1. Jevons
1.1. Maths
1.2. Utilitarianism
1.2.1. Utility - abilit to increase pleasure.
1.2.2. MAX when marginal utility is equal to the price: if apple costs twice as banana, the pleasure has to be twice as large
2. Walras
2.1. Mathematical but in a different way
2.2. Value depends on scarcity.
2.3. Land cannot belong to an individual.
2.4. Demand and supply curves
2.4.1. Price increase, demand decreases, supply increases.
2.4.2. General Equilibrium Model: demand = supply
3. Marshall
3.1. Economics as prof discipline.
3.2. Drew demand and supply curves geometrically.
3.2.1. Economies of scale; More demand lowers the price
3.3. biological
3.3.1. firm has a biological life
3.3.2. behavior modified in response to environment
3.3.3. sceptical about math as the latter has no foundation in reality
4. Marginlist economics based on the marginal utility and maximisation of social welfare
4.1. Edgeworth (cardinal) decreasing marginal utility
4.1.1. Exact utilitarianism
4.1.1.1. Marginal utility of income is decreasing:
4.1.1.1.1. Equal distribution of income is the best for the society
4.1.1.2. Total utility is the sum of utilities for each product.
4.1.1.2.1. Depends on the quantities of each good.
4.1.2. Got the idea of indifference curves.
4.1.2.1. Edgeworth's box diagram (Pareto drew it): concept of contact curve.
4.1.2.1.1. Allocation of resources between 2 agents - analyse their preferences.
4.2. Pareto (ordinal) no decreasing marginal utility
4.2.1. Classical School (historical analysis, supply side, production factors)
4.2.2. Utility theory as a tool of understanding the demand.
4.2.2.1. Consumer preferences --> indifference curves
4.2.2.1.1. Covexity
4.2.2.1.2. Multiple optimal solutions to maximise
4.2.3. 1% higher/lower than median icome has 1.5% less n of earners
4.3. Pigou (cardinal) decreasing marginal utility as a law
4.3.1. Utility functions are comparable between individuals.
4.3.2. Ideal distribution: additional unit of utility benefits everyone equally (marginal net product is equal)
4.3.2.1. Re-distribution of resources to groups who have less (poor).
4.3.3. Decreasing marginal utility: as income increases, it get harder to produce the better living standards
4.3.4. Taxation as an instrument for eco policy.
4.3.4.1. Highest taxes on goods that are inelastic in demand / supply (such as cigarettes)
5. Friedman
5.1. Critique of Keynesianism
5.1.1. Criticised interventions, backed free market policies.
5.2. Permanent income hypothesis
5.2.1. Consumption depends on long-term expected incomerather than short-term fluctuations.
6. Hick
6.1. IS-LM
6.2. Moderned general equilibrium theory
6.3. Microeconomics
7. Samuelson
7.1. Efficiency is maximum output, equity is fair distributiuon of resources.
7.2. Stability condition: equilibrium has to be stable to have practical relevance.
7.3. Merged Keynesian and classical econ into neoclassical
8. Solow
8.1. Growth theory
8.1.1. Natural growth rate: how fast the economy grows depends on the population growth rates
8.1.2. Only better tech increases how much each person can earn over time
8.1.2.1. Living standard does not increase due to higher savings, but due to higher tech.
8.1.3. Growth Accounting
8.1.3.1. economic growth is measured by capital / labour / tech
8.1.4. Long-term econ growth as a result of capital accumulation and tech progress
9. Socialism and central planning
9.1. Hayek - against
9.1.1. G interven --> inefficiency and loss of freedom
9.2. Mises - against
9.2.1. Calcualtion Problem
9.2.1.1. without market prices, cannot determine the value of resources efficiently --> irrational econ decisions
