Understanding entrepreneurial profit in the times of classical political economy.
Forms The period of classical political economy occupies the end. XVII - mid. XIX centuries Origins in the last third of the 18th century classical school
associated with the name of Adam Smith. Further development of the classical school at the end of the 18th - beginning of the 19th centuries. belongs to such economists as D. Ricardo, J.B. Say and T. Malthus.
Thus, D. Ricardo identified the pattern of the tendency of the rate of profit to decrease, developed a theory about the forms of land rent, and substantiated the patterns of changes in the value of money as goods depending on their quantity in circulation.
J.B. Say was the first to study the problem of balance between supply and demand, the realization of the total social product depending on market conditions. The founder of the classical school in economics is Adam Smith (1729-1790). His main work is “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776). The central idea is the idea of liberalism in the economy - minimal government intervention, market self-regulation based on the free movement of prices. Smith called economic regulators “the invisible hand of the market.” A. Smith believed that economic activity is carried out by people inclined to realize, first of all, their own benefit; in this regard, he introduced the term “ economic man
" Orientation towards the realization of personal interest determines, according to Smith's views, orderliness in economic relations.
Smith argued: “In order to raise a state from the lowest level of barbarism to the highest level of prosperity, all that is needed is moderately light taxes and tolerance in government: the natural course of things will do the rest.”
A. Smith laid the foundations of the labor theory of value (but was not its consistent supporter), showed the importance of the division of labor as a condition for increasing its productivity, and clearly formulated the principles of rational taxation. David Ricardo (1772-1823) is another representative of English classical political economy. Ricardo's main work is “Principles of Political Economy and Taxation” (1817). his scientific system is the recognition of the law of value as the foundation on which the theory of political economy is built into a single whole. Ricardo believed that the only source of value is the labor of the worker, which underlies the income of various classes (wages, profits, interest, rent). From this he drew a social conclusion: profit is the result of a worker’s unpaid labor. Ricardo identified the tendency of the rate of profit to decrease and revealed the mechanism of formation of differential rent.
The principle of comparative costs put forward by Ricardo is still used today to justify the effectiveness of international specialization and cooperation in production.
John Stuart Mill (1806-1873) - English economist, philosopher, public figure. “The Foundations of Political Economy and Some Applications to Social Philosophy,” his main work, was written in 1848. Mill gave a detailed and systematic presentation of the provisions of the classical school. The main form of overcoming the vices of capitalism was the reform of the principle private property by limiting the right of inheritance. He considered it necessary to redistribute income in order to improve the capitalist system. Justified the principles of rational taxation. Laid the foundations of bourgeois reformism.
By the end of the first quarter of the 19th century, in connection with the development of capitalism and the completion of the industrial revolution, the emergence of periodic industrial crises, the situation of workers sharply worsened, and therefore the class struggle intensified. At the same time, the “death hour” struck for scientific bourgeois political economy. From now on, the issue was no longer about whether this or that theorem was correct or incorrect, but about whether it was useful or harmful for capital. Whether it is convenient or inconvenient is consistent with police considerations or not. Disinterested research gives way to the battles of hired hacks, impartial scientific research is replaced by biased, servile politics.
Classical bourgeois political economy is giving way to vulgar, i.e. not scientific bourgeois political economy, for which sliding along the surface of phenomena becomes characteristic. Description of the external appearance of economic relations of capitalism, masking their true antagonistic essence.
Vulgar political economy arose at the turn of the 18th-19th centuries, its founders were J. Say (France) and T. Malthus (England).
Their identification of non-scientific elements in Smith’s teachings and their development into a system, the subsequent vulgarization of the theory by D. Ricardo, D. Millen, D. McCullack. Then, the open break with the classical school in the writings of N. Sinior (England), F. Bastis (France), G. Carey (USA) and the historical school (Germany) represents the main milestones in the process of vulgarization of bourgeois political economy in the first half of the 19th century.
The ruling class needed ideological defense of the existing order. Representatives of vulgar political economy zealously defended these orders, ensuring that the interests of the landowner and capitalist, coinciding, were directed against the workers. But at the same time they tried to convince the ruling classes to relieve them of responsibility for the poverty and suffering of the masses, presenting as a utopia any desire to improve the existence of the social system.
For example, K. Malthus’s “Essay on the Law of Population” was intended to serve this purpose.
The main and continuous cause of poverty, according to Malthus, is due to “natural laws and human passions,” the totality of nature and the excessively rapid reproduction of the human race. There is only one way out - this is a reduction in the population through abstinence from marriage of the poor, or as a result of various misfortunes (famine, epidemic, war), i.e. the evils of capitalism are the inevitable lot of humanity.
Jean Baptiste Say is a supporter of free trade and state non-interference in the economy. He idealized the free market system and denied the possibility economic crises, allowed the possibility of overproduction of only certain goods. Formulated the so-called “Say’s Law”: “Supply creates its own demand.” In other words, demand in a market economy is ultimately determined by supply, therefore the economy always reaches equilibrium.
