Social theories of economic development focus on social issues to improve the economic status of an area. Corporations, on the other hand, are not permitted such tactics. Thus, all theories should be critiqued with attention paid to their cross-cultural applicability. The main tools economists use are economic theories or models. Friedman believed in keeping wages and prices flexible as part of a Laissez Faire economy. As we mentioned above, there is a wide range of economic theories in existence. One of the first pioneers of the field was John von Neumann, although there have been many other contributors, such as John Nash, who developed the Nash Equilibrium. One of Smith’s most famous concepts was that of the “invisible hand,” which he describes in his work The Wealth of Nations. He articulated his views regarding population in his famous book, Essay on the Principle of Population (1798). Prior to the Great Depression, banks in the US were largely unregulated; they had the power to print money to meet all of their fiscal obligations. However, if you want to study the most influential or widely-supported economic theories, try reading the key theories of major economists. Famous Economists and their Contributions. Other theories have been suggested for developing countries. My economics teacher London is a classical economist! Such pump and dump schemes are illegal and the perpetrators are generally caught... not by individuals, as the Laisser Faire doctrine states but by government overseers. Bear in mind that his pronouncements came at a time when everyone who was able was fighting to get rich. Such models help people visualize a product (or a building) in a more complete, concrete way than they could without them. The following are a few economic theories, models and concepts that are both interesting and somewhat applicable to business strategy. In times of slowing economy, the government must run deficits in order to keep people employed because private sector businesses cannot be counted on to invest enough in production to keep the economy afloat. So please take the list in the spirit of fun mixed with seriousness. In it, he outlined two drastically different styles of management (theories X and Y). In his book, he emphasized a view that the growth of an economy depends on division of labor. That is if funds were available for withdrawal. Companies often build models of their new products that are rougher and less finished than the final product but can still demonstrate how the new product will work and look. The key tenet of Keynesian economics was the idea that the government should involve itself in the running of a capitalist economy. Monetarism, on the other hand, advocates for the government controlling how much money is in circulation but taking no action. The Population Theory had great in influence on both Charles Darwin and Alfred Wallace as this theory led to the formulation of the theory of natural selection. In other words: the government should focus solely on maintaining sustainable rates of economic ability. As with all of these economic philosophies, we have to look at what was happening in the world and with various economies, to get a real sense of what, exactly, the economist intended by his model. Though they came from different parts of the world, they had a … ADVERTISEMENTS: All theories of globalization have been put hereunder in eight categories: liberalism, political realism, Marxism, constructivism, postmodernism, feminism , Trans-formationalism and eclecticism. As economies have developed over time, so economic theory has developed as well to try to explain changing circumstances. These ‘bank wars’ ended in 1751 – coincidentally, only a few years before our Mr Smith published his Theory of Moral Sentiments. November 3, 2011, cherran, 5 Comments. Here is where the concept of Laisser Faire runs into trouble! The Malthus Predictions. He was Irish by birth. Every Great Economist Has Their Own Economic Theory. In graduate school, Buffett studied the teaching and models of economist Benjamin Graham, the author of Security Analysis, a classic guide to investing. Illustrative of a free market economy, Smith argued that there was an invisible hand that guided the economy towards balance and equilibrium, despite the self-interest of individuals. The most well-known theories are probably those of supply and demand, but you will learn a number of others. — Keynesian, n., adj. There are certainly economic theories that are wrong, but nonetheless deserve to be on the list. What to produce The Founders’ economic motives, according to Beard, were straightforward—they were owed money from their support of the Revolution, and those “public securities” (receipts for loans made to support American independence) were not being repaid under the weak Articles of Confederation. economic, social and political development of the new African States of which decolonization was merely a beginning and offered a challenge to African nationalist leaders to a full responsibility for their new nation States. Most of what follows will be confined to the former. Individuals must closely watch corporations and other entities of the State because of their inclination to disrupt (the Smithian) spontaneous order. Each was a highly original thinker who developed economic theories that were put into practice and affected the world's economies for generations. That’s the question a publisher recently asked me to ponder for a book they are developing. The theory posits that individuals, contrary to the assumptions in most economic models, are not always fully rational decision makers. Consequently, social, economic and political aspects are included in theories of economic development, which apply different models related to different key concepts (Martinussen 1997; Roberts and Hite 2000). Key Concepts and Summary. The book is a thorough examination of investment strategies and models, and Graham published four editions from 1934 to 1962. Classical economic theory was developed shortly after the birth of western capitalism. The fifth, most important tenet is that markets should always be competitive. It refers to the dominant school of thought for economics in the 18th and 19th centuries. We briefly explain below his ideas about economic development. Far from the lackadaisical impression this term suggests, this economic theory rests on five fundamentals: Even today, we find evidence of this economic model. Milton Friedman, a U.S. economist, was, in contrast to Keynes, an advocate for the free market, and has been closely associated with the theory of monetarism. Scholars from historically less-developed parts of Europe, and from the colonial world, contributed to the construction of modern theories of development in the 1940s, stressing the role of the state. Many of these neo-classical economic theories were brought together in Alfred Marshall’s very influential textbook, Principles of Economics. 5) Theories X And Y. This article lists historical figures credited with founding religions or religious philosophies or people who first codified older known religious traditions. The common characteristic in the African … One reason for the derision his writings were often subjected to was the fact that the economic model he proposed was so contrary to the political machine of his day. Free trade: participants assign their own values for bartering. Essentially, it is an effective way of embracing Laisser Faire economics and the ‘Invisible Hand’ postulate; a combination which would naturally foster fair trade. Economic growth - Economic growth - Theories of growth: In discussing theories of growth a distinction must be made between theories designed to explain growth (or the lack of growth) in countries that are already developed and those concerned with countries trapped in circumstances of poverty. Further, how simple, or indeed complex, a model is, will depend on the economist creating the model, and what aims they are seeking to achieve. Every Great Economist Has Their Own Economic Theory. By Lacy Hunt, Hoisington Asset Management The three competing theories for economic contractions are: 1) the Keynesian, 2) the Friedmanite, and 3) the Fisherian. o Management is an exercise in logic applied to situations. 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