Jhingan-HistoryEconTh-ajk$2.47#5 1,10381,577,his,eng,20150410,20150510,4,JHingan MGirija-L.Sasikala: History of Economic Thought ama,https://www.amazon.com/History-Economic-Thought-M-L-Jhingan-ebook/dp/B00IKNFYSM/ref=cm_rdp_product_img eng,https://www.amazon.com/gp/review/R2U866N0TBT6N0?ref_=glimp_1rv_cl 116,,b,0150416 172,2,Chapter 2 ANCIENT ECONOMIC THOUGHT 245,3,PLATO (427-347 BC) 258,h,Plato distinguished five types of government. 259,h,1) Aristocracy - rule by the best. 2) Timocracy - rule by the soldiers. 3) Oligarchy - rule by a few. 4) The rule o... 270,h,Secondly to Adam Smith the advantages of but to Plato it is beneficial to the entire... 279,h,Plato recognised the value of money as medium of exchange. 304,h,He recognised division of labour and it was adopted as a means of easier and better production. 308,h,Aristotle was the first analytical economist who laid the foundation of the science of Economics. 312,h,Aristotle followed the inductive method and therfore a more practical one. 324,h,wmie HBto aavocatea pudiic properry Aristotle supported the institution of private property. 331,h,The institution of private property will promote good conduct among the citizens. 337,h,Aristotle developed the theory of economics while discussing the elements of household management. 342,h,Aristotle laid the foundation for value in-use 366,3,ROMAN ECONOMIC THOUGHT 413,2,Chapter 3 MEDIEVAL ECONOMIC THOUGHT 416,h,the fell of the Roman Empire in 476 A.D. seems to be the beginning of the Middle Ages. 418,h,an end in 1500 A.D. The thousand years of Middle Ages can be divided into two periods: (1) From 476 A.D. to 11th cen... 429,3,ST. THOMAS AQUINAS (1225-1274 A.D.) St. Thomas Aquinas was the best representative of medieval economic 436,h,Just Price The most important contribution of Thomas Aquinas was Just price (" Justum Pretium"). 443,h,Thus Aquinas distinguished between ’Just price’ and 'market price’. Just price was determined by law. 453,h,Aquinas to condemn usury. H Winhlinhf I rvratinn Aquinas followed Aristotle regarding private property. 457,h,Trade was considered to be unnatural and to him it meant a fall from the state of grace. But still he recognised it as a nec... 472,3,NICOLE ORESME Oresme was an important medieval thinker and his treatise "On the contained var... 483,h,The historians dubbed the medieval period this period is of great significance in the evolution of ec... 488,h,whole economic philosophy of the Middle ages might be summed in the doctrine of which aimed to protect buye... 492,2,Chapter 4 MERCANTILISM 497,h,In France it was known as "Colbertism" the Finance Minister of Louie the XIV. In Germany a... 502,h,Germany and Italy, 502,h,Spain and Scotland. It adopted itself to the changing circumstances. 504,h,"Mercantilism comprises the economic views that prevailed among the European statesmen from 16th to 18th... 505,3,FACTORS SHAPING MERCANTILISM Some political, religious and cultural factors were responsible for the emerg... 535,h,The fundamental aim of Mercantilism was to make a country strong. The strength of a country was tested with the help of t... I ny i my I the natural resources of the country to increase its exports. There was regulation of economic life by the government. 539,h,Mercantilism firmly believed that gold was the basis of wealth and power. 553,h,Money in those days was identified with capital. 557,h,The Mercantilist theory of foreign trade is known as the balance of trade theory. 562,h,The mercantilists insisted that the value of export should always be greater than imports. 570,h,The mercantilists considered commerce and industry as the most important branches of the national economy- 574,h,They thought that agriculture did not contribute directly to the strength of the country. 592,h,market value was recognised. 594,h,Mercantilists recognised three important namely, land, labour and capital. 611,h,Mercantilist theories and practices have been criticised by many writers. The opposition actually started towards the ... 628,h,"It is the who are the spiritual predecessors of modern econo... 633,h,Knut Wicksell developed his theory of interest with the mercantilist ideas as the basis. Keynes also admired some of the ... 640,h,Mercantilism declined due to many reasons. Under the influence of the teachings of policy of plenty began to replace... 657,h,Economic ideas of the mercantilists have relevance to the under-developed 673,h,Capital deficiency is one of the main problems of underdeveloped countries. External assistance is uncertain and can... 682,3,INFLUENCE OF MERCANTILISTS ON ECONIMICPOLICY 714,3,SIR THOMAS MUN Mun was an important representative of the English mercantilists. He was born in England in 1571. 716,h,Gray rightly remarks that "Mun is perhaps the nearest approach to the perfect mercantilist". 717,h,Mun wanted to regulate the foreign trade of the country to secure a favourable balance of trade. 739,h,Mun praised industry and condemned idleness and luxury. He praised the "industrious Dutch" and deplored the idl... 773,3,JOHANNES HEJNRICH GOTTLEB VON JUSTI (1717-1771) Justi was a professor of Kameral Sciences at the University of Vi... 820,2,Chapter 5 PHYSIOCRACY 821,h,economic principles and policies which developed in France in the middle of th... 828,h,"Physiocrats must be credited with a foundation of the earliest school of economists in the fulle... 852,h,Physiocrats contributed on the theoretical three important ideas, namely : 1. The concept of natural order. 2. The co... 883,h,Thus industry and commerce are regarded as unproductive. 885,4,3. The Circulation Of Wealth: (Tableau Economique). 892,h,The author of this table was Quesnay. 896,h,The productive class: It consisted of who cultivate the soil and pay the rent to the landlords. The proprietory cl... 902,h,All wealth is produced by the productive class. 927,h,There is one more advantage from the Tableau Economique. It can help us to understand and construct models. 934,h,when the tableau économique was published it was regarded as one of the greatest achievements of... 937,h,Quesnay's économique table is considered as the most important contribution of physiocracy. 821,h,economic principles and policies which developed in France in the middle of th... 828,h,"Physiocrats must be credited with a foundation of the earliest school of economists in the fulle... 852,h,Physiocrats contributed on the theoretical three important ideas, namely : 1. The concept of natural order. 2. The co... 883,h,Thus industry and commerce are regarded as unproductive. 885,h,3. The Circulation Of Wealth: (Tableau Economique). 892,h,The author of this table was Quesnay. 896,h,The productive class: It consisted of who cultivate the soil and pay the rent to the landlords. The proprietory cl... 902,h,All wealth is produced by the productive class. 927,h,There is one more advantage from the Tableau Economique. It can help us to understand and construct models. 934,h,when the tableau économique was published it was regarded as one of the greatest achievements of... 937,h,Quesnay's économique table is considered as the most important contribution of physiocracy. 54 957: 20150416@ oThus the functions of the physiocratic government were:
  1. To preserve natural order.
  2. To protect private property.
  3. To spread education in natural order.
  4. To undertake public works programme.
  5. To eliminate international barriers.
963,h,Thus the functions of the physiocratic government were: To preserve natural order. To protect private property. To s... 976,h,physiocrats in general regarded foreign trade as an evil. 980,h,The greatest defect in the physiocratic doctrine is the absence of any reference to value. 982,h,The aim of the physiocrats was to develop agriculture. 990,3,FRANCOIS QUESNAY (1694-1774) 1019,4,The Productive Classes. 1022,4,Equality of Exchanges. 1032,h,The most rational means to achieve this aim is perfect freedom of trade' 1033,h,to him, was merely a statutory medium of exchange. 1038,h,annual production of the primary goods which gives rise to commerce and money and which... 1045,h,country can be prosperous only when inland production and consumption are equal. 1076,h,He recognised the worth of capital and proved the validity of interest. 1088,h,(b) Views of physiocrats on ’Taxation' (c) Sterile class in Physiocracy. Chapter 6 PRE- CLASSICAL ECONOMISTS WILLIAM PET... 1088,,b,0150419 1089,2,Chapter 6 PRE-CLASSICAL ECONOMISTS 1098,h,Petty's most important contribution to economic theory was his theory of natural par which also included his views on ren... 1194,h,The precious metals have a value which is determined in exactly the same way as that namely, b... 1200,3,SIR DAVID HUME (1711-1776) 1203,h,Cantillon uses a number of examples serfs, craftsmen, and others; and he concludes that the intrin... 1205,h,sine he accepts Hailey's calculation that half the children that are born die before the ag... 1207,h,though primarily a is also known as an economist. 1214,h,He said that balance of trade of a country could not be permanently favourable or adverse and in the long run the balance... 1225,h,He regarded land as the source of all useful things but he had hardly any love for the landed class. In his opinion land owners ... 1228,h,It is thus clear that he gave ideas which were adopted by writers who followed him and it cannot be denied that he was on... 1230,h,Sir James Steuart (1712-1780) was the chief English Mercantilist writer of the eighteenth century. 1236,h,political economy is in a state... 1252,h,This theory can be summarized as follows. Prices are in equilibrium when demand and work balance. (Stuart's own theory of r... 1277,2,Chapter 7 JEREMY BENTHAM 1285,h,Just as Ricardo's name is associated with Bentham’s name is associated with the principle of utility. 1289,h,Most fundamental in Bentham’s thought is his hedonistic psychology. 1292,h,Bentham had to believe that pleasures and pains are 1300,h,we may say that Bentham seemed to have some vague notions about the diminishing marginal utility of money. 1311,h,two conclusions which are of great importance in the development of economic thought. The first one is that... 1317,h,1. (a) The wealth of society is nothing but the wealth of individuals who compose it; (b) each individual knows his interest be... 1319,h,2. Government actions is not merely it is injurious. 1320,h,Bentham advocated unlimited freedom for competition. 1353,h,Bentham finds an important place in the history of economic thought for the he dealt a sever... 1360,2,Chapter 8 ADAM SMITH 1364,h,Adam Smith has been regarded as the father and leader of the British Classical School. 1367,h,The word 'classic' has been used in the economic literature to convey three it is used to refer the e... 77 1372: 20150419@ oThe following are the characteristic features of classical school:
