Modern Theories of Political Economy

The rate of profit in capitalism is calculated by dividing surplus value (profit) by the total capital invested (constant capital and variable capital).

The bourgeoisie's fear of the working class and their hesitance to directly exercise political authority are key weaknesses that drive the bourgeoisie to often ally with reactionary forces, like the military, to suppress popular movements.

The state, in the context of capitalism, can act independently from bourgeois interests to maintain its own power, sometimes even suppressing popular movements.

The basic unit of capitalist exchange is the commodity, which is analyzed to understand its value.

Overproduction, underconsumption, and economic crises are inevitable consequences of the drive for profit within capitalism, resulting in contradictions within the system.

The income earned by workers for their labor.

The profit is the difference between the total revenue a company receives from selling its goods and the total costs it incurs in producing them.

The payment made for the use of someone else's property, such as an apartment or land.

A situation where a large number of depositors withdraw their money from a bank simultaneously, fearing its insolvency.

A theory suggesting that population growth will inevitably outpace the growth of resources, leading to a decline in living standards and potential catastrophe.

This theory states that the government needs to intervene to improve the economy. For example, by increasing spending during recessions to stimulate demand.

The idea that government spending has a multiplier effect on the economy, meaning that every dollar spent by the government can generate more than a dollar in economic activity.

Economic system where the means of production are owned and controlled by the community.

Political ideology advocating for minimal government intervention in both economic and social affairs.

A school of economic thought that emphasizes free markets, individual choice, and limited government intervention.

In this phase, a commodity is sold for money, and that money is then used to buy another commodity. Money acts as a medium for exchange, facilitating the circulation of goods within society. The primary aim is not wealth accumulation but the fulfillment of human needs.

The process of exchanging commodities for money, and then money for other commodities. This cycle facilitates the circulation of goods and fulfills human needs.

Money's role is to facilitate the comparison and exchange of commodities. It reflects the abstraction of labor and value in the capitalist economy, obscuring the real social origins of goods.

Communists advocate for collective control over the means of production (e.g., factories, land) instead of individual ownership. This aims for equitable distribution of wealth amongst the community.

Communism promotes global unity among workers to fight against the oppression of capitalism. It emphasizes solidarity across national borders.

This type of socialism sought to address social problems without fundamentally challenging the existing power structures or economic system. It aimed for incremental changes within the capitalist framework.

Communists believe in a society where there is no private ownership of the means of production, and instead, the working class collectively controls and owns everything, overthrowing the capitalist class.

Communists advocate for a global movement where workers of all countries unite to fight against the oppression of capitalism, achieving a classless society.

The belief that a nation's wealth is measured by its gold and silver reserves. This theory emphasizes boosting exports and limiting imports to accumulate wealth.

This type of mercantilism focuses on promoting domestic industry and agriculture, with the king holding absolute power. It emphasizes self-sufficiency and views feudal land ownership as originating from the king.

This type of mercantilism stresses the importance of agriculture and acquiring precious metals like gold and silver. It also prioritizes domestic production over importing finished goods.

A situation where a nation exports more goods than it imports, leading to an increase in its gold and silver reserves. A key principle of mercantilism.

The idea that a society can benefit from individual vices, like greed and self-interest. This concept challenges traditional morality.

The concept that a society can thrive through individuals pursuing their own self-interest, even if it leads to seemingly negative actions like greed or deceit.

This refers to the economic system where the king holds absolute power and controls four key departments: coinage, exports, imports, and expenditures.

This refers to the economic system in a province controlled by a governor. Revenue is generated from land, agriculture, trade, taxes, livestock, and other sources.

The economic system operating in a city, characterized by a wide variety of activities and a focus on trade and commerce.

This type of economist believes in a system where individuals can freely buy and sell goods, essentially advocating for a market-driven economy.

The idea that inflation affects different goods and assets in an economy unequally, with some prices rising more than others.

A concept that promotes the idea that individuals pursuing their own self-interest can inadvertently benefit society as a whole.

The idea that dividing tasks among workers allows for increased efficiency and productivity.

A system of government assistance for the poor, where the government provides essential necessities like food, shelter, and clothing.

A school of thought that emphasizes the importance of agriculture as the primary source of wealth and economic power.

The idea that the value of goods and services is determined by the labor required to produce them.

Actions taken to limit population growth, such as birth control, abortion, and vasectomy.

A period of severe economic downturn characterized by high unemployment, reduced production, and widespread financial instability.

A state where supply and demand are balanced, resulting in stable prices and quantities. This occurs when scarcity and demand find a point of equilibrium, determining the value of goods.

The additional satisfaction a consumer gains from consuming one more unit of a good. It is a subjective experience tied to individual consumption levels and influences price determination.

The concept that as more units of a good are consumed, the additional satisfaction from each subsequent unit decreases. This impacts the value individuals place on goods as they consume more.

A school of thought in economics that emerged in the 1870s, emphasizing individual decision-making and market equilibrium. It shifted from focusing on objective value theories to a subjective theory of value.

The concept that the value of a good is determined by its marginal utility, the additional satisfaction a consumer gains from consuming one more unit of the good. This challenged the classical focus on production costs as determinants of value.

The process of analyzing the benefits and costs of a small change (e.g., consuming one more unit, hiring one more worker). Individuals and firms use this to allocate limited resources effectively to maximize utility or profit.

This theory suggests that value is not derived from total utility, but rather from the marginal utility, meaning the additional satisfaction experienced from consuming one more unit.

A school of economic thought that focuses on the role of individual preferences and decisions in shaping the economy, emphasizing limited government intervention and free markets.

According to Ayn Rand, this refers to ethical principles based on objective reality, emphasizing individual rights, rationality, and self-interest. It rejects altruism and collectivism.

A philosophy that promotes ethical egoism and individual self-interest. It criticizes altruism as requiring self-sacrifice and undermining individual freedom.

A philosophy based on the idea that the individual’s life and happiness are the highest moral purposes. It rejects the notion that one has a duty to serve others.

This view holds that economic freedom is crucial for individual liberty, arguing that without economic freedom, individuals are vulnerable to government manipulation.

A philosophical and economic perspective that emphasizes the role of government in fostering cooperation among corporations, labor unions, and other powerful interest groups. It favors government aid to industries with significant potential growth.