Concept
History of economic thought
Related concepts (23)
Economic calculation problem
The economic calculation problem (sometimes abbreviated ECP) is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Economic Calculation in the Socialist Commonwealth" and later expanded upon by Friedrich Hayek. In his first article, Mises described the nature of the price system under capitalism and described how individual subjective values (while criticizing other theories of value) are translated into the objective information necessary for rational allocation of resources in society.
Steady-state economy
A steady-state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. In effect, such an economy does not grow in the course of time. The term usually refers to the national economy of a particular country, but it is also applicable to the economic system of a city, a region, or the entire world. Early in the history of economic thought, classical economist Adam Smith of the 18th century developed the concept of a stationary state of an economy: Smith believed that any national economy in the world would sooner or later settle in a final state of stationarity.
Perspectives on capitalism by school of thought
Throughout modern history, a variety of perspectives on capitalism have evolved based on different schools of thought. Adam Smith was one of the first influential writers on the topic with his book The Wealth of Nations, which is generally considered to be the start of classical economics which emerged in the 18th century. To the contrary, Karl Marx considered capitalism to be a historically specific mode of production and considered capitalism a phase of economic development that would pass and be replaced by communism.
General equilibrium theory
In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall general equilibrium. General equilibrium theory contrasts with the theory of partial equilibrium, which analyzes a specific part of an economy while its other factors are held constant.
Input–output model
In economics, an input–output model is a quantitative economic model that represents the interdependencies between different sectors of a national economy or different regional economies. Wassily Leontief (1906–1999) is credited with developing this type of analysis and earned the Nobel Prize in Economics for his development of this model. Francois Quesnay had developed a cruder version of this technique called Tableau économique, and Léon Walras's work Elements of Pure Economics on general equilibrium theory also was a forerunner and made a generalization of Leontief's seminal concept.
Market failure
In neoclassical economics, market failure is a situation in which the allocation of goods and services by a free market is not Pareto efficient, often leading to a net loss of economic value. Market failures can be viewed as scenarios where individuals' pursuit of pure self-interest leads to results that are not efficient – that can be improved upon from the societal point of view. The first known use of the term by economists was in 1958, but the concept has been traced back to the Victorian philosopher Henry Sidgwick.
Keynesian Revolution
The Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy. The revolution was set against the then orthodox economic framework, namely neoclassical economics. The early stage of the Keynesian Revolution took place in the years following the publication of John Maynard Keynes' General Theory in 1936. It saw the neoclassical understanding of employment replaced with Keynes' view that demand, and not supply, is the driving factor determining levels of employment.
Treasury view
In macroeconomics, particularly in the history of economic thought, the Treasury view is the assertion that fiscal policy has no effect on the total amount of economic activity and unemployment, even during times of economic recession. This view was most famously advanced in the 1930s (during the Great Depression) by the staff of the British Chancellor of the Exchequer. The position can be characterized as: Any increase in government spending necessarily crowds out an equal amount of private spending or investment, and thus has no net impact on economic activity.
Tableau économique
The Tableau économique (tablo ekɔnɔmik) or Economic Table is an economic model first described by French economist François Quesnay in 1758, which laid the foundation of the Physiocratic school of economics. Quesnay believed that trade and industry were not sources of wealth, and instead in his 1758 manuscript Tableau économique (Economic Table) argued that agricultural surpluses, by flowing through the economy in the form of rent, wages, and purchases were the real economic movers.
Say's law
In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product. So, production is the source of demand. In his principal work, A Treatise on Political Economy (Traité d'économie politique, 1803), Jean-Baptiste Say wrote: "A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value.