Talking About Economy

Talking About Economy

by Marcus Eduardo de Oliveira

"… the ideas of Economists and political philosophers, BOTH right when they are and when they are wrong, are more powerful than is commonly understood."

-John Maynard Keynes


Nobody can ignore the economy for only two reasons: the first is that not enough resources for everyone, since desires are unlimited. The shortage, understood as market failure, is an incontestable truth. The second reason is that we are all part of the economy. The latest issues involving the economy also involve us in every moment. Thus, regardless of the evolutionary stage of each company, we always affect situations involving the generation of employment, income, combating poverty, hunger, resource transfers, taxation, purchase and sale of goods. When you buy a movie ticket, while filling the car, when traveling on vacation, to enroll a child at school, as we embark on a driving public by paying taxes, to seek the services of a dentist, doctor, detective or lawyer, we are participating in trade and finance; we are consuming, spending, and thus making money circulate. It is no coincidence that the popular belief predicts that it is money that moves the world. And precisely because it moves with the money turns on trade in goods and services. Thus, the savings are "controlled" by its monetary base (the amount of money in circulation).

It is the base currency of a country that determines how fast (time is money, says the adage often delivered in English-speaking countries) with which an economy can grow. Why when dry "tap" financial companies, individuals and government economic activity slows. To prevent from occurring a deceleration of economic activity, the central bank (guardian of the money of a country) need to control the monetary base in a balanced manner. Any imbalance, either upward or down, has serious consequences for all.

If the central bank allows the expansion of the monetary base (excess money in circulation), surely this will lead to an inflationary process. Otherwise, if the monetary base is restricted ("downsizing" of money in circulation), the recession ahead, then causing the appearance of the unwanted situation of chronic unemployment.

However, for a control of trade in goods and services, so that production can take place so as to meet the domestic market, it is recommended that it be optimized by allocating to it, effectively, the resources available . That is the major duty that task falls to the organizers of the modern economy. It is for these organizers, they are responding to the dictates of market forces or the principles of a planned economy to achieve in the first instance what James Edward Meade (1907-95), winner of the Nobel Prize in 1977, stands as the three main objectives of the economy: 1) FREEDOM – to ensure the free choice by each citizen, 2) EQUALITY – avoid the brutal difference between wealth and poverty, and 3) EFFICIENCY – practice the best use of available resources ensure a better standard of living.

If it is true to say that current looking to the past we found some answers to these questions, the economics, since the service is really useful for understanding the economic and social environment that surrounds it, arises in such detail as the host of other social sciences for the complete understanding of what currently occurs in most societies, as that science can never be denied, since at any moment, without even noticing, we are part of the "economy" , sometimes buying, selling, exchanging or distributing. In this sense, the economy falls precisely what the character of Sherlock Holmes said, everything is a matter of "observation and deduction."

Figure consumer or producer, employer or employee, provider or beneficiary, we all entered this social science that is also defined as "the science of choices." Far from the coldness of graphs, equations, mathematical models and statistics, and various taxes, the economy is, above all, the study of human behavior, interacting in the same market space that is called, in turn, full of facts and events. As professor Robert Solow (1924), a singular figure of economics, "the facts demand explanations, and explanations seek new facts." So try to understand this "behavior" that is in our daily lives is the task for modern economists.

However, in the words of Tim Harford, author of The Economist Clandestino, "the fact that the economy is a tool for an objective analysis does not mean that economists are always goals. Economists study the power, poverty, growth and development. It is difficult to generate models that describe these things without being touched by the actual context where they are".

This text aims to do just about getting a quick "tour" through economic history, not bowing to the timeline, much less arresting to examine in detail the "human behavior." Of course, we are not here to pretend to cover all the important facts and figures in economic history. This task, difficult to achieve, should be left to economic historians of the more devout.

They did (and still do) the economics sciences

To try to understand the current economic phenomena, we must first "dip" in space and time and those who have contributed (both in theory and in practice) for the history of economic thought. From the most simple to the most illustrious thinkers, the economic sciences, legitimate daughter of Theology, Law and Philosophy is the science that was "developed" by a French court physician of Louis XV, by a professor of anatomy at Oxford, by Greek philosopher who coined the term economics, as taught by the Scots of Moral Philosophy, by the British who made his fortune operating in the London Stock Exchange, the English professor who has advised the U.S. government, the Austrian who came to the office of minister Finance in your country, the Protestant pastor concerned about the overcrowding, by one who was considered the head of the so-called "neoclassical school of Cambridge", by American professor who believed "there is no free lunch", the lawyer and the German philosopher full of revolutionary ideas that advised the union of the proletarians of the world as a solution to building a better world.