  1. The classical economists had faith in laissez faire. For them that Government is best which governs least.
  2. Classical advocated a market economy based on perfect competition. Production, exchange and distribution are guided by market forces.
  3. They assumed that full employment level would exist in the economy. They thought that the economy was self-adjusting and any deviation from full employment would automatically get adjusted to full employment.
  4. They believed in the existence of a harmony of interests.
  5. The classical economists emphasised the importance of all economic activities.
  6. The classicals believed in the universality of economic laws.
  7. They were the first economists who paid attention to the problems of economic growth and development.
  8. They looked at the economy as a whole. Their approach was macro in nature.
  9. Lastly, the classical economists believed in Say's law of market. 1374,3,ADAM SMITH (1723-1790) 1386,h,Adam Smith stands as an institution by himself in the history of economic thought. He is regarded as the founder of moder... It is no exaggeration to say that Economic science was born in 1776 with Adam 1386,h,Smith's 'Wealth of Nations'. He is the first economist who dealt economic problems in a systematic manner. In 1392,h,he worked as a Professor of Logic and later became a Professor of Moral he published his "T... 1395,h,"An Inquiry into the Nature and Causes of the Wealth of Nations" which was published he was app... 1399,h,Smith-( a) Predecessors (b) clubs and travels (c) The economic and political conditions. 1403,h,Being a personal friend of Quesnay and he had been deeply influenced by 1410,h,c) The Economic and Political Conditions 1418,h,The Philosophy of Adam Smith 1421,h,namely self-interest. 1424,h,best judge of his own interest. 1430,h,all Government interventions in human activities were injurious. 1425,3,SMITH'S NATURALISM AND OPTIMISM 1437,h,Division of labour is not the effect of human wisdom. 1444,h,He gave too much importance to capital and treated 1460,h,Wealth of Nations consists of an followed by and a short appendix. 1473,h,labour is the most important factor which increases the wealth of nations. 1478,h,Adam Smith distinguishes between productive and unproductive labour. Smith 1481,h,Whereas unproductive labour produces services which are consumed at the time of production. 1486,h,Division of Labour 1492,h,only factor in economic progress". 1494,h,pin making industry which involves 18 different operations has become a classic example. 1494,h,not nme more tnan ¿u pins a aay. but he could... 1504,h,Adam Smith also pointed out the disadvantages of division of labour. 1) As worker is confined to one or two opera... 1515,h,fixed capital and circulating capital. 1526,h,place to agriculture. Smith believed that investment in agriculture was the most productive form of capital investment b... 1537,h,value in use and value in exchange. 1544,h,Thus the theory that labour is the cause of value was first formulated by the Father of Political Economy. It is the same theory ... 1551,h,the price of a commodity land and capital. 1555,h,The market price is the actual price prevailing in the market and is determined by the forces of demand and supply. 1572,3,SMITH'S IDEAS ON DISTRIBUTION 1593,h,Smith's theory of distribution is confusing. 94 1671: 20150419@ oA Critical Appraisal
    2. Neglect of Middle Class
    3. One-sided Saving Base
    4. Unrealistic assumption of perfect competition
    5. Neglect of Entrepreneur
    6. Unrealistic assumption of stationary state
    1687,h,tainted with Physiocratic errors and is in mark contrast with the remarkable lucidity of his views on production. Gide and Ris... state 1690,3,SMITH'S THEORY OF ECONOMIC DEVELOPMENT 1695,h,instead wealth of a nation can be increased only by increasing the productive powers of for in the ultimate analysis lab... 1702,h,Smith locally moves to his famous law of market. 1704,h,and (ii) foreign demand. 1710,h,Adam Smith was an essentially optimistic thinker. 1712,h,Smithian distinction between productive and unproductive labour. 1741,3,LAISSEZ FAIRE OR ECONOMIC LIBERTY 1744,h,He ardently advocated the policy of laissez fa ire. 1745,h,Toynbee has remarked that Smith’s entire economic thought is a plea for liberty. 1745,h,Every page of his writing is illumined by the passion for freedom. 1755,h,Public Finance The Vth book of Wealth of Nations deals with the revenue of the Government. 1771,h,Hence he disagrees with mercantilist idea that trade is advantageous because it acquires gold and silver. 1775,h,summed up into the dictum. "Look after and the gold will look after itself". 1776,h,The arguments given by him in favour of free trade are summarised below: a) Free trade brings about a proper distribution ... 1782,h,certain limitations also. He considered the defence of the country as more important than opulence. 1783,h,Hence he thought that the Navigation Act of England was the wisest step taken by the Government. He also suggested th... 1784,h,CRITICAL ESTIMATE Adam Smith has a strong claim as the Father of Political Economy. 1786,h,Wealth of Nations has become the corner- stone of economic science. 1789,h,"Adam Smith’s name is incomparably the greatest in the 1807,h,the Wealth of Nation possesses a literary charm. It provides a starting point for all... 1817,2,Chapter 9 THOMAS ROBERT MALTHUS (1766-1834) 1825,h,he left for a trip to the continent. Norway, Finland and Russia. 1847,h,when unchecked, increased in a geometrical ratio. Food production increases in an arithmetical ratio." 1867,h,Thus Malthus was the first to devote a treatise to the principles of population. He deserves great consideration for calling ... 105 1867: 20150419@ oCRITICISMS