The theories of the followers of vulgar political economy were, for the most part, absurd and untenable.
Thus, the main ideas and key conclusions of classical political economy are:
- * Classical political economy is the science of wealth, its sources, distribution, movement, evaluation.
- * Classical political economy formalized economic science in whole system, presenting the object of study, methodology, certain tools (price, cost, production price, law of value, rent, profit, etc.).
- * The teachings of the classics define the basic principles of operation market economy. Main principle- non-interference of the state in the economy (the principle of self-development).
- * The classics built a certain structured system of relations between wage labor, land owners, emerging industrial capital, the state and interstate relations. Development financial sector, the formation of monopolies and other problems prompted the need to more accurately determine the prices of goods, build correct budget and tax policies, etc. Therefore, some ideas of the classics were developed in a neoclassical interpretation.
Prerequisites for the formation of a classical school. By the middle of the 17th century, a set of prerequisites was emerging for the transition to the theoretical stage of development of political economy. The penetration of capital into the sphere of production, the complication of economic life, the increasing role of the industrial bourgeoisie and wage workers required a systematic understanding of their role in the creation of wealth, and brought to life the need to understand the social conditions that would most contribute to its growth. The classical school of political economy coped with this task. Having defined wealth as the totality of goods, she viewed production as the decisive sphere of wealth creation, and labor as its source and universal measure. For economists of the classical school, the freedom of individuals to exercise their abilities, reasonable taxes and competition are necessary and sufficient conditions for the positive manifestation of economic laws and increasing the country's wealth. The laws of the capitalist economy were perceived by representatives of the classical school as something corresponding to the natural nature of man and, as a result, historically enduring. The classical school was the first theoretical school of bourgeois political economy. Classic bourgeois political Economy(the term was introduced by Karl Marx) arose in the second half of the 17th century. and reached its peak at the beginning of the 19th century. Subsequently, it entered a period of decomposition of its labor paradigm, which ended with the marginal revolution of the 70s of the 19th century. and the transition of bourgeois political economy to the subjective psychological paradigm.
Stages of evolution of classical political economy
First stage– justification for the ideas of free trade and entrepreneurship: the economic teachings of W. Petty and P. Boisguillebert. Peculiarities of interpretations of the categories wealth, money, value, income.
Second phase– A. Smith: the formation of political economy as a science. The teachings of A. Smith and his work “An Inquiry into the Nature and Causes of the Wealth of Nations.” The principle of the “invisible hand”, the theory of division of labor, the theory of value, the theory of productive labor. Theories of money, income, capital, reproduction. Smith's Fabulous Dogma.
Third stage- the development of political economy in the works of economists D. Ricardo, J. B. Say, T. R. Malthus. Economic doctrine of D. Ricardo. Theories of value, capital, income, reproduction. The “iron” law of wages by D. Ricardo. The teachings of J.B. Say. Theory of three factors of production, theory of income, value. J.B. Say's law of markets, or the concept of a crisis-free economic growth. The teachings of T. R. Malthus. Population theory.
Fourth stage– formation of the ideas of liberal reformism and Marxism. J. S. Mill - the opposition of the laws of production and distribution. The essence of the theory of value and neutrality of money, judgments about socialism and reforms. K. Marx's model of an ideal society. Class theory. Theories of capital, value, money, income. Reproduction schemes. Cyclicity theory economic development capitalism.
The founder of the classical school in England was William Petty (1623-1687). Main works: “Treatise on Taxes and Duties” (1662), “A Word to the Wise” (1664), “Political Anatomy of Ireland” (1672), “Political Arithmetic” (1676), “Miscellaneous Concerning Money” (1682). Petty considered himself the founder of a new science - political arithmetic (in the present - economic statistics). He sought to determine the value of England's national wealth. By solving this statistical problem, Petty takes two revolutionary steps in the field of political economy: he solves in a new way questions about the nature of wealth and its measure. By wealth he means, first of all, the result of the nation's annual production, its property, developed land, money, labor skills. To calculate its value, Petty uses natural prices, which are weighted average market (political) prices over a long period of time. Natural prices cannot be explained by the relationship between supply and demand, since, as average prices, they presuppose equality of supply and demand. Petty considered the basis and measure (“common denominator”) of the natural prices of goods to be the amount of labor expended in their creation and delivery to the consumer.
Petty explores the nature of the income of employees (wages) and owners of capital and land (rent). According to W. Petty, the qualitative certainty of wages lies in the fact that it is the “price of labor” of an employee. The quantitative certainty of wages lies in the fact that its value is regulated by the cost of the minimum means of subsistence necessary for the worker’s existence. Petty believed that a worker can receive in the form of wages only part of the natural price of a product created by him. The other part goes to the capitalist in the form of rent.
