Member of parliament Charles Davenant (1656–1714) published Essay on the East India Trade, displaying the first understanding of consumer demand and perfect competition.
5. The upheaval was accompanied by a number of major scientific advances, including Robert Boyle’s discovery of the gas pressure constant (1660) and Sir Isaac Newton’s publication of Philosophiae Naturalis Principia Mathematica (1687), which described Newton’s laws of motion and his universal law of gravitation.

Businesses, on the other hand, are induced to invest by the expected rate of return on new investments (the benefit) and the rate of interest paid (the cost). So, said Keynes, if business expectations remained the same, and government reduces interest rates (the costs of borrowing), investment would increase, and would have a multiplied effect on total spending. Interest rates, in turn, depend on the quantity of money and the desire to hold money in bank accounts (as opposed to investing). If not enough money is available to match how much people want to hold, interest rates rise until enough people are put off. So if the quantity of money were increased, while the desire to hold money remained stable, interest rates would fall, leading to increased investment, output and employment. For both these reasons, Keynes therefore advocated low interest rates and easy credit, to combat unemployment.

Unlike the mercantilist thinkers however, wealth was found not in trade but in human labor. The first person to tie these ideas into a political framework was John Locke. In the 16th and 17th centuries the School of Salamanca in Spain developed economic theory, one of the earliest forms of a study in the economic tradition of the field of economics. Economic policy in Europe during the late Middle Ages and early Renaissance treated economic activity as a good which was to be taxed to raise revenues for the nobility and the church.

1. Keynesian views entered the mainstream as a result of the neoclassical synthesis developed by John Hicks.
2. The Journal des Économistes was instrumental in promulgating the ideas of the School.
3. Smith was a Scottish moral philosopher, whose first book was The Theory of Moral Sentiments (1759).
4. People produce things, to fulfill their own wants rather than those of others, therefore production is not a question of supply but an indication of producers demanding goods.
5. Why should a bale of linen brought overland from Brittany at great expense be worth more than one which is transported cheaply by sea?

As societies grew wealthier and trade grew more complex, economic theory turned to the mathematics, statistics, and computational modeling that economists use to help guide policymakers. The business cycle, booms and busts, anti-inflation measures, and mortgage interest rates are outgrowths of economics. This school includes economists like Michel Aglietta (1938), André Orléan (1950), Robert Boyer fr (1943), Benjamin Coriat (1948) and Alain Lipietz (1947). It is one of the two heterodox schools in France, the other being l’école des conventions. Their interests revolves around accounting for the regime of regulation of specific historic stage of capitalism. They have mainly analysed the fordist mode of regulation, who corresponds to the after war period.

As an extension of this, Smith’s labor theory of value—that the value of a good can be measured by the hours of labor needed to produce it—has also largely been abandoned. These accounting systems, arising in tandem with written language, eventually included methods for tracking property transfers, recording debts and interest payments, calculating compound interest, and other economic tools still used today. Please provide your email address so that we may notify you once this format of the book can be pre-ordered. In 1957 Myrdal published his theory of Circular Cumulative Causation, in which a change in one institution ripples through others. In the 1930s LSE member Sir Roy G.D. Allen (1906–1983) popularized the use of mathematics in economics. In August 1774 King Louis XVI appointed Turgot as minister of finance, and in the space of two years he introduced many anti-mercantile and anti-feudal measures, supported by the king.

In 1960 he published a small book called Production of Commodities by Means of Commodities, which explained how technological relationships are the basis for production of goods and services. Prices result from wage-profit tradeoffs, collective bargaining, labour and management conflict and the intervention of government planning. Like Robinson, Sraffa was showing how the major force for price setting in the economy was not necessarily market adjustments. But Keynes believed in the 1930s, conditions necessitated public sector action. The New Deal programme in the U.S. had been well underway by the publication history of economic thought of the General Theory. Keynes also believed in a more egalitarian distribution of income, and taxation on unearned income arguing that high rates of savings (to which richer folk are prone) are not desirable in a developed economy.

The Historical school largely controlled appointments to Chairs of Economics in German universities, as many of the advisors of Friedrich Althoff, head of the university department in the Prussian Ministry of Education 1882–1907, had studied under members of the School. Moreover, Prussia was the intellectual powerhouse of Germany and so dominated academia, not only in central Europe, but also in the United States until about 1900, because the American economics profession was led by holders of German Ph.Ds. The Historical school was involved in the Methodenstreit («strife over method») with the Austrian School, whose orientation was more theoretical and a prioristic. In English speaking countries, the Historical school is perhaps the least known and least understood approach to the study of economics, because it differs radically from the now-dominant Anglo-American analytical point of view.