    1. The mathematical character of the theory is opened to objection.
    2. The theory neglects the influence of education and standard of living.
    3. Malthus ignored scientific discoveries and inventions.
    4. Too much importance to population and food supply.
    5. Neglects the effects of over population.
    6. Excludes International Trade.
    7. Pessimistic Theory.
    8. Incomplete Theory. "A baby comes to the world not only with a mouth but also with a pairof hands".
    9. Importance of preventive checks undermined.
    10. Malthus failed to provide a satisfactory economic theory of population.
    1930,3,OTHER ECONOMIC VIEWS OF MALTHUS Malthus anticipated the Ricardian theory of rent. 1970,h,all the classical economists believed in the operation of Say's law of market which stated that "every supply... 1971,h,Its implication is that there never could be any overproduction resulting in unemployment. 1979,h,Malthus never agreed with Say's law of market. 1991,h,Malthus used the concept of effective demand to show that the economic system was not self-adjusting. 1993,h,Malthus believed that if producers pay less they wouldultimately dig their own graves be... 2007,h,supply will not be equal to demand. 2016,3,MALTHUSIAN GLUT AND KEYNESIAN STAGNATION 2025,3,MALTHUS AS A PESSIMIST 2058,h,Malthus holds a unique place in the history of economic thought. Keynes called Malthus as the "first of the Cambridge e... 2067,h,Keynes has rightly spoken of him as being "far ahead of his time in his analysis" of the role of demand. 2069,h,He can be placed as number'two’ after Smith in the list of the builders of economic science. We can conclude with the wor... 2071,3,COMPARATIVE STUDY OF SMITH AND MALTHUS 2074,h,Smith and Malthus earned an immortal place in the history of economic thought by providing the most durable foundatio... 2075,h,Smith gave an elegant theory of production based on his concept of division of labour. Malthus became a pioneer in ... 2083,h,Thus Malthusian essay was a reaction against the optimism of Smith. 2093,h,But Malthus developed a theory of market gluts or a theory of under-consumption which later became a fore-runner to Ke... 2093,,b,0150422 2109,h,Thought. 2110,2,Chapter 10 DAVID RICARDO (1772 - 1823) 2112,h,David Ricardo has been considered as the greatest economist of all times. 2118,3,DEFINITION OF POLITICAL ECONOMY 2126,h,Value 2129,h,those that cannot be multiplied in which case value is determined by scarcity for example, rare statues, coins,... 2130,h,there are those commodities which can be multiplied to any limit and in such cases value is determined by quan... 2140,h,There is difficulty in measuring labour or equal efficiency. The less skilled may tak... 2154,3,THEORY OF RENT 2205,3,THEORY OF WAGES 2234,3,MONEY 2237,h,Value of money is its purchasing power and determined in the market, like by it... 2244,h,The theory of comparative cost is the major contribution of Ricardo to the theory of foreign trade. It states that every co... 2336,3,RICARDO'S THEORY OF ECONOMIC GROWTH 2349,h,Y=f(K, N, L, S) In this production N and L are the same as in Smith's production function. ’S’ a new v... 2390,h,capital accumulation is a strategic factor. In 2404,h,the natural tendency of profits periodically the introduction of innovation might check ... 2463,h,While Adam Smith looked at the stationary state as a dim and distant prospect Ricardo considered it as a real possibility. The Ric... 2466,h,"Next to Smith, Ricardo is the greatest name in economics. Ricardo is the supreme example of abstr... 2470,h,With Ricardo Political Economy became Economics". 2495,h,it is the capitalists who initiate and maintain the process of 2531,h,Smith’s theory of distribution was confused and scrappy. Ricardian theory of distribution was concerned with the manner in whi... 2554,h,Ricardo went further and applied the theory generally. Smith and Cantillon had distinguished between short-term mark... 2573,h,Smith's economic thought was based on nature philosophy which he borrowed from the physiocrats. But Ricardo’s economic... 2578,h,To conclude we can say that Ricardo is ranked next to Smith. But even the opponents of Ricardo admired the man ... 2584,h,Ricardian theory of rent was based upon the Malthusian theory of population and diminishing returns in agriculture. 2606,h,Malthus departed from Ricardo 2606,h,consumption which later influenced Keynesian economics. 2620,h,Malthusian thought revealed a dualistic philosophy. As a man he was an idealist. As an economist he was materialist. Ricard... 2636,2,Chapter 11 CLASSICAL TRADITIONISTS 2640,3,JEAN BAPTISTE SAY (1767-1832) 2648,4,NATURE AND SCOPE OF POLITICAL ECONOMY 2652,h,a study of the laws which govern wealth. 2654,h,Say said that national income would be wages and profits. 2663,4,DOCTRINE OF IMMATERIAL PRODUCTS 2665,h,Smith recognised land to be a productive judges, artists as unproductive. Say ... 2680,h,Say's 'Law of Markets' has found a permanent place for him among the galaxy of economists. The Law of Markets is c... 2688,4,excess production of particular product can be corrected in time by reducing its production. 2711,h,Implications of Say's Law of Markets 2711,h,'Supply creates its own demand' implies that there can be no general unemployment and no general over-pro... 2879,h,Conclusion commonly canea 2882,h,Hermann declared himself a follower of Adam Smith and quoted him liberally. But on certain issues he showed his disagre... 2887,4,FREDERIC BASTIAT (1801 - 1850). 2896,h,He was a stanuch advocate of free trade. To him the policy of protection was immoral as it allowed more profits to on... 2896,h,stanuch löytyy vain puolalaisena sukunimenä 2905,h,two kinds of utility; or rather he divides the total utility of the product into two layers: (i) The first layer is that of 2906,h,free of cost. No payment need be made for it in and therefore, it does n... 2914,h,Bastiat held the view that it is only a payment made for the past services of the landlord such as redaimin... 2920,h,Bastiat held the view that it is a payment for postponement of consumption by capitalist. 2922,h,His theory of distribution advocated complete absence of clash between the worker and the capitalist. The teaching... 2934,h,According to him "Political Economy 2935,h,should be studied from the consumer's standpoint". 2945,h,Bastiat's support for laissez - faire within the ernnnmv is also haseri unnn his helief in m a n u m . ai uttu iyivc iuii iiccuv... 2960,2,Chapter 12 THE EARLY SOCIALIST CRITICS 2963,h,Charles Fourier, Louis Blanc and Joseph Proudhon were the early socialist critics of the classical school. 2967,h,he enforced 12 hours of work in place of 17 hours and abolished childlabour of 10 years of age and all fin... 2982,h,terms of hours of work undergone in making it. They were to be paid in ’labour notes' to that extent and these’notes'... 3002,h,like Sismondi in France, was the first thinker to condemn the ugliness and waste of the ca... 3007,3,FRANCOIS MARIE CHARLES FOURIER (1772-1837) 3018,h,he called Phalanx. 3019,h,dining rooms, concert halls, kitchens, everything was common, except their living quarters. 3056,h,Criticism of competition: Blanc criticised the competitive system of economy. 3101,h,Proudhon considered that labour alone was land and capital were useless. 3109,h,the matter is simple. The absolute then, is its cost in time and expense. 3109,,b,0150424 3145,4,Proudhon. 3145,2,Chapter 13 THE SOCIALIST CRITICS 3149,3,SISMONDI (1773-1842) 3157,h,importance to distribution more than the theory of production. 3158,h,Sismondi says that " Political Economy at its widest is a theory of charity’ 3167,4,OVER-PRODUCTION 3172,h,He condemned over-production as it reduced the and cause... 3174,h,due to (1) the competitive character of the economy. (2) Production is determined by the supply of capital and not by dem... 3180,4,CLASS CONFLICT 3183,h,the rich and the capitalists and the workers. 3212,4,CAPITAL 3216,4,COMPETITION 3217,h,Sismondi criticised the classical view that 3220,4,PEASANT FARMING 3224,4,SISMONDI REFORM PROJECTS 3227,h,He advocated state intervention to correct the immediate evils of the wage system and worker's misery. 3235,h,He rejected the theoretical principles of the but not to the extent of identifying himself with socialism. 3242,h,who stood for social security. 3244,h,Saint-Simon was a noble man who led a adventurous life. 3250,4,ECONOMIC IDEAS Saint-Simon’s economic ideas might be summed up as an apothesis 3255,4,ST. SIMON'S PARABLE St. Simon’s leading contained within the compass of a have since become ... 3280,h,positive science of productive organisation. 3289,h,St. Simon was not a socialist but a collectivist. He 3295,3,ECONOMIC IDEAS OF ST. SIMONIANS 3313,3,ST. SIMONIAN COLLECTIVISM 3317,h,Individual initiative and capitalist enterprise were replaced by a system of production in which there was equality of opportunity... 3322,h,Saint. Simonians is a mixture of realism and utopianism. 3330,2,Chapter 14 THE HISTORICAL SCHOOL 3332,3,A. THE GERMAN HISTORICAL SCHOOL 3334,h,1843. These economists emphasised the upheld the inductive and historical meth... 3335,h,research rather than abstraction and and emphasised relationship of economics with allied social sciences like... 3347,3,OLDER HISTORICAL SCHOOL 3347,4,WILHELM ROSCHER: (1817-1896) 3364,4,BRUNO HILDEBRAND (1812-1878) 3396,h,The Younger Historical School 3397,h,While the older historical school stressed a was handicapped by the lack of statistic... 3402,4,GUSTAV SCHMOLLER (1839-1917) 3430,h,The National System of Political Economy 3436,h,List rejected the cosmopolitanism of Adam Smith and his followers. 3441,h,Degrees of Culture or Economic Stages 3442,h,List gave five stages of economic development. (1) The savage stage (2) the pastoral stage (3) the agricultural st... 3449,h,Adam Smith had enumerated three stages viz., agricultural, agricultural-manufacturing and agricultur... 3492,h,List has been accepted as the first German hero who sacrificed for the unification and industrial development of the nation. 3493,h,The historical school attacked the classical economics on three grounds: (a) (b) Crude... 3530,h,Positive Ideas of the Historical School 3532,h,classicists and historians was that while the classical thinkers approached the econo... 3552,h,The economists of the historical school are to be thanked for their valuable studies in economic history. These studies have pr... 3554,3,B. THE BRITISH HISTORICAL SCHOOL 3559,h,Thus a host of writers called British Historical School attacked Smith and Ricardo for making abstract generalisation 3571,4,WATER BAGEHOT (1826-1877) 3588,h,He wanted the economic studies to be based on physics and biology. 