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What is Economics?

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Economics is the study of how individuals make use of their limited resources to satisfy their

unlimited wants.

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More about Economics

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Famous economists

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Economists included:

Timothy Franz Geithner

Paul Anthony Samuelson

Adam Smith

Milton Friedman

John Maynard Keynes

Vilfredo Pareto

David Ricardo

 

Timothy Franz Geithner (August 18, 1961 - )

Timothy Franz Geithner is an American economist, banker, and civil servant. He is the 75th and current United States Secretary of the Treasury, serving under President Barack Obama. He was previously the president of the Federal Reserve Bank of New York.
Geithner's position includes a large role in directing the Federal Government's spending on the financial crisis of 2007¡V2010, including allocation of $350 billion of funds from the Troubled Asset Relief Program enacted during the previous administration. At the end of his first year in office, he continued to deal with multiple high visibility issues, including administration efforts to restructure the regulation of the nation's financial system, attempts to spur recovery of both the mortgage market and the automobile industry, demands for protectionism, President Obama's tax changes, and negotiations with foreign governments on approaches to worldwide financial issues.

 

Paul Anthony Samuelson (May 15, 1915 ¡V December 13, 2009)

Samuelson was born in 1915 in Indiana, earned a Ph.D. in economics from Harvard and began teaching at the Massachusetts Institute of Technology at age 25, where he spent his entire career and influenced a number of other Nobel laureates. He also served in various advisory roles to the U.S. government. He is the first American to win the Nobel Memorial Prize in Economics, which he received in 1970 for raising ¡§the level of scientific analysis in economic theory.¡¨ Samuelson¡¦s areas of research included modern welfare economics, linear programming, Keynesian economics, economic dynamics, international trade theory, logic choice and maximization. He also authored a best-selling college economics textbook, "Economics: An Introductory Analysis",which teaches Keynesian principles. Economic historian Randall E. Parker calls him the "Father of Modern Economics",and The New York Times considered him to be the "foremost academic economist of the 20th century.¡¨

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Adam Smith (1723-1790)

Adam Smith is often seen as the founding father of economics. He developed much of the theory about

markets that we regard as standard theory now. In fact he could be seen as being to blame for much of the

content of current economics courses!

Adam Smith was Scottish and after graduating from Glasgow (at the amazing age of 17!!) he was a fellow at

Oxford and then he lectured back in Scotland again - first at Edinburgh and then Glasgow Universities.

Surprisingly this was not in economics. In fact it was not until 10 years after leaving the Chair of Moral

Philosophy at Glasgow that he wrote the book (or series of books) for which he is most famous. After Glasgow,

he decided to go traveling. Almost certainly this was not backpacking and sleeping out in stations as he spent

much of this time meeting the influential thinkers of the day. It was this that helped him to formulate his ideas,

and once he got back to Scotland again, he started writing.

Milton Friedman (1912 - 

American economist, founder of Monetarism, professor at the University of Chicago, and one of the leading

conservative economists in the second half of the 20th-century.

After studying at Rutgers University and the University of Chicago, Friedman received his Ph.D. from Columbia

University in 1946 and joined the University of Chicago, home of the famous Chicago School of right-wing

political economists. Friedman became the leading advocate of Monetarist economics, which holds that the

business cycle is determined primarily by money supply and interest rates, rather than by a government's 

fiscal policy.

With the break-up of the post-War boom and the growth of ¡§stag-flation¡¨ in the early 1970s, Friedman¡¦s theory

achieved widespread acclaim and John Maynard Keynes was systematically dumped in favour of Monetarism.

In the 1962 Capitalism and Freedom Friedman and his wife, Rose Friedman, argued for a negative income tax,

or guaranteed income, to supersede social welfare services, which in their view was inimical to the values of

individualism and useful work. Among his other works, many of which concern the theory of money, are A

Monetary History of the United States, 1867-1960 (1963) and Monetary Trends of the United States and the

United Kingdom (1981). 

* Click to here see his article The Methodology of Positive Economics

 

John Maynard Keynes (1883-1946)

Keynes is perhaps one of the best known of all economists. This is hardly surprising for two main reasons. The

first is that his work was perhaps the most important work that had been done for decades and changed the

whole face of post-war economic policy. The second, more flippant reason for his fame is that he is perhaps

the only economist to have a whole branch of economics named after him. Though it would be nice to argue

that Milton Keynes was named in tribute to the work of two great economists - Milton Friedman and John

Maynard Keynes - it would be totally untrue! So Keynes remains the only person to be honoured in this way.

His main contribution to the economics debate of the time was in putting together a coherent critique of the

existing classical economic theory that dominated policy-making circles. Keynes' father was an economist and

his mother was Mayor of Cambridge for some time.

Keynes went to Eton (as a scholar) and then went on to King's College Cambridge to study Classics and Maths.

He worked for a short time in the Civil Service but didn't like it much, and so left and went back to Cambridge

as a Fellow. In 1911 he was made editor of the Economic Journal - Britain's foremost economics publication.

He was a varied character - not at all the stereotypical economist of people's assumptions. He married a

Russian ballerina and was for much of his time a member of the Bloomsbury Group - a group of intellectuals

whose ranks included well-known names such as Virginia Woolf, E.M.Forster and Bertrand Russell. He

speculated considerably and as Bursar of King's College made the college very rich! He also acted as an advisor

to a number of companies. In the Second World War he made his peace again with the Treasury. As a result he

was instrumental in providing the framework for post-war economic recovery.