Having laid the foundations of the labor theory of exchange and income, Petty at the same time gave birth to a tautological definition of wages, characteristic of economists of the classical school: if the price is based on a certain amount of labor, then the definition “price of labor” in its actual meaning is equivalent to the expression “labor is labor.” In addition, if the worker really receives the “price of labor,” then he gets all the value he created and, therefore, the rational source of rent (profit) disappears. If the worker receives part of the value he created, then the exchange between the worker and the capitalist is not equivalent, which contradicts general law commodity exchange - the law of value (labor) equivalence. However, arguing that the amount of wages is regulated by the cost of the means of subsistence of hired workers, Petty actually notes that it is not the price of the labor of workers, but the price of their means of subsistence.
Petty tried to discover and formulate the law of land price formation. He brilliantly grasps that in the case of land, the object of purchase and sale is the right to receive rent and considers the price of land as capitalized rent.
In France, the foundations of the classical school were created by Pierre Boisguilbert (1646-1714) in the works “ Detailed description the situation of France, the reasons for the decline in its welfare and simple ways, or “How to deliver in one month to the king all the money he needs, and enrich the whole population” (1696), “Accusation of France.” Boisguillebert believed that state regulation of economic life and the ban on free trade in grain (so characteristic of mercantilism) were the cause of the economic decline of France. Freedom of trade, in his opinion, would lead to the establishment of natural prices that would compensate peasants and artisans for the usual costs of their labor. Boisguillebert had a negative attitude towards money and resellers, not seeing the future of France in the development of commercial and industrial capital.
In the middle of the 18th century, the first theoretical school of political economy emerged in France - the school of physiocrats, whose leader was Francois Quesnay (1694-1774). Using the method of logical abstraction, he created the first theoretical model of the bourgeois economy. Quesnay represents society in its “natural” state (free competition) in the form of three interconnected classes: productive (farmers), sterile (employed in industry and trade) and owners (landowners). According to Quesnay, only labor applied to land with natural fertility is productive and becomes a source of compensation for the worn-out part of the initial advances of farmers (investments in buildings, draft animals - in those elements of agricultural production that are acquired at a time, but wear out gradually over the course of average) ten years), their entire annual advance (investment in that part of the elements of agricultural production that is consumed during its one cycle) and the creator of the net product is transferred by farmers to land owners in the form of rent for the use of land. Farmers exchange part of the harvest for industrial products. But the last part, according to Quesnay, does not increase the wealth of society, because only transforms the pure product Agriculture. In fact, Quesnay was the first researcher of the reproduction of individual capital. The farmer's initial and annual advance is nothing more than fixed and circulating capital, and he, correctly, sees the difference between them in in different ways their wear and reimbursement.
Quesnay reveals an understanding that the laws of reproduction of the farm economy are not identical to the laws of reproduction of the economy as a whole. Thus, his “microeconomic” “slice” of the natural economy is supplemented macroeconomic analyzes. The macroeconomic aspect of Quesnay’s theory is summarized in the famous “Economic Tables” (1758). Quesnay believed that in conditions of free competition, the exchange of goods at the macro and micro levels of the economy is equivalent.
Anne Robert Turgot (1727-1781), in her main work “Reflections on the Creation and Distribution of Wealth” (1766), highlights special role agriculture in wealth creation. He considered real profit in industry and noted the fact that it was divided into percentage of profit (the share of profit appropriated by the owner through ownership of capital) and entrepreneurial income (the share of profit accruing to the person using the capital). Turgot identifies another class - hired workers in agriculture and industry. Considering exchange as an equivalent process, Turgot, at the same time, explained that the price is determined by the utility of goods. Turgot's undoubted theoretical merits include his model of equalization of industry rates of profit in the course of intersectoral competition of capital. In his opinion, industries with initially high annual rate profits attract capital from less profitable industries. After some time, an excess supply arises here, and prices and profitability fall, while in initially low-income industries, on the contrary, an increase in the rate of profit is observed. The emergence of an average (the same for all industries) rate of profit will be the “overall result” of the intersectoral “migration” of capital.
The founder of classical political economy, Adam Smith (1723-1790, “An Inquiry into the Nature and Causes of the Wealth of Nations”) methodologically relies on the ideas of the French enlighteners (the concept of inalienable natural human rights and the idea of a social contract) and the type of rational thinking formed on the basis of the natural sciences , requiring a causal cause-and-effect explanation of the phenomena of the reality surrounding a person.
Introduction
Classical bourgeois political economy reached its highest development in the works of British scientists Adam Smith and David Ricardo, since Great Britain was at that time the most advanced in economically country. It had a relatively highly developed agriculture and rapidly growing industry, and conducted active foreign trade. Capitalist relations received great development in England: the main classes of bourgeois society emerged here: the working class, the bourgeoisie and landowners. The bourgeoisie was interested in a scientific analysis of the capitalist mode of production. Thus, in the second half of the 18th century. In Great Britain, favorable conditions developed for the rise of economic thought, such as the work of the Scottish economist and philosopher A. Smith and his follower D. Ricardo.