3594,4,THOMAS EDWARD CLIFFE LESLIE (1825-1882) 3599,4,ARNOLD TOYNBEE (1853-1883) 3600,h,Arnold Toynbee was more a social reformer than an economist. 3606,4,THOROLD ROGERS (1823-1890) 3629,h,According to Senior the subject matter of Political Economy was limited to wealth and not with human happiness. 3634,h,consumer tries to maximise his consumer's an entrepreneur tries to maximise a factor of production, its inc... 3641,h,Senior emphasised that capital formation could take place due to abstinence. 3680,h,Ricardo therefore required revision and modification in the context of new ... 3685,h,Mill's work heralded the end of one and the beginning of another epoch in economic development. 3690,h,seventh edition in 1871. 3707,h,Hedonistic Principle: Hedonistic Principle or law of self-interest means that every individual desires wellbeing and each ma... 3715,h,Mill restated that the laws governing the production and distribution are closely related as well as different from each ot... 3718,h,Scope of Economics 3721,h,Method of Study 3723,h,adopted the concrete deductive method that is a combination of deductive and inductive methods. 3728,h,labour and natural objects are the two agents of production. 3737,h,There are five ways in which labour operates indirectly in production; (1) labour employed in extractive industries (2) lab... 3761,h,Mill supported a legislative measure to prohibit the marriage of the poor. He wrote that the laws forbidding marriage unless... 3771,h,capitalnfixed and circulating capital. 3777,h,Cost of Production 3779,h,there are three components of cost of capital and differential tax. 3784,h,degree of productive efficiency of a community depended upon several factors en... 212 3793: 20150424@ oScale of Production The advantages of large scale production are: 3803,h,it was the mildest form of slavery. England was the first country which abolished slavery... 3820,h,Profits Mill explained that profits are the "remuneration of abstinence". 3829,h,But he did not accept Adam Smith’s version that the tendency of the profit was to fall as a result of competitive cap... 3831,h,Mill accepted Ricardo’s law of rent 3842,h,He said that demand and supply theory of value was simply a vicious circle. He gave viz., normal value and 3848,h,money was a commodity and its value depended upon its purchasing power. 3849,h,There is an inverse relationship between value of money and price level. 3853,h,Mill said that those people who acted upon the principle of laissez foire were nearer the truth 19 times out 20 times than those... 3857,h,I was a staunch free Jan 1,,considered taxation as the means with the help of which greater inequalities of wealth nigniignt 3882,3,THEORY OF ECONOMIC DEVELOPMENT 3896,h,Mill was not merely a political economist but also a social reformer. 3896,h,He developed his economic ideas relating to socialism from social thinkers like Saint Sismondi 218 3903: 20150424@ oprogrammes for social uplift:
    1. to remove all legal and fiscal impediments to the
    2. to restrict within the narrowest limits, the power of tying up land,
    3. to secure the abolition of the law of inheritance,
    4. to claim for the state, the interception by taxation of the future unearned increase of the rent of land,
    5. to promote a policy of encouragement to
    6. promotea policy of encouragement to cooperative agriculture,
    7. to promote the acquisition of land in a similar manner to be let to small cultivators,
    8. to make available land belonging to the crown or public bodies or charitable and other endowments, for the same purpose...... as well as for the improvement of the dwellings of working class,
    9. to retain all waste lands for national uses,
    10. to retain less fertile lands for natural beauty,
    11. to obtain for the state the power to take possession of all natural objects.
      12. 3914,h,Mill aimed at increasing the general happiness of society. 3919,4,CRITICAL ESTIMATE 3920,h,a staunch free trader and an unparalled exponent of liberalism. Mill supported th... 3926,h,failed to develop the marginal analysis in consumption and production. 3930,h,"Mill did for Ricardo what J.B. Say did for Adam Smith— a job of systematization and popularisation". 3938,2,Chapter 16 THE MARGINAL REVOLUTION 3953,h,they opposed the use of averages and made use of "marginal utilities". 3956,h,Further like classicals, the subjective economists believed in perfect competion. 3972,h,The subjective school consists of two schools of thought: (1) Mathematical School and (2) Non-mathematical or Psy... 3976,3,AUGUSTINE COURNOT (1801-1877) Cournot was the principal founder of the mathematical school. 4026,h,"he exerts a powerful influence on economic thought. It is with him therefore that any survey ... 4027,3,GOSSEN (1810-1858) 4037,h,this connection he gave 3 laws of human conduct. These 4037,h,three laws exhibits main features. (1) utilitarianism (2) consumption approach (3) Mathematical method. 4042,h,this law is known as the Law of Diminishing Marginal Utility'. 4045,h,second law tells that each man will spend his money on different commodities in such a way that the amounts of all enjoymet... 4047,h,Gossen’s second law is known as the Law of Equi-marginal Utility. 4050,h,goods possessing value into 3 classes. (1) Those which have all the properties for i.e., consumer goo... 4071,h,Mathematical Economic Analysis: Edgeworth never attempted a complete treatise on as he was not k... 4077,h,Static and Dynamic Analysis: Edgeworth discriminated between static 4081,h,Indifference and Contract Curves: Edgeworth has given two different ideas - Indifference curve and Contract curves. 4085,h,Three Dimensional Utility: In the economic utility has been 4087,h,Evaluation: Edgeworth gave mathematical treatment to the theories of monopoly and international trade. He wrote on railway... 4092,h,AN ESTIMATE OF MARGINAL UTILITY SCHOOL 4100,h,they believed that marginal utility was quantitatively measurable. 4105,h,The economists of marginálist school also realized the interdependence of economic life. 4107,h,"probably the most important technical contribution lay in the development of the tools of what we can call marginal analy... 4109,h,marginal marginal costs, marginal marginal rates of transformati... 4109,,b,0150427 4118,2,Chapter 17 AUSTRIAN SCHOOL 4136,h,However this battle of method came to an "Induction and 4137,h,deduction are both necessary for the science just as the right and left foot are needed for walking". 4138,h,"Foundations of Economic Theory" 4143,h,satisfaction of social needs is the goal of social economics which is totally different from individual economics. 4154,h,Menger emphasised the importance of consumer goods on which the demand for other goods depended. 4176,h,money as a medium of exchange. He recognised the role of money as a standard it h... 4196,h,we can say that Menger's achievements are narrower than Adam Smith. Smith gave... 4247,3,EUGEN VON BOHM-BAWERK (1851-1914) 4256,h,As for as satisfaction of wants were capital goods were future goods. 4287,4,JOHN GUSTAV KNUT WICKSELL (1851-1926) 4288,h,Wicksell was the founder of the Swedish School of Economics. 4423,h,"The Common sense of Political Economy" is the most exhaustive non-mathematical explanation of marginal theory of pure e... 4427,,b,0150502 4428,2,Chapter 18 KARL MARX (1818-1883) 4430,h,"It is a sound tradition which assigns Marx a place in every history but puts him in a... 4442,3,INFLUENCES SHAPING MARX'S IDEAS 4445,h,Though he was much impressed with at one stage he felt that it was too conservative to ... 4447,3,MARXISM OR SCIENTIFIC SOCIALISM 4451,h,Marixan socialism is called scientific socialism or Marxism. 4453,h,The chief merit of Marxism as a system lies in its organic unity. 4466,3,CHIEF TENETS OF MARXIAN THOUGHT 4472,h,there is something which we think is true then there must be something which is if there is somethin... 4476,h,every thesis having its antithesis. 4480,h,depend upon the exact combination of synthesis and antithesis in each case. 4481,h,Thus history is nothing but the march of God on earth— the unfolding of His will in this world. 4491,h,Next plank in Marxian interpretation of history is the concept of surplus value. 4496,h,there is a surplus value over and above the replacement cost. 4499,h,The State is always a class-State— it is always controlled by a particular class in whose economic interest it is to keep o... 4510,h,when slavery was replaced by the the slaves were given the chance of improving their lot by be... 4537,h,Also the serfs could have some private property which earlier they were not allowed to. 4541,h,the division of the society is the capitalists and the middle class. 4547,h,At the most it can only postpone the downfall of capitalism. That is why Lenin calls imperialism the highest stage of ca... 4549,h,"The history of all existing society is the history of class struggle." Marx made the class conflict the dominant feature of so... 4480,h,Communist Manifesto gave a call to the depend upon the exact combination of synthesis and antithesis in each case. 4481,h,Thus history is nothing but the march of God on earth— the unfolding of His will in this world. 4491,h,Next plank in Marxian interpretation of history is the concept of surplus value. 4496,h,there is a surplus value over and above the replacement cost. 4499,h,The State is always a class-State— it is always controlled by a particular class in whose economic interest it is to keep o... 4510,h,when slavery was replaced by the the slaves were given the chance of improving their lot by be... 4537,h,Also the serfs could have some private property which earlier they were not allowed to. 4541,h,the division of the society is the capitalists and the middle class. 4547,h,At the most it can only postpone the downfall of capitalism. That is why Lenin calls imperialism the highest stage of ca... 4549,h,"The history of all existing society is the history of class struggle." Marx made the class conflict the dominant feature of so... 4555,h,Communist Manifesto gave a call to the themselves from the capitalists. It believ... 4556,h,for its destruction. 4558,4,Method of Approach 4566,4,Money 4573,4,Division of Labour 4581,3,SECTION II 4582,h,This section discusses the Marxian Economic Theories. 4590,h,use value and exchange value. 4592,h,there is a corresponding two-fold nature of labour. 4613,4,Theory of Surplus Value 4618,h,labour power has the peculiar character of being able to create more value than is needed for its own production. In othe... 4626,h,constant capital and variable capital. 259 4648: 20150502@ o1. The Marxian theory of surplus value has been criticsed on the following grounds:
      1. Marxian theory of surplus value is derived from the labour theory of value. But there is no proof that labour alone creates surplus value.
