Chapter 11
Political Economy
11.1 DEVELOPMENT OF
ECONOMIC THEORY
pre-eighteenth century
Mercantilism,Liberality,
11.1 DEVELOPMENT OF
ECONOMIC THEORY
pre-eighteenth
century
seventeenth
century
nineteenth
century
Mercantilism
Liberality
Adam Smith
Classical economics
John Stuart Mill
Alfred Marshall
11.1.1 Classical Economics
Western Europe
Late 1600s – 1800s
Classical economics focused on the outcomes from the sum of
individual decisions,rather than thinking only about the actions of the
rulers of nations,Freedom in the market place was efficient and
desirable
Representatives
Adam Smith
David Ricardo
John Stuart Mill
Keys
Smith’s notion of the role of specialization in driving economic growth
with,invisible hand”.
Ricardo’s analysis of comparative advantage,and the consequent need
for free trade.
Mill’s argument for the need for a high degree of individual freedom,both
for economic and moral reasons.
11.1.2 Marxian Economics
Communist Manifesto
Capital – there is inevitable change to
social and economic system
affirmation (thesis)
negation (antithesis)
negation of negation
11.1.3 Neo-classical Economics
Basis for the microeconomics
Representatives
William Jevons
Carl menger
Leon Walras
Alfred Marshall
Bases
Keys
11.1.4 Keynesian Revolution
the General Theory of Employment
Interest and Money
The General Theory
GDP = C + I + G + X - M
11.1.5 Revival of
Neo-Classical Economics
Policies