Economic Thought and Public Policy

Economic Thought and Historians

• Economic thought is defined as the sum total of all opinions and desires concerning economic subjects, especially concerning public policies of different times and places, by Haney.
• The Classical Economics school of thought includes economists such as Smith, Malthus, Ricardo, and Mill.

Key Economists and Their Contributions

• Karl Marx belonged to the Socialist school of thought.
• Adam Smith introduced the concept of the "invisible hand" in economics.
• Thomas Robert Malthus wrote the "Essay on the Principle of Population".
• David Ricardo was a prominent economist of the Classical Economics school.

Economic Ideas and Theories

• Socialists promoted ideas of inequality in distribution of wealth, class division, and labor exploitation.
• Keynesian economists promoted the role of fiscal policy, aggregate demand, and reducing unemployment.

Historical Context

• According to the Code of Hammurabi, merchants played a significant role in international relations, engaging in international trade and even acting as diplomats abroad.

Economic Thought and Theories

• Economic thought is the sum total of all opinions and desires concerning economic subjects, especially concerning public policies of different times and places, as defined by Haney.
• Smith, Malthus, Ricardo, and Mill belong to the Classical Economics school of thought.

Key Economists and Their Contributions

• Karl Marx belonged to the Socialist school of thought.
• Adam Smith introduced the concept of the "invisible hand" in economies.
• John Maynard Keynes' ideas include fiscal policy, the role of aggregate demand in determining output, and reducing unemployment.
• Thomas Robert Malthus wrote the Essay on the Principle of Population.
• David Ricardo is known for his theory of Comparative Advantage and the theory of rent.

Economic Concepts

• The Law of Diminishing Marginal Utility states that when a consumer consumes more units of a good or service, the additional satisfaction or utility derived from each additional unit decreases.
• Say's Law states that "Supply creates its own demand."
• The labour theory of value is associated with Karl Marx.
• Utility maximization, as a basis for understanding consumer behaviour, was proposed by Alfred Marshall.
• Marginal utility refers to the additional satisfaction or pleasure that a consumer derives from consuming one more unit of a good or service.

Historical Economic Thought

• The Code of Hammurabi primarily focused on Social order and justice, and merchants played a key role in international relations, even acting as diplomats abroad.
• Ibn Khaldoun described the Stages of economic development as a cyclical model, where societies transition from nomadic simplicity to urban luxury and eventually decline.
• Quesnay was an economist who argued that the economy was driven by the pursuit of self-interest.
• The concept of the "invisible hand" guides the idea that the economy is self-regulating, and the pursuit of self-interest by individuals leads to the best outcome for society as a whole.