      2. In the real world, we are not concerned with values, but real tangible prices
      3. Marxian theory ignores the demand side.
      4. Marx exaggerated the scope of exploitation
      5. Critics have pointed out that the rate of profit is not only related to variable capital, but also depends on the demand and supply of commodities.
      4653,3,Theory of Capitalist Exploitation 4668,3,Law of Capitalist Accumulation 261 4673: 20150502@ oEvil Effects The accumulation of capital gives rise to the following evil effects:
      1. Large scale production is controlled by a few persons.
      2. There is concentration of rural population in towns which leads to the number of proletariat.
      3. As a result of there is a declining trend in profits.
      4. Since in a capitalist system, there is no balance between production and consumption, an industrial crisis occurs. In order to compensate the falling profits, the capitalist try to increase the production, but consumption does not increase at the same rate. So there is over production and under consumption.
      5. There is growth of unemployment and pauperism. With the accumulation of capital, technological improvements take up which reduces the demand for labour. So the labour class forms an industrial reserve army. Thus there exist a large mass of casual labourers and paupers.
      6. The developments of joint stock companies and banking and credit facilities fasten the growth of concentration of capital. 4683,3,MARX'S THEORY OF CAPITALIST CRISIS 4696,h,chronic deficiency of demand is the result. 4702,h,1. Law of Falling Tendency of Rate of Profit. 3. Crises arising from... 4758,h,with a fall in the rate of 4764,h,rise in organic composition of capital is 4770,h,the Law of Falling Rate of Profit cannot be the cause of crises. 4782,h,The Theory of Disproportionality 4789,h,Under-consumption Theory 4811,3,MARXISM AND CLASSICISM 4830,3,CHARACTERISTICS OF MARXISM 4831,h,main characteristic features of Marxism. 4841,h,"The Marxist doctrine is important because it is true. It is comprehensive and harmonious and pro... "The Marxist doctrine is important because it is true. It is comprehensive and harmonious and pro... 4850,h,Marx was a prophet. Marxism became something like a religion. It provided the ways and means for the salvation of hu... 4857,h,advanced capitalist societies as assumed by the real wages of workers have continued to rise. 4861,h,we should remember that Marx developed many insights into the problem of mode... 4875,2,Chapter 19 STATE SOCIALISM 4878,h,Socialism has been defined "as that organisation of society in which the means and the d... 4883,h,Socialism is one of the two main movements that have grown out of Marxism. These two movements are co... 4907,h,There were several classical economists who criticised the ideal of free competition or Laissez-faire. 4911,h,these thinkers and writers were not the forerunners of State Socialism; but their criticism of Laissez-faire and their a... 4976,h,which the level of human welfare will be would bring greater prosperit... 4986,h,decreasing wage share. According to this the share of labourers in the national income goes on continually decreasing. 4988,h,He concluded that the great mass of mankind is deprived of the income which it creates. 4998,h,three stages 4998,h,(1) antiquity 4999,h,(2) Christian Germanic stage in which there was private ownership of property and this was during his own days. 5000,h,(3) Christian social stage which would develop within next five or six centuries and in which land and capital would be f... 5005,4,FERDINAND LASSALLE (1825-1864) 5011,h,Both Rodbertus and Lassalle are responsible for unconsciously laying the social and moral foundations of the State Socialism. 5011,,b,0150503 5030,h,Lassalle. 5030,2,Chapter 20 NEO -CLASSICAL ECONOMICS: ALFRED MARSHALL 5039,h,He was the first economist to rename political economy as Economics. 5057,h,Marshall considered both induction and deduction as useful for economics. 5062,h,Thus all the other forces are reduced to inaction by the phrase "other things being equal". 5064,h,comforts and luxuries. 5065,h,consumption was the beginning and end of all economic activities and so he discussed consumption first and production after... 5073,h,The individual demand curve can be directly derived from the law of diminishing marginal utility. 5078,h,A rational consumer will spend his money in such a way that his total satisfaction is maximum. He will go on substituting on... 5081,h,Marshall added the term consumer's surplus "The excess of price which he would b... 5089,h,'The' elasticity of demand in a market is great or small according as the amount demanded increases much or little for a ... 5092,h,He laid down that the demand for luxuries for comforts elastic and for necessaries inelastic. 5101,h,the producer too "has to distribute his resources that they have the same marginal utility in each use; he has to w... 5106,h,Prime cost are variable costs and include wages and raw materials. Supplementary costs are rixea costs ana inciuae aeprec... 5107,h,a firm has to cover its a firm must cover both prime and supplement... 5109,h,land and labour are the two chief factors of production. Capital is the secondary agent of production. 5116,h,is not true to say that an increase in population is detrimental to the economic prosperity of a nation. 5118,h,"The members of a large family educated they are usually more genial often more vigorous in ever... 5137,4,INTERNAL AND EXTERNAL ECONOMIES 5178,h,But Marshall said that both supply and demand determined value. 5181,h,two blades of a pair of scissors. It is useless to ask which does cutting. In his own "we might as reasonably dispute... 5182,h,is the upper or under blade of a pair of as whether value is governed by utility or... 5204,h,"what can be produced by plant which itself can be remuneratively produced and supplied within the given time". In the I... 5211,h,Marshall's introduction of time element in economic analysis was one of his many significant contrib utions t o ec onomic ... 5238,h,Representative firm is also criticised as an illusory and unnecessary one. 5255,h,"Quasi-rent is the income earned from I I ML Ci (31 lu U Ll ICI <3|J|Jllfll ILCS IUI production made by man". 5256,h,surplus earned by the instruments of production other than land. 5259,h,earnings of such capital goods in the short period. 5266,4,DETERMINATION OF QUASI RENT 5296,4,DIFFERENCE BETWEEN PURE RENT AND QUASI RENT 5305,h,But quasi rent diminishes progressively and disappears finally when the supply of factors of production becomes elastic. 5328,h,Thus quasi rent is price determined while interest is price determining. 5330,h,The more efficient workers enjoy a surplus or extra wage over the marginal workers. This surplus constitutes the quasi rent. 5336,h,wages are determined by demand and supply. 5347,h,say that accumulation of wealth is generally the result of postponement of 5348,h,or of waiting for it". 5354,h,profits the reward for organisation or the earnings of management. 5363,h,purchasing power parity theory was associated with the names of Ricardo and it was Marshall who explained th... 5384,h,Marshall's distinction between long-run and short-run has opened a new branch of i.e., Short Time Analysis. 5391,h,prepared the ground for an economic science that would be not only quantitative but numerical. 5394,h,Marshall's Principles is ranked with Adam Smith's Wealth of Nations and Ricardo’s Principles and commands similar respect. 5412,2,Chapter 21 INSTITUTIONAL SCHOOL 5414,h,Institutional economics is a phenomenon of the twentieth century. It is an American product. 5416,h,"The Theory of the Leisure class". 5427,h,not price should be the central theme of economics. 5441,h,economic instincts and habits. 5447,h,They do not believe in the destruction of capitalism but in eradicating its evils. 5463,3,THORSTEIN BUNDE VEBLEN (1857-1929) 5468,h,Veblen never succeeded as a Professor due to his high eccentricities. 5488,h,economists— both past and present had completely failed to grasp the significance of the evolutionary approach. 5526,h,Veblen's analysis of the leisure class appears to be more or less similar to that of Marx. 5545,h,under the existing the society was divided into two classes— productive da... 5547,h,class conflict arose out of cultural lag. 5581,h,dash of interests which the institution of private property created. 5614,h,merchant capitalism or mercantilism, and b... 5631,h,Under communism and fascism which had liberty was suppressed. 5635,h,Commons was regarded as a great labour economist. 5641,h,Commons developed pluralism and admitted that the class conflict would continue for ever. 5648,4,WESLEY CLAIR MITCHELL (1874-1948) 5693,h,Mitchell's greatest contribution was the study of business fluctuations. His book entitled "The Rhythm of Business Actwi... 5748,2,Chapter 22 WELFARE ECONOMICS 5750,4,INTRODUCTION AND DEFINITION 5845,h,name welfare economics are due to Prof. to make anyone better off without making somebody else worse off. 5848,h,atleast one person better off without harming anyone else. 5849,h,there should be unanimity among individuals about the maintenance of the condition in which welfare has increased... 