Classical political economy has firmly taken its place in the history of economic science and some of their ideas are still relevant, which certainly speaks of their value for economic science.
The beginning of the classical school
It is believed that the classical school was founded by W. Petty, but it should be said that his ideas belong to the school of physiocrats - this is the very beginning of the classical school and does not fully belong to the classical school itself. However, the physiocrats laid the foundations to which the classics later turned more than once. Petty, Boisguillebert, Quesnay, Turgot - all of them can be considered early classics. It was to them that the first theories in the history of economic doctrines belonged. Therefore, I would like to briefly discuss these economists and their main theories.
Physiocrats. Problems solved by physiocrats
He also believed that the formation of wealth occurs in the sphere of material production precisely through labor.
In his theory of money, Petty argued that value is money, therefore money is value because it has the property of the entire commodity world - it is a product of living things. human labor. The essence of money is that it is the universal equivalent of the commodity world. Petty discovered the functions of money as a measure of value, a medium of exchange, a means of payment for treasure.
In income theory, Petty defined wages as the income of labor and rent as the income of land. His salary is payment for labor, and the amount of the salary is determined by the minimum means of subsistence necessary for the reproduction of the worker, otherwise workers will work less, because they are lazy.
He defined rent as the product of land fertility.
Boisguillebert- second physiocrat. He saw the main task of economic science in the growth of production, and the subject of economic theory in the concept of social wealth, i.e. in a variety of useful goods and things. He created the first theory of crises of overproduction, the theory optimal price. The price should compensate for industry average costs, bring normal profits to the manufacturer and ensure stable demand for this product.
He introduced the principle of laissez faire, i.e. the principle of state non-interference in the economy.
Quesnay- the next physiocrat. He believed, like all other physiocrats, that the only productive sphere is agriculture, and it is in this that national wealth is created. He also considered wealth to be the sum of all goods in society. He created a class structure, according to which the class that works on the lands and creates national wealth is productive, the class of industrialists was considered sterile, and in the class of landowners he saw only land holders.
Turgot- a student of Quesnay, became the last of the early classics. He developed the doctrine of the Quesnay classes and the doctrine of national wealth, and became a worthy completion of the era of the physiocrats.
The physiocrats are being replaced by Smith and Ricardo, representatives of the classical school of political economy in the era of its dawn, which is why their theories are considered the foundations of classical political economy. And since the topic of this work is general characteristics classical political economy, then this coursework will be written about their works.
Smith and Ricciardo - Who are they?
Adam Smith, the founder of classical political economy in every sense, lived in the 18th century (1723-1790). His main work is the book “An Inquiry into the Nature and Causes of the Wealth of Nations,” published in 1776. David Ricardo (1772-1823) became a follower of his theory. He wrote the book "Principles of Political Economy and Taxation", in which he continued his study of classical political economy.
Smith sees the subject of economics as the study of the factors of social wealth, while Ricardo considers it necessary to study the distribution of income and the creation of wealth. However, although Ricardo was a follower of Smith, he changed some of his theories in his teaching, therefore, in this work, the theories created by Smith will be considered both by him and by Ricardo. So, I’ll start with perhaps their most famous theory – the theory of value.
Classical school of political economy- direction of economic thought (late 17th century - 30s of the 19th century). Main representatives: W. Petty, A. Smith, D. Ricardo (Great Britain), P. Boisguillebert, A. R. J. Turgot, F. Quesnay (France), J. C. Sismondi (Switzerland). The theoretical constructions of the classical school were based on the idea that the processes of production, distribution and consumption of wealth are determined by objective economic laws. The classical school explored the mechanism of reproduction, money turnover and credit, public finance, developed labor theory cost. She advocated economic freedom and limiting government intervention in the economy. Had a significant influence on the development of economic science.
Leading countries of Western Europe during the period of manufacturing capitalism.
France . The main branch of the economy is agriculture, and the largest class is the peasantry. The main holders of the land are nobles, the workers are peasants who pay rent. The main channels of initial capital accumulation are: tax system, government loans, sales of judicial and financial positions. The process of property stratification and landlessness of peasants. The first manufactories appeared in the 16th century. They produced cloth, linen and silk, their development was supported by the state. The policy of mercantilism is to stimulate the development of state-owned factories and the influx of funds from trade. Metallurgical manufactories, the development of internal trade, and the military and merchant fleet of France developed.
England. England entered the manufacturing period of capitalism in the 16th century. Centralized, dispersed and decentralized manufactories grew in villages. Cloth production developed, and woolen fabrics were exported abroad. Metallurgy and metalworking. Development of shipbuilding and fishing, cotton production, glass, soap, gunpowder. The dispossession of peasants is an agrarian revolution, the acceleration of the development of capitalism in the countryside, and the growth of the productive forces of agriculture. Capitalist farming, dispersed manufacturing. A hired labor market emerged.