9.3. Marx - support
9.3.1. Critique of capitalism exploitation and instatibility
9.3.1.1. surplus is extracted from workers and is taken by capitalists
9.3.2. State to control production, ensuring equitable resource distribution
9.3.3. Communism: classless society, resources are shared acc. to the need.
9.4. Lange - support
9.4.1. Market socialism
9.4.1.1. Mimic market outcomes using theoretical prices
9.5. Trotsky's permanent revolution: political and ideological strategy for the spread of socialism worldwide.
10. Classical School (historical analysis, supply side, production factors)
10.1. Malthus
10.1.1. Population when unchecked increases in geometrical ratio, substistence (food) in arithmetical.
10.1.2. Iron law of wages: income increase -> children increase -> income decrease. Just more poor people
10.1.2.1. Wages tend toward min subsistence level.
10.1.3. Corn Laws: supported as they protect British agriculature for the case of war.
10.1.4. Greg Clark
10.1.4.1. Malthusian model
10.1.4.1.1. Malthusian equilibrium: BR=DR. Stagnating population. 0.3% tech progress per year.
10.1.4.1.2. Preventive check - restrict birth rates. Positive check - increase death rate
10.2. Adam Smith
10.2.1. Invisible hand
10.2.1.1. Human action backed by self-interest. What is best for indovidual is frequently best for the society.
10.2.1.2. Ensures that the system is of free competition
10.2.1.3. Neutralises the weakness of markets
10.2.1.4. directs resources to the areas where they yield the highest return
10.2.2. Free trade
10.2.3. Free markets (competition)
10.2.3.1. system of perfect liberty
10.2.3.1.1. no monopoly
10.2.3.1.2. prices tend toward natural level and are taken as given
10.2.3.1.3. free entry and exit
10.2.3.2. best system for allocation of resources
10.2.3.3. can generate inequalities; unacceptable from economic justice point of view
10.2.3.4. originated because mercantilistic governments were awful
10.2.4. Theory of value in use (water) vs. in exchange (diamond)
10.2.4.1. Labor theory of value: relative prices are determined by the relative amount of labour needed to produce them.
10.2.4.2. Price is based on supply side.
10.2.4.2.1. Price of corn has to be determined by cost of production on the farm with the highest cost
10.2.4.3. Natural price - normal level towards which the market (actual) price gravitates.
10.2.4.3.1. Normal value and the quantity of inputs used in the production (labor, capital, land).
10.2.5. Smithian Model (Persson)
10.2.5.1. Efficiency improves with - market expansion (more people is fine) - division of labor - trade
10.2.5.1.1. Smithin growth: market expansion + division --> specialisation and trade --> efficiency Growth by: - learning by doing - higher demand - division of labor
10.2.5.2. Delayed marriages reduce population coz fewer children are born.
10.2.6. Higher wage difference based on
10.2.6.1. hardship (miners)
10.2.6.2. skills / training costs needed (doctor / lawyer)
10.2.6.3. irregularity (seasonal)
10.2.7. Factors of production
10.2.7.1. labor
10.2.7.2. capital
10.2.7.3. land
10.3. Ricardo
10.3.1. 93% theory of value. Deviations in relative prices are 7%
10.3.2. Rent
10.3.2.1. Population increase --> food consumption --> use of land, even lower quality --> increase in share of rent in the national income
10.3.2.2. is the highest price the landowner can ask for without prividing an incentive to switch to another
10.3.2.3. rent is paid coz corn is high
10.3.2.3.1. prices are determined by the least productive land in use.
10.3.2.4. not part of the production cost. Only labor and capital.
10.3.2.4.1. for non-produced product price depends only on scersity
10.3.3. Trade
10.3.3.1. Increases the standard of living.
10.3.3.2. based on the comparative advantage
10.3.3.2.1. increases efficiency of use of resources
10.3.3.3. encourages specialisation
10.3.3.4. Delays the arrical of stationary state.
10.3.4. tension between labour theory of value and comparative advantage
10.3.5. Tax
10.3.5.1. tax increases the price of a product
10.3.5.2. tax and loan finance are econ equivalent: loan finance illusion of wealth which is not understood by the people
10.3.5.2.1. did not hold view of ricardian equivalence. tax finance is prefered as people understand true cost of war
10.3.6. Machinery
10.3.6.1. lower prices for the goods, but replace working places
11. Germany and Austria
11.1. Menger
11.1.1. Satisfy human needs with goods: directly - low-order; indirectly - higher order.
11.1.1.1. price is determined by value provided
11.1.2. Diminishing marginal utility
11.1.2.1. value falls as the quantity of the good increases
11.1.3. Competition - process through which monopolies are eliminated
11.1.4. Insitutions are unintended consequences of econ action.
11.2. Theoretical economics
11.2.1. exact laws
11.3. Historical economics
12. Keynes
12.1. Government interventions (public spending)
12.1.1. Markets are not self-corrective -> stabilise economies
12.1.2. Monetary policies are ineffective in the periods of low interest rates (like the Great Depression was)
12.2. General theory
12.2.1. Markets fail to ensure full employment
12.2.2. Marginal prospensity to consume: when income increases, C increases in smaller proportion.
12.2.3. Multiplier effect: increase in income leads to bigger Y increase.
12.2.4. Investment is driven by expectations and interest.
12.3. Keynesian revolution
12.3.1. Macro as a distinct field
12.3.2. Halsen and Samuelson integrated Keynesian ideas into mainstream economics.