5855,h,Pareto social optimum are: Individual ordinal utility functions remain invariant when economic changes are effected. 5906,h,Hicks proposed a test which is the reverse of Kaldor test. He pointed out that in any o... 5915,h,"Scitovsky Double criterion". 5972,h,"General Possibility Theorem". 5990,2,Chapter 23 JOHN MAYNARD KEYNES (1883-1946) 5995,h,The term "Keynesian Revolution" is 5995,h,often applied to describe the economic ideas of Keynes and it is also called as "New Economics". 6012,h,Keynesian economics or Macro economics is based on broad national aggregates like consumption, saving, i... 6013,h,Keynes held that mal-adjustment in the economic system of a country was a normal feature which might lead 6014,h,cycles. His approach was fundamentally different from that of the classicists. 6020,h,Whereas Keynes stated that under employment equilibrium is in the reality and full employment is a distant goal. Achiev... 6023,h,Keynes argued that perfect competition is a myth. Today's market structure is characterised by imperfect market whic... 6026,h,Keynes said that private motives do not coincide with public welfare. 6027,h,or automatic price mechanism which ensures the welfare of one and all in society. 6029,h,There is no such automatic or self adjusting system in Keynesian economics. If such a depressions and booms c... 6034,h,Keynesian contribution relates to macro micro problems require one set of policies and... 6035,h,Macro is not a mere addition of micro magnitude and intensity of macro problems vary from t... 6041,h,wage flexibility is not especially downward flexibility of wages. Modern t... 6043,h,In modem economy where there are workers will not accept a reduction in real wage. 6045,h,it may affect the consumption level of 6060,h,Keynes explained that neither savings nor investment are functions of interest rate. Savings depend on the capacity of the ... 6063,h,Investment is a function of MEC and not interest. So mere interest rate flexibility cannot bring about an equality betwee... 6071,h,Keynes successfully integrated the theory of value with the theory of prices. Both money and real markets are interdepen... 6073,h,money plays a very active role and not a passive role. 6076,h,Keynes psychological law of consumption is of basic importance in the analysis of output and employment. 6080,h,three propositions: 1. When aggregate income increases consumption expenditure also increases. This is because as a pers... 6083,h,people spend only a portion of their additional income and save the remaind... 6090,h,Keynes explained the concepts of propensity to consume namely average propensity to consume (APC) and margi... 6095,h,the subjective factors and objective factors influence consumption function. 6097,h,There are eight psychological individual which determine individual's spending. 6098,h,They are: (i). the desire to keep reserves for emergency (ii). the desire to provide for old age and sickness (iii) the desire t... 6101,h,There are four business motives: the desire to do big things. the desire to meet emergency... 6103,h,the desire to provide adequate financial obsolesc... 6151,h,14. Demographic Factors. ¦ Uinhlinht I sv-atinn 147 15. Terms of Consumer Credit. 6154,h,16. Permanent Income. 6156,h,17. Consumer Durables. 6159,h,18. Pigou Effect. 6160,h,'Pigou Effect' or 'Real Value of Money Assets Effect' or 'Wealth Effect.' 6165,h,a result of Pigou effect the consumption function will shift upward. 6167,h,IMPLICATIONS OF CONSUMPTION FUNCTION 6169,h,Most of the economists agree with Prof. Hansen's view that the Keynesian formulation of consumption function is a... 6171,h,1. Vital Importance of Investment. 6180,h,4. Need for State Intervention. 6181,h,government should interfere actively to ensure that aggregate effective demand does not fall below aggregate supply. 6182,h,5. Over Saving Gap. 6183,h,danger of 6189,h,8. Under Employment Equilibrium. 6197,h,10. Turning Points of Trade Cycle. 6201,h,Thus consumption function occupies a very important place in the theory of employment. 6216,h,present value of the series of annuities given by the returns expected from the capital asset during its life equal to its su... 6256,h,2. Development of new areas. 6259,h,4. Productive capacity of the Industry. 6261,h,5. Level of current investment. 6262,h,CRITICISM OF THE MARGINAL EFFICIENCY OF CAPITAL 6267,h,MARGINAL EFFICIENCY OF INVESTMENT 6276,h,there is a difference between the MEC and the MEI. 6278,h,MEC and the MEI are interrelated. 6317,h,Interest and Money of the late Lord Keynes appeared in the year 1933. 6327,h,There would be a virtual paradise on earth if only the government allowed the principle of laissez faire to work uninterr... 6330,h,"Normally everything goes well on its own" was the assumption of the pre-Keynesian school of thought. 6331,h,What Lord Keynes did was to blow up the complacency. 6332,h,The depression of the thirties was too much to be bypassed Laisse faire had let loose terrific disturbances in the economy. 6337,h,The study of the aggregate output of an economv. is nothina but the sudv of when atte... 6337,,b,0150504 6365,h,prices 6366,2,Chapter 24 DEVELOPMENT OF ECONOMIC THEORIES 6369,h,(a) THEORIES OF RENT 6369,h,the term "rent" denotes a periodical payment made for the say, a plot of land, a house, a ... 6371,h,rent was a payment for the use of land rent is a peri... 6374,h,RICARDIAN THEORY OF RENT 6403,h,The marginal land does not yield any surplus because the price of com and the cost of 6404,h,production on the marginal land are equal. But the superior lands will yield surpluses. 6404,h,ASSUMPTIONS OF RICARDIAN THEORY 6415,h,CRITICAL EVALUATION OF THE RICARDIAN THEORY 6421,h,it is possible to destroy the properties of land. 6337,h,Whenever a factor unit gets a payment over and above what is really necessary to the extra navment is when atte... 6365,h,prices 6366,2,Chapter 24 DEVELOPMENT OF ECONOMIC THEORIES 6369,h,(a) THEORIES OF RENT 6369,h,the term "rent" denotes a periodical payment made for the say, a plot of land, a house, a ... 6371,h,rent was a payment for the use of land rent is a peri... 6374,h,RICARDIAN THEORY OF RENT 6403,h,The marginal land does not yield any surplus because the price of com and the cost of 6404,h,production on the marginal land are equal. But the superior lands will yield surpluses. 6404,h,ASSUMPTIONS OF RICARDIAN THEORY 6415,h,CRITICAL EVALUATION OF THE RICARDIAN THEORY 6421,h,it is possible to destroy the properties of land. 6438,h,Whenever a factor unit gets a payment over and above what is really necessary to the extra navment is 6449,h,Economic rent = Actual Remuneration for a factor unit minus its Transfer earnings. 6475,h,STANDARD OF LIVING THEORY 6487,h,This theory was developed by J.S.Mill. 6488,h,the employers set apart a certain amount of capital to pay wages for labourers. This is fixed and constant.... 6492,h,Wäge rate = Wäge fund / Number of labourers 6508,h,RESIDUAL CLAIMANT THEORY 6541,h,DISCOUNTED MARGINAL PRODUCTIVITY THEORY OF WAGES 6552,h,(c) THEORIES OF INTEREST 6555,h,CLASSICAL THEORIES OF INTEREST 6557,h,1. Productivity Theory of Interest 6558,h,paid for the productivity of capital. "interest is the payment by the borrower of capital 6559,h,by virtue of its productivity". 6568,h,Abstinence or Wäiting Theory 6569,h,interest is the remuneration for mere abstinence. 6570,h,Abstinence theory explains interest from the side of supply whereas the productivity theory explains from the demand side. 6580,h,Agio or Austrian Theory of Interest 6587,h,A premium or agio must be given to the lender if he has a part with his income at the present. This premium is the so-call... 6618,h,THE CLASSICAL THEORY OF INTEREST The classical theory of interest was propounded by the old classical econom... 6623,h,This means that the rate of interest is determined by the volume of savings and volume of investment. 6628,h,According to classical economist the rate of interest is determined by the demand for savings to invest in capital goods and th... 6630,h,Demand for capital arises on account of its productivity. 6639,h,Supply of Capital The supply of capital depends upon savings and hence the will to save and the power to save of the c... 6646,h,Determination of the Rate of Interest 6655,h,The real theory of the classical economists as propounded by Marshall and Pigou has been criticised by Keynes. Keynes has c... 6679,h,neo-classical theory explains the determination of interest in terms of de... 6680,h,theory was developed by Swedish economists and first formulated by Knut Wicksell but contributions were made b... 6681,h,The term loanable funds means the total amount of money which is supplied and demanded in the market. 6683,h,loanable funds. There are several sources of both supply and demand of loanable funds. 6691,h,(b) Dishoarding 6694,h,(c) Bank Credit 6696,h,(d) Disinvestment 6701,h,Demand for Loanable Fund 6701,h,The demand for loanable funds mainly comes from three sectors namely businessmen and consumers 6713,h,The loanable funds theory is more realistic than the classical theory in several respects. The classical theory neglects ... 