Netherlands . The first manufactories with hired labor arose in the 16th century. There was a significant increase in trade. In agriculture there was also the use of hired labor. The peasant was legally free and leased land from the feudal lord. After the “price revolution,” part of the lands of the ruined feudal lords passed into the hands of farmers. The first bourgeois revolution was caused by the presence of remnants of feudalism, which hampered the development of the productive forces of the countryside and the pressure of feudal Spain. As a result, the United Provinces of Holland arose.
Views of the classical school
In principle, it is theoretically possible to establish equilibrium in the labor market. The mechanism for its establishment, according to the views of the classical school, is as follows: in the first case, that is, when there is a shortage of workers, entrepreneurs are ready not only to attract new workers with unknown wages, but also to increase them in order to fill empty jobs; in the second - the emergence of unemployed people who are ready to work for lower wages.
Based on this, representatives of the classical movement saw the cause of unemployment in the requirements hired workers high salaries. Accordingly, unemployment, in their opinion, could be eliminated automatically, by the market mechanism itself, due to the “pressure” of labor supply on wages down to equilibrium. In other words, from the perspective of economic theory, unemployment itself can reduce wages and increase employment.
An unambiguous answer about the role of the state in the economy follows from the classical concept. If the market has regulators capable of ensuring automatic use of available resources, then government intervention is unnecessary. Exactly at classical theory the principle of state non-interference in the economy in general and in the labor market in particular was formulated.
CONCLUSION
At the beginning of the 19th century. The bourgeoisie was still a rising class, and Ricardo, as its ideologist, developed political economy in a progressive direction, as far as this was possible within the framework of the bourgeois outlook.
Considering capitalism to be an absolutely progressive form of production, Ricardo denied the possibility of general crises of overproduction. He accepted the dogma of Adam Smith, which blocked his path to a scientific analysis of capitalist reproduction. As an economist of the Industrial Revolution, Ricardo developed political economy in scientific direction and eliminated from it those contradictions in the views of his predecessors that were due to the immaturity of capitalism during the manufacturing period of its development. At the same time, Ricardo came face to face with economic problems that, within the framework of the bourgeois horizon, are insoluble. This primarily relates to the problem of surplus value. Therefore, as K. Marx pointed out, in the person of Ricardo, bourgeois political economy reached its final, insurmountable limit.
The classical school of political economy is one of the mature directions of economic thought. It is called classical, first of all, for the truly scientific nature of many of its theories and methodological provisions. The school originated at the end of the 17th century. and reached its peak in the 18th-19th centuries. In its development, with some convention, four stages can be distinguished.
First stage covers the period from the end of the 17th century. until the beginning of the second half of the 18th century. This period is characterized by an expansion of the sphere of market relations. The economic thought of this time no longer focused on the sphere of circulation, but on the sphere of production. This is the era of the birth of classical political economy. Its leading representatives William Petty(I623-1687) - founder of classical polyeconomy in England and Pierre Boisguilbert(1646-1714) - founder of the school in France.
Unlike the mercantilists, W. Peggy argued that the wealth of a nation is formed not only by precious metals, but also by the country’s lands, houses, ships, and goods. The formation of wealth occurs not in trade, but in the sphere of production through labor. Petty is the first author of the labor theory of value, according to which the value of goods is created by a certain amount of labor expended. The economist opposed the influx of precious metals into the country, as he saw it as a source of rising domestic prices. Petty noted that an excess of money leads to higher prices, and a lack of money leads to a reduction in the volume of work performed. In other words, he was a supporter of the quantity theory of money.
For your information. W. Petty was born into the family of a small artisan. Refusing to engage in the family craft, he hired himself as a cabin boy on a ship. A year later he broke his leg and was landed on the nearest shore with an insignificant amount of money. Petty was able to survive in a foreign country and even went to college. He made his living in a variety of ways: he drew nautical maps and served in the navy. He devoted his further life to the study of medicine. At the age of 27, he received a doctorate in physics and became a professor of anatomy at one of the English colleges. W. Petty studied mathematics, wanted to become an inventor (he invented a copying machine and received a patent for it). Then he suddenly left his position and took a job as a doctor under the commander-in-chief of the English army in Ireland. Petty enriched himself by taking on a government contract to draw up a map of conquered Ireland, and here the knowledge he had acquired in cartography was very useful. Arriving in Ireland as a simple doctor, a few years later he became one of the richest people in the country. At the age of 38 he was knighted and became known as Sir W. Petty.