According to "Genealogy of the Economy," described by Professor Paul Samuelson (1915), the economy is in "the genius of Adam Smith’s classical school which led to David Ricardo, the ‘father of all’, which generated two streams opposite: one Orthodox, personified in John Stuart Mill and the neoclassical Leon Walras, William Stanley Jevons and Alfred Marshall, who begat John Maynard Keynes, who came, in turn, the ‘neo’ and ‘post-Keynesian’ of our day, the other, heterodox, represented by Karl Marx and his descendants ‘scientific socialists’ tinted today. " (See Ottolmy Strauch at the Introduction, the book on Marshall, California, Nova Cultural, Brazil, 1996).

The fact is that the economy was itself or in the center or behind the scenes of the main events of mankind. So was present in the writings of the founding fathers of Western economic thought: Plato (428/427-347 BC) and Aristotle (384-322 BC). According to Plato, every human being is born with a particular vocation to pursue a trade. Aristotle viewed it as a natural order, coming to defend slavery as a "natural factor" that should not be changed. The economy was present in the emergence, formation and development of markets occurred in European cities in the late Middle Ages, the system of price formation, problems of social philosophy, in Individualism (the doctrine that the center of human life is the action of the individual) in excess of population; interventionist liberalism. Was still in the thinking of revolutionary utopian, in the Marxist view of development and collapse of capitalism, the Luddite movement that began in 1811 in the English countryside and steel, coal and manufacturing which were the basis of the Industrial Revolution. Economics met representatives and represented in Mercantilism (Petty) in Physiocracy (Quesnay), the classical school (Smith, Malthus, Mill, Ricardo), the critique of capitalism (Marx, Weblen and Hobson), the marginality (Pareto, Jevons and Walras), the neoclassicism (Marshall) in Keynesianism (Keynes and Kalecki) in historicism (Weber) and contemporary economic thought (Schumpeter, Samuelson, Myrdal, Sraffa, Robinson and Galbraith).

When the neoclassical presented themselves to the world, the economics there was represented in the concept of marginal utility and the pursuit of individual welfare. When the economic crisis decided to "shake" the foundations of global capitalism, the economy was present in the New Deal, and John M. Keynes, he returned to "shake" the world, only now in a "scientific revolution", the theoretical founding of the current macroeconomics. Economics with the theory was that inaugurated the policy planning in the Soviet Union, as well as attended the first five-year plan that country. The economy was on costs and consequences of World War II and the Cold War, and was present with Joseph Alois Schumpeter (1883-1950) "survival" of capitalism at the hands of "revolutionary economy": the entrepreneurs. Economic activity was, is and always will be in large firms, the major unions in big government, as well as being, above all, society at large, eager to experience better days, especially when it comes to consuming more goods and services, rather than lower costs for much of the population has access to the blessings that economic activity can provide. The economy is in the marginal costs and benefits are what really matters for the efficiency of an economy.

The economy is in everything and everything seems to revolve around the economy

As the economy is in everything and almost everything seems to revolve around the economy, Professor Roger E. Backhouse, renowned economic historian, says that even in the texts of the Old Testament or the poetry of Homer are excerpts economical. Let us not forget, in this detail, which the company described in the Iliad and Odyssey, works attributed to Homer (though there are doubts about its existence), reflects the world Mycenaean (Bronze Age) and were organized societies outside of industry standards based on plunder, theft and taxes paid by companies defeated as ways of distributing wealth. So were the societies in which economic activity marked its presence.

Hesiod who lived in the late eighth century BC is another poet of the ancient world that also seems to keep a close relationship with the economy. One of the poems attributed to the author – Works and days – has a strong economic content. According to Backhouse, Hesiod can be read as someone he saw as the basic economic problem of scarcity of resources. The reason for men to work is that "the gods keep food hidden from men, otherwise it would work easily in a day is enough to provide for the rest of the year without working." Hesiod, in addition to being the first poet individualistic, was also the first to complain publicly of the humble from oppression, injustice to the growing supremacy of the rich.

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Author`s name Oksana Orlovskaya