Adam Smith
- invisible hand
- when you benefit yourself, you can benefit society
- markets need structure
- ethics important
- ground rules for government
- against monopoly
- concern for poverty: criticism against employers who don’t want high wages who don’t look at impact of own profit
- government should provide public goods (things that aren’t profitable)
- markets need guiding principles
- against mercantilism. (Hoarding gold, zero sum game ) he argues that a nations true wealth is based on value they offer people. Wants free trade. No tariffs. Nations should specialize. About efficiency on country level
- what makes a nation wealthy? Division of labor needs a big enough market (more people and more trade)
- theory of value: value in use vs value in exchange.
- labor theory of value: price is fundamentally determined by how much labor goes into production. But real world markets are different. Eg skills, land, risk, machinery, capital. Natural price reflects that
- market price can fluctuate though. Short term events
- value vs price
- over time market prices converge on value. Self correcting mechanism
- for that mechanism you need competition and efficient resource use
- businesses need competition. Gov needs to fight monopolies
- gov needs to intervene where market might fail and for fairness
- he wants to increase pie and slice it fairly
- concerned about poor. Society is responsible on weakest members
- sees role for gov in education, infrastructure and justice
- no gov welfare. Create dependency and less incentive to work
- he wants human flourishing
- economic growth: population growth. More demand but also larger workforce and larger markets
- greater specialization and profuctivity and innovation. Positive feedback loop
- also essential: capital accumulatuon: saving for future production
- human capital: skills and knowledge ofworkforce
Mathus
Ricardo
93% labor → cost of product
Pigou
- thought about society!
- practical implication
Marshall
- combines every point of view into one model
- making economics scientific
- wants to communicate math to the people
- marshall cross → supply and demand
Jevons
abstract utility
- less math obsessed than walras
Edgeworth
According to Edgeworth, utility can be interpreted to a degree that makes it a meaningful concept.
- also thinks about society
- cardinal utility
- total utility → diminishing returns
Walras
- mathematical
- opposite of pigou
- concerned with models, markets, equilibrium and not how society is doing
- equilibirum for many markets
Menger
- competition is dynamic process
- stesm from historic school but is about utlity theory and came conculsion to british guys
- cared about social insitutions
- utility satifies human needs
Pareto efficiency
- zero sum game
- ordinal utility
Mises
- HATES socialism
Hayek
Ultra capitatilst same page as mises
Lange
- ironic statue of mises#
- socialist
- lange thinks his central price planning can outperfom free markets in terms of efficiency after trial and error
Schumpeter
- dynamic markets
- creative destruction