6730,h,Keynes introduced a monetary theory of "The General Interest and M... 6731,h,According to him "interest is a reward for parting with liquidity. 6732,h,Liquidity preference means the demand for fn hnlH r\r fKn nf fhrt im ihlif to hold cash. 6733,h,To Keynes interest is purely a monetary phenomenon 6737,h,Factors Determining Liquidity Preference 6740,h,Transaction Motive 6748,h,The Precautionary Motive 6753,h,Speculative Demand for Money 6757,h,Supply of Money 6760,h,Determination of the Rate of Interest 6761,h,The rate of interest like the price of a commodity is determined at a level where the demand for money equals the suppl... 6779,h,Hansen "Keynes' criticism of the classical theory applies equally to his own theory". 6783,h,(d) THEORIES OF PROFIT 6784,h,explain why the profit is paid. 6785,h,RENT THEORY OF PROFIT 6810,h,WAGE THEORY OF PROFIT 6812,h,profit is also a type of wage which is given to the entrepreneur for the services rendered by him. 6821,h,RISK THEORY OF PROFIT 6841,h,THE DYNAMIC THEORY OF PROFIT 6853,h,"Since costs and selling there can be no profit beyond wages for the routine wo... 6869,h,SCHUMPETER'S INNOVATION THEORY 6871,h,This theory was propounded by Schumpeter. This theory is more or less similar to that of Clark's theory. Instead ... 6874,h,in the production process with an objective of reducing the cost of commodity so as to create gap b etwee... 6881,h,Profits are of temporary nature. 6884,h,Profits are thus causes and effects of innovation. 6908,h,Some of the non-insurable risks which arise in modern business are as follows: 6913,h,(c) Risk of government intervention: 6918,h,Prof. Knight calls these risks as ’uncertainties' 6956,h,(e) THEORIES OF TRADE CYCLE 6960,h,"A trade cycle is composed of periods of good trade characterised by rising prices and low unemployment per... 6962,h,FEATURES OF A TRADE CYCLE 6968,h,The business cycle is not periodical. Some while others last for six or eight or even... 6970,h,trade cycle is international in character. booms and depressions in one country are passed t... 6971,h,PHASES OF A TRADE CYCLE 6973,h,Depression: 6975,h,Recovery: 6978,h,Prosperity: 6982,h,Recession: 6985,h,THEORIES OF TRADE CYCLE 6988,h,Non-Monetary Theories of Trade Cycle 6988,h,1. Sunspot Theory or Climatic Theory: 6995,h,2. Psychological Theory: 7002,h,3. Overinvestment Theory: Arthur Spiethoff and D.H. Robertson 7010,h,Thus Prof. Robertson has successfully combined real and monetary factors to explain business cycle.This theory is reali... 7012,h,4. Over-Saving or Under Consumption Theory: 7016,h,consumption will not increase. Increase in the supply of goods and decline in the demand create under consumpti... 7020,h,5. Keynes' Theory of Trade Cycles: 7020,h,effective demand is composed of consumption and investment expenditure. It is effective demand whi... 7027,h,a decline in MEC leads to unemployment and fell in income and output. It results in depression. 7032,h,"Trade cycle can be described and analyzed in terms of the fluctuations of the marginal efficiency of... 7035,h,the change in consumption function with its effect on MEC is thu... 7045,h,6. Schumpeter's Innovation Theory: 7053,h,Schumpeter's theory has been criticised on Schumpter's theory is based on two assumptions viz.... 7056,h,MONETORY THEORIES OF TRADE CYCLES 7059,h,1. Over-Investment Theory: Prof. Von Hayek in his books on "Monetary Theory and Trade Cycle" and "Prices and Produ... 7074,h,2. Hawtrey's Monetary Theory: Prof. Hawtrey 7099,2,Chapter 25 JOSEPH ALOIS SCHUMPETER 7105,h,Schumpeter was famous for his scholarly achievements. He was the president of Econometric Society from 1937 to 194... 7113,h,Schumpeter believed that both inductive and deductive methods are necessary for the study of economic science. 7116,h,Historical method was the most important he accepted 7116,h,mathematics as an important tool in the science of economics. 7117,h,THEORY OF ECONOMIC DEVELOPMENT 7123,h,The main motivating factor behind an innovating 7123,h,entrepreneur was profit expectations. 7129,h,economic use of an invention". 7132,h,the innovator borrowed money from the bank and moved into the market to outbid others. 7138,h,Joseph A. Schumpeter has developed innovation theory of trade cycles. An innovation includes the discovery of a n... 7140,h,Thus innovations may bring about changes in economic conditions. 7141,h,factors of production have to be withdrawn from others to manufacture the new product. 7144,h,supernormal profits will be competed away. Firms incurring losses will go out of busin... 7154,h,Schumpeter agreed with Marx that capitalism was sowing the seeds of its own due to inner contradictions. 7157,h,the economic and social foundations of capitalism crumbled on account of the destruction... 7164,h,He was neither a marxist nor a socialist. Instead he was an objective scientific with no particular axe to gri... 7167,h,and none at all for socialists. 7167,h,His natural sympathy is all with the heroic age of expanding capitalism. But yet he regards capitalism as doomed and sociali... 7176,2,Chapter 26 CONTRIBUTIONS OF NOBEL ECONOMISTS 7181,h,1970 for his brilliant contributions. He has "Development of New Economic Theori... 7182,h,while declaring this has rightly said that Samuelson has done more than any other economist t... 7185,h,an Introductory Analysis" which has become world famous. Samuelson remarked that "Economics n... 7191,h,1. Theory of Revealed Preference 7195,h,Give the price of two commodities and the price line PL is drawn. Given the price income line PLt... 7199,h,the consumer is buying OM of commodity X and ON Quantity of commodity Y. 7211,h,Revealed preference theory is an improvement over the Marshallian utility analysis and Hicks - Allen indifference cu... 7216,h,Demerits Revealed preference theory is not free from defects. 7218,h,based on strong ordering and neglects the consumer is faced with alternatives which are equal... 7224,h,But market demand schedule cannot be drawn with the help of this approach. 7243,h,possible to get cycles of various types. 7260,h,Social Welfare Function Samuelson makes use of his social welfare function which describes the factors on which the welf... 7263,h,The social welfare function possess some special properties which give it an edge of superiority over the earlier ones. 7275,h,social welfare function is simply a set of social indifference curves where an increase all other indivi... 7277,h,function is an ordinal index of society's welfare and is also a function of the level of satisfaction of all individuals. 7286,h,the greater is the aggregate social welfare. 7292,h,Inflotion : Samuelson has emphasized the problem of inflation. Inflation occured inv... 7293,h,expenditures exceed the full employment capacity of production. Samuelson regards the Phillips Curve as an important conce... 7295,h,He gave a welfare interpretation of the concept of national income. He has suggested a Leontief- type Input-Outp... 7298,h,he has impressed the world much more than any other economist of the day. 7301,h,"pioneering contributions to the general economic equiiiorium tneory ana weirare 7313,h,The chief characteristic of Hick's work was that he moved away from the partial equilibrium approach of Alfred Marshall b... 7321,h,His style is easy and popular..... the presentation is straight forward and dignified". 7322,h,'A Revision of Demand Theory' has been acclaimed as "a superb exercise of exposition" and "probably the last wo... 7323,h,law of demand can be extended to study the behaviour of groups from that of individuals. The theory of demand for a ... 7325,h,theory. 7327,h,DEFINITION OF ECONOMICS 7329,h,"the science which deals with business affairs". 7331,h,CONSUMER EQUILIBRIUM 7333,h,Hicks has made notable contribution to the study of consumer equilibrium by making use of indifference curve approach. The... 7357,h,CONSUMER' S SURPLUS 7377,h,Hicks explained the consumer's surplus with his indifference curve technique without assuming cardinal measurability of utility ... 7379,h,Population 7379,h,Hicks is not worried over the problem of over population in a country. He feels that tne over population or particular areas ... 7387,h,Although the method of incentives is the latter can prove to be more fruitful... 7409,h,Therefore Hicks says that the economists should be interested in temporary equilibrium. 7411,h,"A beautiful theory of the cycle is here built up with an admirable economy of means undoubtedly a tour de force". 7425,h,FF1 represents the level of full employment income—" full employment ceiling". 7445,h,Thus Hicks' theory makes use of multiplier and accelerator principles and autonomous and induced investments. It is induced i... 7450,h,have introduced the concept of compensation principle and reorganisation principle. The compensation principle is ... 7456,h,Hicks has given the compensation principle "If A is made so much better off by change that he could compensate B for... 7470,h,joined tne ranK or immortals HKe tne earner economists like Alfred Marshall and Keynes. 