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Vilfredo Pareto (1848-1923)

Italian economist and sociologist, known for his theory on mass and elite interaction and his application of

mathematics to economic analysis.

After his graduation from the University of Turin (1869), where he had studied mathematics and physics, Pareto

became an engineer and later a director of an Italian railway and was also employed by a large ironworks.

Residing in Florence, he studied philosophy and politics and wrote many articles analysing economic problems

with mathematical tools. In 1893 he was appointed to the chair of political economy at the University of

Lausanne, Switzerland.

Pareto's first work, Cours d'Économie Politique (1896-97), included his famous but much-criticised law of

income distribution, a complicated mathematical formulation in which Pareto attempted to prove that the

distribution of incomes and wealth in society exhibits a consistent pattern throughout history, in all parts of

the world and in all societies.

In his Manuale d'economia politica (1906), he further developed his theory of pure economics and his analysis

of ophelimity (power to give satisfaction). He laid the foundation of modern welfare economics with his

concept of the so-called Pareto optimum, stating that the optimum allocation of the resources of a society is

not attained so long as it is possible to make at least one individual better off in his own estimation while

keeping others as well off as before in their own estimation. He also introduced "curves of indifference," that

did not become popular until the 1930s.

Believing that there were problems that economics could not solve, Pareto turned to sociology, writing what he

considered his greatest work, Mind and Society (1916), in which he inquired into the nature and bases of

individual and social action. Persons of superior ability, he argued, seek to confirm and aggrandise their social

position. Thus social classes are formed. In an effort to rise into the elite of the upper strata, privileged

members of the lower-class groups continually strive to use their abilities and thus improve them; the

opposite tendency obtains among the elite. As a result, the best-equipped persons from the lower class rise to

challenge the position of the upper-class elite. There thus occurs a "circulation of elites." Because of his theory

of the superiority of the elite, Pareto sometimes has been associated with fascism.

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David Ricardo (1772-1823)

English economist who gave systematised and classical form to the rising science of economics. His

laissez-faire doctrines were typified in his Iron Law of Wages, which stated that all attempts to improve the

real income of workers were futile and that wages perforce remained near the subsistence level.

Ricardo was the third son of a Dutch Jew who had made a fortune on the London Stock Exchange. At the age of

14 he entered his father's business. By 21, he had become a Unitarian, and married a Quaker. He continued as

a member of the stock exchange, and in a few years acquired a fortune.

His interest in economic questions arose in 1799 when he happened to read Adam Smith's Wealth of Nations.

His first published work was The High Price of Bullion, a Proof of the Depreciation of Bank Notes (1810),

asserting that there was a close connection between the volume of bank notes and the level of prices and that

the level of prices in turn affected foreign exchange rates and the inflow or outflow of gold.. A committee

appointed by the House of Commons, known as the Bullion Committee, confirmed Ricardo's views and

recommended the repeal of the Bank Restriction Act which had obliged the Bank to withhold payment in gold

under the strain of war with France.

At this time Ricardo became friends with the philosopher and economist James Mill (father of John Stuart Mill),

the Utilitarian philosopher Jeremy Bentham and Thomas Malthus, best known for his theory that population

tends to increase faster than the food supply.

In 1815 another controversy arose over the Corn Laws. A decline in wheat prices had led Parliament to raise

the tariff on imported wheat. This provoked a popular outcry and caused Ricardo to publish his Essay on the

Influence of a Low Price of Corn on the Profits of Stock (1815), in which he argued that raising the tariff on

grain imports tended to increase the rents of the country gentlemen while decreasing the profits of

manufacturers.

In his Principles of Political Economy and Taxation (1817), Ricardo undertook to analyse the laws determining

the distribution of the social product among the "three classes of the community," namely, the landlords, the

workers, and the owners of capital. He applied his findings more widely, however, and elaborated various

other economic principles. He found the relative domestic values of commodities to be dominated by the

quantities of labour required in their production, rent being eliminated from the costs of production.

He concluded that profits vary inversely with wages, which move with the cost of necessaries, and that rent

tends to increase as population grows, rising as the marginal costs of cultivation rise. He supposed that there

was little tendency to unemployment; but he remained apprehensive lest population grow too rapidly, depress

wages to the subsistence level, and, by extending the margin of cultivation, reduce profits and check capital

formation. He also concluded that trade between countries was not dominated by relative costs of production

and by differences in internal price structures that reflected the comparative advantages of the trading

countries and made exchange desirable. He treated monetary questions and especially taxation at length.

Although he built in part upon the work of Adam Smith, he defined the scope of economics more narrowly

than had Smith and included little explicit social philosophy.

Marx fundamentally differs with Ricardo over the Falling Rate of Profit, Ricardo's theory of rent, law of

comparative cost, the concept of money and wages and profits.

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Economists' works

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The Wealth of Nations, by Adam Smith, 1776

Theory of Moral Sentiments, by Adam Smith, 1759

Principles of Political Economy and Taxation, by David Ricardo, 1817

The New Theories of Economics, by Vilfredo Pareto, 1890