ECONOMIC THOUGHT, ASPIRATION OF THE RICH OF THE NATION
INTRODUCTION
The history of economic thought has been evolving from the Middle Ages to the present.
Man, since its origin, faces the problem of compensating their needs with scarce resources, this is how the economy arises naturally. The human being is an economic being, therefore, the economy is an occupation. The economic word has its origin in Greece, and uses it for the first time Jenophon, in its etymological sense, although in the ancient age it was not known as scientific discipline.
We can decipher the economy as follows
Olko = house
Vouevio = administer
Therefore, economy is = administration of a house
It is said that the economy gave a transcendental impart in 1776 of causes and nature of the riches of the Nations of Adam Smith, thus the economy as science is responsible for finding out and cataloging the positive statements that are congruent with what we observe in the world in the worldeconomic.
Financial needs
The human being is a being that never meets his needs, he always wants more: as soon as he satisfies a need seeks to obtain another good.
For example, a student who does not have a mobile cell phone saves to buy one used, as soon as he buys it, he will think about buying another one of a more recent model and as soon as he will want one better and so on and when when.
Relationship with other social and natural sciences
At present, the economy is important, it has become essential for all kinds of activities and that is why it is said that the economy is "the science of decision making or making selections".
In the public sector
Governments, state and local, needs the economy to achieve this essential emergence of any organization, elaborates an industrial and tax policy, controls inflation and promoting technological development.
For example, a State must develop strategies to increase its agricultural and industrial production, as well as propose an energy sector, from extraction to define the final price of oil, offspring and distribution of electricity. This is how the economy is a center of social policy, as a better income distribution obtains and seeks opportunities for population target sectors.
DEVELOPING
Divisions of modern economic theory
Modern economic thinking is related to relative shortage and therefore divides microeconomics and macroeconomics.
The positive economy helps us to explain how it works in relation to what happens in reality, while the normative economy is that it uses value judgments, ethical values and the economy as art deals with issues related to economic policy is related toThe science of the economy with the normative economy and ask questions such as: if these are my normative objectives and if this is the way the economy works.
Macroeconomics theory deals with the behavior of the economy as a whole, it arises in 1936 from John Maynard Keynes, that is, it studies the global level of production, unemployment, prices and the foreign sector of an economy of an economy. The microeconomics theory emerged in 1776 by Adam Smith with the book "Study on the nature and causes of the wealth of nations" is for them that studies the particular behavior of the different economic agents and the individual markets in which they operate. Heterodoxy economy try to explain and have focused on knowing what the forces that cause society. Modern orthodox economic theory is related to the knowledge of economic theory Microeconomics and macroeconomomy therefore examines the development of the concepts and instruments that relates to knowledge.
However, the modern economy focuses on those marked to solve the difficulties that arise with the relative scarce, although in these cases there have been economists that interest other aspects of society. One or the other deals with philosophical issues and often his writings does not focus on a single field of study.
Economic analysis
We understand by economic theory when formulating principles and laws from systematic methods which is intertwined with the economic models that explain, as well as the proposals to improve it.
An example of economic theory is the operation of markets through supply and demand laws, this is how these laws and principles are associated by forming the models that explain their interaction with the producers and consumers under different regime.
Emblematic characters of economic theory
Adam Smith (1723-1790)-The father of modern economy in his economic theories combines history, philosophy, economy, psychological and ethical development is cataloged. It is one of the greatest exponents of the classical economy. One of his relevant works is the value of use and the exchange value with the purpose of reducing production costs and confrontation with factories or industries and workers would go with a fundamental guideline for economic growth.
The invisible hand is the act that has the free market of self-regulating that is to say it refers to the fact that what society wants or is sold.
John Maynard Keynes (1883-1946)-The Keynesian economy focused on the analysis of the causes and consequences of the variations in aggregate demand and their relationships with the level of employment and income. Keynes’s final interest was to be able to provide national institutions or international institutions to control the economy in times of recession or crisis
Karl Marx (1818-1883)-is a socialist and revolutionary activist of German origin. The work of this philosopher has had such vast and tangible historical consequence from the Russian revolution of 1917 until the fall of the Miro de Berlin in 1989, half of humanity has lived under political regimes that declared heirs of his thinking.
Milton Friedman (1912 – 2006) – One of Friedman’s most important contributions to the economy is his study of consumption function. Unlike Keynes, who said that the consumption of a period depended exclusively on the entry of the same period, Friedman’s postulum depended on permanent income, that is, the long -term income.
David Ricardo (1772-1823)-His master work is the principle of political economy and taxation, constitutes the most mature and precise exhibition of the classical economy. Among its contributions include:
- The theory of comparative advantage that defends the advantages of international trade
- The idea that the real salary of workers will remain close to subsistence level is attributed to him.
Tomas Malthus (1766-1839)-stands out for conducting studies on the population, in its principles of political economy analyzes periods of economic decrease, which is known as crisis and as cause they point out excess savings and insufficiency in insufficiency in insufficiency inconsumption
Santo Tomas de Aquino (1225-1274)-is a Catholic theologian and preacher’s philosopher that is characterized by discussing the price and gain from the point of view from whether it was correct or that is not how it is implemented to obtain gain from the exchange from the exchangeof merchandise.
In its beginnings two schools of thought in Europe are relevant:
Mercantilism
It is an economic theory that is associated with Adam Smith gave the set of theories and measures that caused in the period (1450-1750).
- The mercantilists were associations made up of merchants and businessmen who defended their own interests.
- It was decreed at that time that the exchange of merchandise and the accumulation of gold and silver generated wealth.
- They thought that a trade enriched them with other countries and had to increase their amount of metals.
- They demanded a policy with their interests to the State.
Physiocracy (France, 18th century)
- It arises in relation to mercantilism.
- It works for different components of the economy (social groups).
- Wealth are generated in agricultural tasks, farmers were the country’s productive class.
- The exchange of merchandise and even the industry, did not add any value.
CONCLUSION
As the years go by we have evidenced emblematic characters that have been recognized until today.
One of the most important is the theory of Keynesianism, one of Keynes’s main ideas is that the loss of wages lower the demand and therefore the economy stagnates. To counteract this effect, the State must increase public spending in times of crisis or recession. In other words, monetary policy or indebtedness should be used to generate greater liquidity and sustain the demand.
The monetarist school is an economic theory that considers the amount of money available as a determining element within the economy. It opposes Keynesianism holding that inflation is a problem only monetary and ensures that it occurs because there is more money in circulation than the economy demands. According to monetarism, the State should not intervene in the market, but only set and control the amount of money in circulation required by the economy. Monetarism says that consumption is not influenced by short -term income but for long -term income.
I consider the history of economic thought in the personnel should be studied because it helps us to understand the present. When we look most interesting, the more it helps us study and understand, this is how a person who studies economy makes him a better economist that is why constantly when reading more helps us to the theoretical and logical capacity of the human being. The history of economic theory leads us every time and when to be humble.
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