P. Boisguillebert, like W. Petty, was not a professional economist. He also considered the sphere of production to be a source of wealth, and assigned trade the role of a condition necessary for economic development. Boisguillebert, regardless of his English like-minded person, put forward the labor theory of value. He emphasized the role of agriculture in the country's economic growth and advocated policies aimed at promoting agricultural development. Boisguillebert underestimated the role of money as goods. He was the only representative of the classical school who demanded the abolition of money.
For your information. P. Boisguilbert was born into a noble family. Following his father, he received a legal education. He studied literature for some time, then turned to the traditional family profession of lawyer. As a result of a quarrel with his father, he was deprived of his inheritance. He worked as a judge for a long time, then received the lucrative and influential position of chief general of the judicial district. He held this position for 25 years and shortly before his death he passed it on to his eldest son. His high social position stimulated his interest in the country's economic problems. Boisguillebert's works are one of the most important sources of information about the state of the French economy of that era.
Second phase The development of classical political economy covers the period of the last third of the 18th century. This is the heyday of classical political economy, the formation of its main categories and laws. This stage in the development of science is associated with the name and works of the Scottish economist and philosopher Adam Smith(1723-1790). His undoubted merit is that he was the first to present economic theory as an integral science, in the interrelation of all its elements. According to A. Smith, the main motive for human economic activity is personal interest. He considered man to be an economic being, that is, a person endowed with egoism and striving for greater accumulation of wealth. The desire of people to improve their financial situation contributes to the prosperity of the entire society. In this regard, the economist formulated the principle of the “invisible hand”, which argued that the individual, pursuing his own interests, is guided by the mechanism of free competition in the interests of the whole society. Basis economic doctrine A. Smith had the principle of free competition. He believed that an indispensable condition for the operation of economic laws is free competition. Only with the free movement of goods, money, capital and people, the resources of society are optimally used. Since market laws best regulate the economy, the principle of complete non-intervention by the state in the economy (“laissez faire”) is a condition for its effectiveness. State intervention in the economy should be minimal (ensuring military security, justice, maintaining some public institutions). Smith highly appreciated the importance of division and specialization of labor, which lead to increased productivity.
For your information. A. Smith was born into the family of a customs official who died a few months before his birth. He was the only child of a young widow. The family did not live well, for this reason A. Smith was not able to receive an excellent education. Since childhood, he showed an ability to study; at the age of 14 he entered the University of Glasgow and continued his studies at Oxford University. Smith had an encyclopedic knowledge of the most diverse branches of science. At the age of 29 he was appointed professor of logic, then worked at the department of moral philosophy. Subsequently, he leaves the department, refuses to be a professor, and during his trip abroad becomes the tutor of the son of a prominent English aristocrat. Smith's scientific interest increasingly shifted to economics. At the age of 55 he was appointed commissioner of customs and remained in this position until his death. Smith was one of the most educated people of his time.
Third stage The evolution of the classical school of political economy occurs in the first half of the 19th century. This is the period of completion of the industrial revolution in most industries. developed countries. At this stage, the basic provisions and laws of classical political economy are being revised, and their further development is underway. Leading representatives of this stage - Jean Baptiste Sey (1767-1832), David Ricardo (1772-1823), Thomas Robert Malthus(1766-1834), etc.
D. Riccardo is both a follower and an opponent of certain provisions of the teachings of A. Smith. Ricardo completed the creation of classical political economy. His undoubted merit is that he presented political economy in a strict logical sequence, systematized economic knowledge that time. Like A. Smith, he was against government intervention in the economy. He considered free competition and other principles of the policy of economic liberalism to be a condition for economic development. The scientist formulated the theory of comparative advantage, in which he proved the mutual benefit of international trade. According to Riccardo, if different countries have a comparative advantage in production different goods, then international trade between these countries will be mutually beneficial.
For your information. D. Ricardo was the third of 17 children of a stockbroker. He did not have the opportunity to receive a systematic education, since from an early age he was forced to help his father in business. By the age of 16, he independently copes with many of his business assignments and understands trading and stock exchange matters. Having married at the age of 21 without the blessing of his parents, Ricardo was left without their financial support and was expelled from home. However, after a few years, his natural abilities and previously acquired skills allowed him to achieve sufficient financial well-being. By the age of 38, Ricciardo had become a major financial figure. In the future, he combines doing business and studying economics. 4 years before his death, he left business and switched to public service to put your own economic ideas into practice.
J. B. Sey unconditionally accepted the principle of market freedom and unlimited free competition. Money, in his opinion, is only a tool of exchange, since people need not the money itself, but what is purchased with it. Economic science owes Say two propositions. He formulated the theory of three factors of production and the so-called law of the market, or, as it is also called, “Say’s law.” The law of the market states that the supply of goods creates its own demand, or in other words, the volume of production produced automatically provides an income equal to the value of all goods created, therefore, sufficient for their full sale. The economist also argued that land, labor and capital are equal factors in creating value and each of the factors generates its own income (rent, wage, profit).