7475,h,Even more important is his analysis of how technical invention affects distribution. 7480,h,Monetary History and and for his demonstration of the complexity of stabilisation policy. 7497,h,Friedman treats the demand for money just like the demand for any durable consumer good. 7643,h,Friedman uses the term income in the sense of permanent income. 7651,h,He divides consumption and income into so that Ym = Yp + Yt and Cm = Cp + Ct 7654,h,Permanent income is to be defined as the means of income which is regarded as permanent by the consumer. It depend... 7658,h,The transitory income can also be zero in which case measured income equals permanent income. 7662,h,Permanent consumption is a multiple (K) of permanent income Yp Cp = KYp and K = f w, u) Therefore Cp = K (r, w, u,) Yp 7664,h,where K is the function of the rate of the ratio of income to wealth and the consumer's propensity to ... 7673,h,The relationship between the permanent and transitory components of income and consumption are based on the following... 7675,h,There is no correlation between permanent and transitory consumption. There is no correlation between transia... 7700,h,The Permanent Income Hypothesis of Friedman is consistent with cross-section budget data. It suggests that current c... 7703,h,Friedman's assumption that there is no connection between transitory components of consumption and incom... 7708,h,Friedman's hypothesis states that whether rich or poor is the same in the long run. But this is n... 7710,h,the usage of terms like 'transitory' and 'measured' have tended to affect the clarity of the... 7713,h,the distinction between human and non-human wealth is sadly missing in Friedman's theory. 7716,h,Milton Freidman and Savage Hypothesis 7755,h,(d) AMARTYA KUMAR SEN (1998) 7764,h,his work on his efforts to relate an... 7795,h,POVERTY AND INEQUALITY 7810,h,THE CONCEPT OF CAPABILITY 7822,h,capability is deemed as a measure of surplus classical economic analysis can be applied to it. 7823,h,The concept of entitlement in the United States refers to the legally enforceable rights against the state like those of old... 7842,h,His argument was that capital-intensive technique strengthens the 7842,h,economic foundation of the country which help in further expansion of the economy. 7906,h,Amartya Sen, more than just is an ethical philosopher. 7911,h,Sen's contribution to applied economics is a momentous and relevant to the contemporary world as ... 7913,h,practice. 7913,,b,0150507 7923,h,which suggests the important theoretical premise that free commodity trade across natio... 8088,h,the issue of the divorce between the ownership and control of a company is known as the principal-agen... 8193,h,Economic theory is of a 'deductive' nature; it deduces conclusions from given however, is of a... 8209,h,FINN E.KYDLAND AND EDWARD C PRESCOTT (2004) 8247,h,the only unemployment is the difference between 'full employment' and the working popu... 8335,h,Phelps has emphasized that not only the issue of savings and capital formation but also the balance between inflation and ... 8342,h,The label "new-Keynesian" should be attributed to Michael 8346,h,New Keynesian incorporated the insights of producers and labour market participant... 8349,h,Phelps pointed out that current inflation depends not only on unemployment but also on inflation expectations. 8350,h,when adjustments are they are based on inflation forecasts. the higher the anticipa... 8385,2,Chapter 27 INDIAN ECONOMIC THOUGHT 8389,h,(a) KAUTILYA'S ARTHASHASTRA 8434,h,The ancient thinkers had no fear of growing population. 8437,h,a slave was treated as a 8875,h,Cottage and village industries help increasing employment. Commodities can be produced cheaply as there is no nee... 8878,h,provide logic to the Gandhian scheme of decentralisation of Integratio... 8890,h,His khadi scheme included the following: 8891,h,Compulsory spinning in all primary and ultivation of cotton in areas where it was not grown. Organisa... 8902,h,Gandhiji described machinery as 'great sin’. He believed that the modern technology v... 8904,h,what I object to is the craze for labour till thousands are without work and the.. 8935,h,Gandhiji remarked that the capitalist who had amassed a large sum of money was a thief. 8970,h,The most important problem which attracted the attention of Gandhgi was the rapid increase in population. 8978,h,the use of coffee, tobacco, and alcohol was detrimental physical, and moral devel... 8998,h,In so far as the relation between labour Mahatma Gandhi always suggested harmony between th... 9001,h,not its master". 8875,h,the less you want, better not for the pninvmpnf nf fhfc lifp hut fnr fhp pninv Cottage and village industries help increasing employment. Commodities can be produced cheaply as there is no nee... 8878,h,provide logic to the Gandhian scheme of decentralisation of Integratio... 8890,h,His khadi scheme included the following: 8891,h,Compulsory spinning in all primary and ultivation of cotton in areas where it was not grown. Organisa... 8902,h,Gandhiji described machinery as 'great sin’. He believed that the modern technology v... 8904,h,what I object to is the craze for labour till thousands are without work and the.. 8935,h,Gandhiji remarked that the capitalist who had amassed a large sum of money was a thief. 8970,h,The most important problem which attracted the attention of Gandhgi was the rapid increase in population. 8978,h,the use of coffee, tobacco, and alcohol was detrimental physical, and moral devel... 8998,h,In so far as the relation between labour Mahatma Gandhi always suggested harmony between th... 9001,h,not its master". 9010,h,Gandhian idea on exchange economy is based on the swadeshi spirit. Every Indian village should be a self supporting and s... 9040,h,Gandhian economics is very different from as it has no dear cut theory. Gandhi himself never studied an... 9050,h,"The relationship between Gandhism and Socialism is interesting. Gandhi himself declared that he was a socialist and his i... 9052,h,He would uphold private ownership of property by asking the capitalists to become the trustees of public property. 9053,h,Gandhian economics is reactionary in its outlook. 9069,h,The influence of Gandhian economic ideas on Indian thinkers has not been very fundamental. 9082,h,country. 9082,,b,0150510 9395,h,MEHTA 9395,h, 9395,h, 9395,,b,0150510,Jhingan-HistoryEconTh end ### en #eng History of economic thought Inspired by Amazon's concrete proof of reader appreciation, a small grant for suggestion of Kindle improvements to be used as paynent in future book purchases. I immediately invented use for it, started from beginning the studies for my past career, buying three big elementary text books in economics: History of economic thoughts, Macroeconomics and Microeconomics. Could you better invest the revenue from the original investment? I think that no, especially after having read this first of the books, the history. On the one hand it is most entertaining and really excellently structured repeating of old acquaintances, starting from antique and even earlier and ending up to our times. On the other hand, there are also quite many novelties for me, but also some disappointments. As I said: well-structured. It means that provided with standard headings like lecture notes such as 'Introduction', 'Contribution to the economic theory', 'Summary', 'Conclusion', and all possible concepts of the subject matter and terminology of economics, such as 'Labor', 'Capital', 'Interest', 'Money and so on. The same with various hypotheses and theories. I find the straightforward use of this rubrication very welcome in this kind of book, handbook not being a false characterization of it. A big disappointment is, of course, the absence of sone of my favourites, such as the econometric approach and its representatives, above all Lawrwnce R. Klein. Searching this more than 600 pages and hundreds of prominent students of economics comprising book does not give any mentioning of Klein, the winner of Nobel price in economics in 1980. On the other hand, a good compensation is a long treatment my other favourite Paul A. Samuelson, although with less emphasis on his tremendous career as elementary teacher of economics for my generation than on his theoretical contributions, which, of course, is the mainninterest of this volume. I must confess that I exercised speed reading in several passages of the book. In some because they were so very familiar, but also in some because they would have too tedious to get properly involved. I must also apologize for using speed at the end of the book, the last chapter treating the share of Indian economists. To my defence I want to mention, however, that I highlighted some passages of Gandhi and Nehru, finding them interesting, although not being directly economists but important leaders, forcibly not being able to avoid economic standpoints. All in all I find this book very praiseworth and worth congratularions to the author team of. ?. With keen interest I now crab the next book by the same team, Macroeconomics, even more close to my skin as retired teacher of just that subject.