However, economics has an impact on every moment of our lives because, at its heart, it is a study of choices and why and how we make them. In this article, we'll look at some basic economic concepts that everyone should understand.
Arthashastrathe earliest known treatise on economic principles and guidelines for a progressive economy, or Xenophon 's c. Oeconomicus, and continue through the religious -based ideas of Jewish thought, the Scholasticsand medieval Islamic scholars.
In early times, and until the industrial revolutioneconomics was not a separate discipline but part of philosophy. Religious tenets and a concern for morality and ethics played a significant role in the views of early theorists.
As a result, early economic thinking generally took into account the welfare of the common man, the worker, rather than seeking ways to benefit a few elite individuals.
Saint Thomas Aquinas c. How to make agricultural production more efficient; and how to make markets, taxation policies, and other monetary instruments transparent and free from corruption, usury, and other practices that would otherwise destroy the well-being of ordinary law-abiding people, the foundation of the state.
Thus, for example, the Ancient Greek philosopher Aristotle examined household spending, market exchanges, and motivations for human action from the point of view of a slave -owning city-state with a limited form of democracy.
With the collapse of the Ancient world and the end of Roman civilization, economic discussion in Europe flagged as societies were cast under the shadow of the Dark Ages. The Middle Ages were intensely religious, under feudal order.
In this period the Scholastic theologians, notably Thomas Aquinastook on the role of guiding society, and their writings included economic aspects of life. Four themes the Scholastics were particularly concerned with were property, justice in economic exchange, money, and usury.
In this area they built on Greek thought as revived by medieval Muslim scholars, of whom perhaps the most well known was Ibn Khaldun of Tunisia. Mercantilism and nationalism Main article: Mercantilism A painting of a French seaport fromat the height of mercantilism. Mercantilism developed at a time when the European economy was in transition.
Isolated feudal estates were being replaced by centralized nation-states as the focus of power.
After the localism of the Middle Agesthe period — was one of religious and commercial warfare, and large revenues were needed to maintain armies and pay the growing costs of civil government.
New opportunities for trade with the New World and Asia were opening, and monarchies wanted a powerful state in order to boost their status. The "mercantile system" was based on the premise that national wealth and power were best served by increasing exports and collecting precious metals in return.
Tariffs could be used to encourage exports bringing more money into the country and discourage imports which send wealth abroad. In other words, the goal was to maintain a positive balance of trade, with a surplus of exports. Mercantilism was not just an economic theory but also a political movement, advocating the use of the state's military power to ensure local markets and supply sources were protected.
Advocates of mercantilism include English businessman Thomas Munwhose book England's Treasure by Foreign Trade represents early mercantile policy.
He prohibited the export of money, levied high tariffs on foreign manufactures, gave liberal bounties to encourage French shipping, and set up national guilds to regulate major industries such as silkwine, and other French specialties. The term "mercantilism" was not, however, coined until late by Victor de Riqueti, marquis de Mirabeau and popularized by Adam Smith in In fact, Adam Smith was the first person to organize formally most of the contributions of mercantilists in his book The Wealth of Nations, although he vigorously opposed its ideas.
Mercantilist ideas did not finally decline until the coming of the Industrial Revolution. Belief in mercantilism, however, began to fade in the late eighteenth century, as the arguments of Adam Smith and the other classical economists won favor in the British Empire and the Physiocrats advocated the laissez-faire approach in France.
The Physiocrats Main article: In his book la Physiocratie du Pont advocated low tariffs and free trade.
Disenchanted with the regulations imposed by mercantilistsan early French " physiocrat ," Vincent de Gournayis reputed to have asked why it was so hard to laissez faire, laissez passer. Contrary to the Mercantilists, the Physiocrats believed that the wealth of a nation lies not in its stocks of gold and silverbut rather in the size of its net product.
They held that agriculture was the source of wealth. At the end of the seventeenth and beginning of the eighteenth centuries advances in natural science and anatomy were being made, including the discovery of blood circulation through the human body.
This concept was mirrored in the physiocrats' economic theory in the notion of a circular flow of income throughout the economy.Supply and demand analysis is an extremely powerful economic tool, however it's often misunderstood. The first misconception I cover is the idea of "The Law Of Supply and Demand." This is a very popular statement, however it's not entirely true.
While public policy should not compel individual moral beliefs or practices, and economic policy should not be used to enforce personal ethics, such policy perhaps should at least be consistent with values such as compassion which, like the justifications for public policy themselves, are based on the manner in which we interact with others.
Capitalism is an economic system based on the freedom of private ownership of the means of production and their operation for profit.
Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment are determined by every owner of wealth.
device to present a very general economic concept. Most visual models, though, are visual exten-sions of mathematical models.
Implicit in their structure is an underlying mathematical model. variation of the simple supply-and-demand model taught in microeconomics, where the purpose is to determine equilibrium price and quantity in a . supply and demand, and other economic indicators.
Discover how individuals, business leaders, and even the leaders sometimes very difficult ones. Supply and demand is a powerful thing; it can force you to go without, pay more than you want to, or force you to look elsewhere for the things you want.
History/social studies. Say's Law and Supply Side Economics. It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments.