1. Morals Justice Property Rights Concepts: Economics First Economic Revolution Division of Labour Money The Market Concepts: Retailing/ wholesaling 1. Study of the Institutions in the Long Run The Wealth of Nations Adam Smith’s Theory

2. 2. The Value of goods ● Production-cost value or labour commanded value: P = F (W, P, R) Concept: Interest rate ●Natural / Market price Current concepts: Demand/ supply curves ● Nominal / Real Price The Wealth of Nations

3. 3. The Productivity The increase of productivity is due to: DIVISION OF LABOUR Causes: Improves workers skill Saves time Fosters machine-invention Limits: The extent of the market Workers “alienation” The Wealth of Nations

4. The increase of productivity is due also to: THE DEFINITION OF PROPERTY RIGHTS THE ACCUMULATION OF CAPITAL (savings) All savings are invested Wages theory: Wages as an incentive Wages-fund theory Stationary state The Wealth of Nations

5. DL1DL1 DL0DL0 DL3DL3 W L DL2DL2 SL1SL1 SL2SL2 SL0SL0 SL3SL3 W sub. 2. 1. 0. 3 S L n-m D L n-m. n-m CAPITAL ACCUMULATION Growing path  Adam Smith Stationary State

6. 4. Against State Intervention The Invisible-hand or the principle of beneficial unintended consequences AGAINST MERCANTILISM The Wealth of Nations RELATED CONTEMPORARY CONCEPTS: Competition / collusion Wealth; Gross National Product (GNP); Gross Domestic Product (GDP) Consumer Price Index (CPI); Inflation Unemployment rate (Keynesian Economics)

7. Mercantilism “Decalogue” 1.National Strenght 2.Zero sum game 3.Money is wealth 4.Positive Balance of Trade 5.Preference of Industry over agriculture 6. Protect infant industry 7. Royal factories 8. Utility of poverty 9. Population policies 10. Colonialism

8. ECONOMIC HISTORY GDP nominal per capita world map IMF 2012

9. Singapore case

10. Inflation rates around the world in 2010

11. Countries by unemployment rate, 2009

12. http://www.heritage.org/index/ranking?src=home