Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

PRECLASSICAL ECONOMICS
I
...
Modern economies are market economies; the
markets deal with the problems of scarcity and gives much less attention to the use of force,
authority and tradition
...

- Back then people were very self-sufficient, and markets were of little importance on daily
basis
...

1
...
His book Guan Zi
included several ideas that are central to economic thinking
...

- Guan Zhong argued that when a good was abundant, it became light, and its price would
fall
...
There would
be movements of goods into and out of markets based on their lightness and heaviness,
with a definite tendency toward one price—equilibrium
...
Guan Zhong also used this light/ heavy theory
to develop a quantity theory of money, asserting that when money was heavy, its price
should rise (prices of goods would fall), and when money was light, its price would fall
(prices of goods would rise)
...
This would not only help stabilize the
price level, but also make money for the government
...
They are not Western ideas imposed on other cultures;
rather they are aspects of reality that will show up in all institutional structures
...

Change the institutional structure and one changes the policy implications
...
Currently China is undergoing a
significant economic transformation and is turning to Western economics for thoughts
about how to structure and manage it
...

2
...


-

-

-

-

-

-

II
...

When individuals feel certain that they will be permitted to keep the fruits of their own
labor they will be inclined to apply themselves in various productive ways
...

(Plato supported communal property)
His main contributions to economic thinking concerned the exchange of commodities and
the use of money in this exchange
...
Hence the production of commodities to satisfy needs was right and natural,
whereas the production of goods to satisfy unlimited desires was unnatural
...
Using the medium of money, however, suggests that the
objective of the exchange is monetary gain, which Aristotle condemned
...

Aristotle condemns many merchants and traders in Greek society as corrupt followers of
wealth for wealth, itself
...
Rejected labor
as the source of wealth
...
He maintained that value is not created solely by the expenditure of labor in the
production process
...

According to Aristotle interest taking was the most unnatural of all the methods of getting
wealth
...

One of the interesting points Aristotle made is that the problem of scarcity can be addressed
by reducing consumption, by changing human attitudes
...

SCHOLASTICISM (Medieval Churchmen)

-

Scholastic economic doctrine is best understood in the context of its time, extending from
before the fall of the Roman Empire to the beginnings of mercantilism in Western Europe
...


-

Scholastic doctrine did not attempt to analyze the economy; its aim was to set religious
standard by which to judge economic conduct
...


Commented [OA2]: By “natural,” Aristotle meant wealthgetting activity that is clearly and consciously pursued to the
ends of “truth” and “virtue
...

Commented [OA3]: Aristotle believed that the
acquisition and use of wealth is a means to pursuing and
attaining “higher” ends
...

Commented [OA4]: He explains that both utility and
labor skills are pertinent to the determination of exchange
values and ratios
...


Commented [OA5]: Viewed over time, scholastic doctrine
represents a slow retreat to a greater acceptance of
economic pursuits
...


-

Feudal economy: consisted of subsistence agriculture in a society bound together not by a
market but by tradition, custom, and authority
...
All land was fundamentally owned by the Roman
Catholic Church or the king
...

PRECLASSICAL PERIOD (1500 – 1776)
1
...
Merchants and the government work
together to reduce the trade deficit and create a surplus
...

-

It advocates trade policies that protect domestic industries and imposes tariffs on imports
...
It doesn't allow anything
that could help foreign companies
...


-

Mercantilism proceeded on the assumption that the total wealth of the world was fixed à
Trade is a zero-sum game
...


-

Mercantilism also worked hand-in-hand with the gold standard
...
The nations with the most gold was the richest
...


-

The goal of economic activity was production, they advocated increasing the nation’s
wealth by simultaneously encouraging production, increasing exports, and holding down
domestic consumption
...
The mercantilists advocated
low wages in order to give the domestic economy competitive advantage in international
trade
...
Thus, when the goal of economic activity is defined in terms
of national output and not in terms of national consumption, poverty for the individual
benefits the nation
...
He also advocated a
large population and child labor since to him, production was the goal of society
...
Exports will decrease

-

Commented [OA6]: 1
...
The
relationship between serf and lord was also dictated by
custom, tradition and authority
...
The serf paid the lord for use of the land with labor,
crops, and sometimes money
...

3
...
Although there were strong elements in the feudal
society that reinforced tradition and were hostile to
change, other factors began to erode feudalism’s
foundations
...


Commented [OA7]: But when the goal of economic
activity is defined in terms of national output and not in
terms of national consumption, poverty for the individual
benefits the nation
...
(Because increase in gold supply
increases price levels, now it is cheaper to import goods)
...

- The mercantilists achieved the first tentative insights into the role of money in determining
the general level of prices and into the effects of foreign trade balances on domestic
economic activity
...
Physiocracy (1750 – 1780)
- School of economists founded in the 18th century France by Francois Quesnay
...
one of the 1st well developed
economic theories
...
They
called for laissez-faire policies
...

- Physiocrats also attacked mercantilism not only for its mass regulation but also for its
emphasis on manufactures and foreign trade
...

- In reaction to the mercantilist notion that wealth was created by the process of exchange,
they studied the creation of physical value and concluded that the origin of wealth was in
agriculture or nature
...

- The most significant contribution of the physiocrats was their concept of the
interrelatedness of the various sectors of an economy
...


Commented [OA8]: Labor was important but could
produce only enough goods to pay the costs of labor
...
Manufacturing and other nonagricultural economic activities were considered “sterile”
because they created no net product
...




---