Chapter 28: Economic Ideas (Part 3: The Classics)

Jean-Baptiste Say's 'Treatise on Political Economy' is a significant work in classical economics, published in 1803. It presents Say's Law, which posits that supply creates its own demand. The treatise also explores the role of entrepreneurship, the importance of production, and the dynamics of markets. Say's work emphasized the interconnectedness of economic activities and the self-regulating nature of markets. His ideas influenced subsequent economic thought and continue to be debated today.

Carl Mengers "Grundsätze der Volkswirtschaftslehre" markieren den Beginn der Österreichischen Schule der Nationalökonomie. Menger entwickelte eine subjektive Wertlehre, die den Wert von Gütern von der individuellen Nachfrage ableitet, im Gegensatz zu den klassischen Theorien, die den Wert auf die Produktionskosten stützten. Das Buch legte die Grundlage für die Weiterentwicklung der Österreichischen Schule durch Ökonomen wie Böhm-Bawerk und Mises. Mengers Werk ist ein Meilenstein in der Geschichte der Wirtschaftswissenschaften und beeinflusst bis heute die wirtschaftspolitische Debatte. Seine Analyse der Entstehung von Märkten und Preisen ist von bleibender Bedeutung.

Published in 1817, 'On the Principles of Political Economy and Taxation' is David Ricardo's most well-known work. It outlines his labor theory of value, which posits that the value of a good is determined by the labor required to produce it. The book also introduces the concept of comparative advantage, arguing that countries benefit from international trade by focusing on goods that require fewer resources to produce. Ricardo critiques earlier economists like Adam Smith and discusses the impact of taxation, machinery, and other economic factors on different classes of society. His work has had a lasting influence on economic theory and policy, particularly in the areas of free trade and the distribution of wealth among landlords, capitalists, and workers.

In this book, Bentham lays out his theory of utilitarianism, arguing that actions are right insofar as they promote the greatest happiness for the greatest number. He introduces the concept of the 'hedonistic calculus,' which involves measuring the units of pleasure and pain resulting from actions to determine their moral value. The book is a comprehensive analysis of the principles of morals and legislation, including the sources of pleasures and pains, the measurement of these, and the morally and legally relevant components of human actions.

Published in 1776, 'The Wealth of Nations' is Adam Smith's magnum opus that laid the groundwork for modern economics. The book critiques mercantilist economic theories and introduces the concept of the 'invisible hand,' which describes how individual self-interest leads to societal benefit. It emphasizes the division of labor, the accumulation of capital, and the importance of free markets. Smith argues that a nation's wealth is not measured by its gold and silver reserves but by the stream of goods and services it produces. The book also outlines the core functions of government, such as maintaining defense, enforcing civil law, and promoting education, while advocating for limited government intervention in market activities.