Ricardo, MARX, MILL - Studies on Classical Economists PDF

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Studies on Classical Economists...

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Running Head: DESCRIBE THE MACROECONOMIC WORLDVIEW OF DAVID…. MILL

How would you describe the Macroeconomic Worldview of David Ricardo, Karl Marx, and John Stuart Mill? Irene Foster ECON 350-D01 Liberty University

Many theories and methodologies associated with the use of macroeconomics are being used by economists today. This is because of many worldviews and theories that have been contributed to the world of economics. There are several economists that have created many of these theories and methodologies. Three of these classical economists that I will discuss worldview of are, David Ricardo, Karl Marx, and John Stuart Mill. I will also discuss some of their accomplishments that are identified with the pertinent macroeconomic theories, hypotheses, and methodologies. David Ricardo “David Ricardo was one of those people who achieved both tremendous success and lasting fame. Ricardo is a notable economist and is known for his political and classical economics contributions, including several writings, “The High Price of Bullion,” Ricardo got

Running Head: DESCRIBE THE MACROECONOMIC WORLDVIEW OF DAVID…. MILL his first recognition among economists after this writing. He wrote that “England’s inflation was the result of the Bank of England propensity to issue excess banknotes.” “Principles of Political Economy and Taxation,” “Essay on the Influence of a Low Price of Corn on the Profits of Stock.” After his family disinherited him for marrying outside his Jewish faith, Ricardo made a fortune as a stockbroker and loan broker (Econlib.org, 1999).” “Ricardo is best known for his theory of value, theory of comparative advantage, and theory of rents. He also along with other economists discovered the law of diminishing marginal returns. His most well-known work is the “Principles of Political Economy and Taxation (1817)”” (David Ricardo, who was David). Ricardo’s formulated idea of comparative costs, today called comparative advantage, is a very subtle idea that is the main basis for most economists’ belief in free trade today. The idea is this, “a country that trades for products it can get at lower cost from another country is better off than if it had made the products at home.” If Poorland “can produce one bottle of wine with five hours of labor and one loaf of bread with ten hours, and Richland’s workers are more productive by producing a bottle of wine with three hours of labor and a loaf of bread with hour you might think that’s because Richland requires fewer labor hours to produce either good, it has nothing to gain from trade.” Karl Marx Classical economist Karl Marx is recognized for his theory of Marxism. The Marxist worldview is grounded in Karl Marx and the publication of two of his books, “The Communist Manifesto and Das Kapital” (All about Worldview, 2002). Marx was best known not as a philosopher but as a revolutionary, whose works inspired the foundation of many communist regimes in the twentieth century. “Marx’s theory of history is centered around the idea that forms of society rise and fall as they further and then impede the development of human power.” In this

Running Head: DESCRIBE THE MACROECONOMIC WORLDVIEW OF DAVID…. MILL study of Marx’s, he sees the historical process as proceeding through the necessary series of modes of production, characterized by class struggle, culminating in communism” (Wolff, 2017). In Marx’s 1840 pamphlet “Wage Labour and Capital” he states: “If the price of a commodity rises considerably because of inadequate supply o disproportionate increase of the demand, the price of some other commodity must necessarily have fallen proportionately,” leading to capital migrations toward the more profitable sectors of the economy. The theory of Capitalism is based on his version of the “labour theory of value and includes the analysis of capitalist profit as the extraction of surplus value from the exploited proletariat” (Wolff, 2017). Marx’s explanation to a question of “why does a quantity of one commodity exchange for a given quantity of another commodity?” “The labour input required to produce the commodity, or the socially necessary labour, which is labour exerted at the average level of intensity and productivity for that branch of activity within the economy. Thus, being the labour theory of value asserts that the value of a commodity is determined by the quantity of socially necessary labour time required to produce it” (Wolff, 2017). One of the great problems of understanding Marxian value is that it is entirely a measure of value rather than a theory of value. John Stuart Mill Economist John Stuart Mill believed strongly in freedom. Mill defended freedom on two grounds. First, he argued that society’s utility would be maximized if each person was free to make his or her own choices. Second, he believed that freedom was required for each person’s development as a whole person” (econlib.org, n.d.). Mill wrote the leading economic treatise of the mid-nineteenth century, he also wrote the leading treatise of his day on logic, as well as other writings in philosophy. John Stuart Mill gave his views of the role of theory as, “not accepting theoretical outcomes uncritically because in practice, in the context of a given society, other

Running Head: DESCRIBE THE MACROECONOMIC WORLDVIEW OF DAVID…. MILL factors such as custom may modify theoretical predictions that distinguish him from Ricardo and are closer to Smithian view” (Economic Theories, 2008). John Stuart Mill exemplified and elaborated classical methodology more explicitly and thoroughly than anyone else. He was the first economist to systematically analyze the application of statistical theory. “Mill’s views on monetary theory were developed in the context of the times and reflected his methodological approach, in which reactions to practical problems directed theoretical inquiry, instead of theory developing separately from policy questions. The context of the times was an extension of the Bullion Debate and how to deal with the periodic recessions and financial disruptions that were occurring” (Economic Theories, 2008). By introducing credit into the monetary analysis “the possibility of general oversupply of commodities may exist.” “On Liberty” was considered to be Mill’s work with ugly implications, that is revered in proportion to its being misunderstood. Even his distortions of others’ in the development of a utility theory of value, a schedule concept of demand and aggregate income theory were honest misunderstandings. Conclusion Today we see a lot of the theories at work in our own time. The Classical Economists of the 1700’s to 1800’s has established their works, Ricardo, Marx, and Mill have created theories that are still being implemented in the world today. We are a very materialistic society of have and have not. With theories like the Comparative Advantage, Principles of Political Economy, and the Analysis of Capitalism they cannot be overlooked, they are an embedded tool for this generation and the generation to come.

Running Head: DESCRIBE THE MACROECONOMIC WORLDVIEW OF DAVID…. MILL

References: All About Worldview. (2002). Marxist Theology. https://www.allaboutworldview.org/marxist-theology.htm Econlib.org. (1999). The Library of Economics and Liberty. David Ricardo. https://www.econlib.org/library/Enc/bios/Ricardo.html Econlib.org. (n.d.). The Library of Economics and Liberty. John Stuart Mill. www.econlib.org/library/Enc/bios/Mill.html Economic Theories. (2008). History of Economic Theory and Thought. John Stuart Mill Economics Mill Economic. www.economictheories.org/2008/7/john-stuart-milleconomics-mill.html Investopedia. (2018). David Ricardo: Who was David Ricardo. https://www.investopedia.com/terms/d/david-ricardo.asp

Running Head: DESCRIBE THE MACROECONOMIC WORLDVIEW OF DAVID…. MILL Wolff, J. (2017). Stanford Encyclopedia of Philosophy. Karl Marx. https://plato.stanford.edu/entries/marx...