For your information. J. B. Sey was born into a merchant family, received an education sufficient to continue family traditions, and subsequently became a major manufacturer. He was actively engaged in self-education and studied political economy in depth. IN last years life headed the department of political economy, becoming the founder of his own school of economic thought.
T. Malthus accepted A. Smith’s principle that the main condition for economic development is free competition. Malthus, like his predecessors, believed that there were no limits to the expansion of production and the growth of wealth could occur without limit. However, the economist notes that not only private, but also general crises of overproduction are possible. Economic science owes T. Malthus the creation of the theory of population. The scientist argued that under favorable conditions, the population increases in geometric progression, and the production of food and other necessary items of subsistence increases only in arithmetic progression. Consequently, poverty can become the lot of all humanity. To solve the problem, he proposed measures to limit population growth.
For your information. T. R. Malthus was born into the family of a landowner. Since Malthus was the second son in the family, he was not entitled to an inheritance. As the youngest son, he was destined for a spiritual career. Malthus received a good education and was awarded a theological degree. Having been ordained, he becomes a village priest. At the same time, Malthus taught at college and studied economic theory in depth. Subsequently, he continued to work as a professor at the department modern history and political economy. At the same time, he will continue to perform the duties of a priest in this college.
Fourth stage the development of classical political economy covers the second period half of the 19th century V. This is the final period of the formation of classical political economy. At this time, a number of provisions of classical political economy were subject to significant adjustments, and new directions of economic thought were being formed. The leading representatives of this period were John Stuart Mill(1806-1873) and Karl Marx(1818-1883), who summarized the best achievements of the school.
J. S. Mill is one of the finalists of classical political economy. The scientist accepted the main provisions of the classical school. Mill supported general principle classical political economy about the freedom of the market, but noted the existence of various spheres of social activity where the market mechanism is unacceptable. In this regard, he put forward the idea of intensifying the participation of the state in the socio-economic development of society. He made the first judgments about socialism and the socialist structure of society. The social reforms he proposed were as follows: limiting inequality in society by limiting the right of Inheritance; socialization of land rent through land tax; introduction of a corporate association eliminating wage labor.
For your information. J. S. Mill was born into the family of the famous economist James Mill and received an excellent education. The child grew up as a child prodigy, and from childhood showed aptitude for learning, which was very versatile (world history, Greek and Latin literature, philosophy, political economy). At age 10, he reviewed world history and Greek and Latin literature; he took a course in political economy with his father at the age of 13. Mill published his first scientific work in the field of political economy at the age of 23. Mill dreamed of a political career, but his father decided otherwise, and the young man began to learn the basics of business as a junior clerk. All his life he combined business with scientific work, was a member of parliament for several years.
K. Marx - thinker and public figure. In his worldview he relied on the ideas of the classical school, albeit significantly modified. He was the founder of a theoretical concept called “Marxism”. Marxism is a unique variant of the development of the classical economic school, defending and defending the interests of the working class. The cornerstone of Marxism is the theory of surplus value, according to which labor is the only source of wealth, while the profit of capitalists and the rent of landowners is only part of the value created by the labor of workers and appropriated free of charge by the owners of capital and land. Marxism comprehensively examined the capitalist economic system, proved the inevitability of its death and the formation of a new one. economic system- socialism. K. Marx's idea about the increasing impoverishment of the working class and the death of capitalism turned out to be erroneous and was not confirmed historically. His name is associated with the largest attempt of people to build a society without private property and exploitation. K. Marx developed the concept of base and superstructure: the totality of production relations constitutes the economic structure of society - the basis on which the superstructure rises. According to the scientist, money is a commodity that spontaneously stands out among other goods and plays the role of a universal equivalent, that is, an expression of the value of all goods. Marx's ideas had a significant influence on social thought and political practice late XIX-XX centuries
For your information. K. Marx was the second of nine children of a lawyer. Om studied law, philosophy, history and art history. Upon completion of his studies, he received a doctorate from the Faculty of Philosophy. He worked as an employee and then as a newspaper editor. Marx was a theoretical scientist until the end of his life. Distinguished by his great efficiency, passion, and deep knowledge, he nevertheless almost never had a permanent paid job. Marx lived a great and dramatic life: it included great love for his wife, a wonderful friendship with F. Engels, fierce ideological battles, and poverty.
The classics of political economy were William Petty, Adam Smith, David Ricardo, who substantiated that the source of social wealth is all social production, laid the foundations of the labor theory of value, explored the mechanism of reproduction of social capital, attempted to explain the laws governing economic phenomena, and advocated limiting government intervention in the economy, for free trade. Klassky condemned the mercantilists and believed that wealth should be created through material production, and not through industry.
The teachings of the classical school are based on the labor theory of value. Basic premises of classical political economy:
- 1. research not into the circulation process, but directly into the production process;
- 2. a critical attitude towards the unproductive classes that do not deliver any product (merchants);
- 3. classifying labor involved in material production as productive labor.
