Western Economic Theories and Schools Group Members: Jenny Kelly Etta Eutene

Content Introduction Jenny Basic Economic Concepts Jenny Development Kelly Etta Conclusion Eutene

I. Basic Economic Concepts  Definitions of economics  3 basic economic questions  Goals of economic theories

2 Principles: 1. Scarcity - the limited nature of society’s resources. 2. Opportunity cost - whatever must be given up to get the item Definitions of Economics

Lionel Robbins ( , LSE) defined economics in 1932: “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses.”

Three Basic Economic Questions What to produce How to produce For whom to produce.

Goals of Economic Theory  Help society find better answers to the 3 basic questions.  Predict how changes in government policy or market institutions will affect economic outcomes.

2.The Development of Economics (1). Mercantilism ( 重商主义 ) (2). Classical Economics ( 古典经济学 ) (3). Neo-Classical Economics ( 新古典经济学 ) (4). Contemporary economics （当代经济学）

1. Mercantilism ( 重商主义 ) A policy to obtain monetary wealth

(1). Mercantilism ( 重商主义 ) Background  Economic matter: The rise and development of commercial capital  Social matter: The great geographical discovery 15 th ～ 17 th century

(1). Mercantilism ( 重商主义 ) Background  Political matter: Centralized country started Need more currency

(1). Mercantilism ( 重商主义 ) Viewpoints Noble metal (money) is the only standard to measure wealth The more accumulation of gold and silver means more powerful

Viewpoints Prohibition of exporting gold and silver, while input increase Government should intervene in economics International trade is a "zero sum game" 零和博 弈 √

 Early mercantilism(15 th ～ the middle of the 16 th century ） buy less in foreign trade prohibit the output of currency control currency movements  Late mercantilism (The second half of the 16 th Century to 17 th Century) sell more allow the output of currency protective tariffs ( 保护关税 ) Development stages

Representative --Thomas Monn 托马斯 · 孟 Output value of commodity must be larger than the input value to increase the currency input

Background Viewpoint Representatives (2).Classical economics ( 古典经济学 )

(2). Classical economics Background  Workshop handicraft industry( 手工业 ) has gradually become the main form  The feudal system( 封建制度 ) has seriously hindered the capitalism about

Viewpoints “An invisible hand”—market( 看不见的手 ) Laissez-faire principle( 自由放任 ), no government intervention National wealth growth conditions (2). Classical economics

Representatives --Adam Smith( 亚当．斯密 ) The economic system to put laissez-faire thought as the center, and the research from the circulation field transfer to the production field (2). Classical economics

Representatives --David Ricardo( 大卫．李嘉图 ) 《政治经济学及赋税原理》 Success in the labor theory of value and distribution of the enrichment and perfection of the theory.

(3). NewClassical Economics ( 新古典经济学 ) The The refinement of Neo-Classical Economics

(3). NewClassical Economics ( 新古典经济学 ) 1870s~1930s Background  Inheritance of Classical Economics and economic liberalism( 经济自由主义）  The beginning of the marginal revolution ( 边际革命）  After Industrial Revolution, the unfair distribution of wealth led to social discontent.

Viewpoints Market economy can solve the problem of unemployment, slump, while the stable policy of government have no effect on it. The dilemma of unemployment and inflation not only exist in the long term, but also in the short term. (3). NewClassical Economics ( 新古典经济学 )

Representatives ——Alfred Marshall( 阿尔弗雷德 · 马歇尔） “Principle of Economics” 《经济学原理》 The theory of supply and demand （供求理论） The theory of production cost （生产费用理论） The theory of marginal utility （边际效用理论） The theory of marginal productivity （边际生产力理论）

(4). Contemporary economics （当代经济学） since 1930s Background —The putting forward of Keynesianism marks the birth of modern economics — The establishment and development of Macroeconomics

Stages of development  The Keynes revolution ( 凯恩斯革命） —putting forward the modern macroeconomics system, in which national revenue decision is the theory center and government intervention the policy adjustment.  The period of macroeconomics  The revival of Laissez-faire thought ( 自由放任） (4). Contemporary economics （当代经济学）

3.Conclusion Basic economic concepts Definition 3 basic questions The goals of economic theory

Development Mercantilism Thomas Men Classical Economics New classical economics Alfred Marshall Contemporary Economics The Keynes revolution

The Nobel Prize for Economics Not much in common Even conflict Fama People’s rational calculation Shiller Psychological factors

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