Classic model. This direction of economic theory recognized the production of material goods as the real source of wealth. It began to consider economic activity in the form of production, distribution, exchange and consumption of useful things. Classical political economy moved on to the study of the essence economic phenomena(e.g. exchange of goods for money) and laws economic development. Classical political economy created its own doctrine of the wealth of society. She established that nature, figuratively speaking, is the “mother” of wealth. It supplies people with the means of life (fish, fruits, ores, etc.) Labor was proclaimed the “father” of wealth (English economist Petty). He was the founder of the labor theory of value.
According to this model, the system functions in accordance with the rules dictated by the market, and, consequently, the consumer. In cases where, for one reason or another, the response to this impact is insufficient or imperfect, it may be necessary for the state to adjust the impact or supplement the response so that it is better consistent with the general interests.
Economists of the classical school have an extremely negative attitude towards maintaining price levels, creating obstacles to the use of technical inventions, and anything that resembles government support or tacit consent to the activities of a monopoly.
English political economy created the labor theory of value. It argued that the labor of workers producing goods creates their value. The latter compares goods and money with each other.
Smith writes the book “The Wealth of the People”, in which he divides labor into productive and unproductive, talks about 1 the division of labor, 2 the accumulation of capital, 3 the role of taxes, he also touches on the role of the state - the “principle of the invisible hand”, he considers the main task of the economy to be the satisfaction of human needs, and the task of the state is to provide the conditions for the existence of the natural order. Applying the labor concept of value to the study of the capitalist economy, A. Smith founded the theory of surplus value. He believed that factory workers created new value through their labor. The latter only partially goes to them - (ZP), the rest - the surplus value - is appropriated by the capitalists. A. Smith also advocated the triumph of a new social order, in which economic development proceeds in accordance with the objective laws of economics. "Natural order" in the area economic life he believed in the dominance of private property, free competition and free trade, and non-interference of the state in economic activities.
A. Smith's ideas were subsequently developed by another English economist D. Ricardo. In his work “The Price of Gold” he laid the foundations of the quantitative theory of money, where he presented his judgments on the theory of value, salary, capital, ground rent, etc. from a critical position.
In classical political economy, a commodity is a product of labor that can satisfy any human need and is produced for sale. The product was also considered as a certain material object, since at the heart of everything economic activity human society Until recently, there was only material production.
In classical political economy, any objects of labor are of a purely material nature, hence human labor, until recently, was mostly physical, and the means of labor also turned out to be purely material. That is, it turns out that man, as a being living in the material physical world, carries out his technological activities precisely within the framework of this world. Moreover, all objects of labor turn out to be components of the material technological environment.
The nation's wealth is created in all spheres of material production. Riccardo spoke about the problems of distribution of wealth between owners (entrepreneurs), landowners and employees. Labor is the basis of wealth. Wealth criterion: the richest period will be the period in which each participant in the division (provided that the money is divided equally) will be able to hire more workers.
Classical political economy knows three sources of GDP - labor, capital and land (land rent),
In classical political economy, value is determined by the cost of producing a good.
Countries with the classic model of initial capital accumulation include Holland and England.
Within the framework of classical political economy, a number of new directions appeared, which was associated with the industrial revolution carried out in England. This changed the social structure of society: on the one hand, the role of the industrial bourgeoisie increased. On the other hand, this caused the impoverishment of small producers and a significant increase in hired workers.
The classics founded the labor theory of value: 1 heterogeneous products of market exchange have the same internal content - value, therefore in the market they are equated to each other in a certain exchange proportion, 2 Value - labor embodied in a product, therefore the equality of goods in value means that they contain the same amount of labor.
The value of a product is determined by the production costs spent on its production. Man is considered only as an “economic man”, cat. Strives for his own material benefit. The main factor in increasing wealth is capital accumulation. Money is just a medium of circulation. Econ. Growth is achieved by increasing the share of the population, cat. Engaged in productive work and labor productivity. The main factor was gone. labor productivity – specialization (saving work time, improving work skills, new technologies).
Salary is a “product of labor”, remuneration for labor
Profit is a “deduction from the product of labor”, the difference between the cost of the product produced and the wages of workers
Land rent is a payment for the use of land of a given quality, paid by the tenant to the owner.
Capital is part of the reserves per cat. The capitalist expects to receive income.
Smith divided capital into fixed and circulating capital (enters into the circulation process and changes form during the production process).
Petits will determine the cost of goods in money, i.e. exchange value. Believed that salary should be regulated by the state (required subsistence level)
Smith distinguished between the natural price of a product (= production costs) and the market price (formed in the market under the influence of supply and demand)
Ricardo includes in the value of goods not only the value created directly by the labor expended on them, but also the value of capital, cat. took part in the production.
![Bookmark and Share](http://s7.addthis.com/static/btn/v2/lg-share-en.gif)