Institutionalism (19-20 centuries) (T.Veblen, V. Mitchell)

Date: 2015-10-07; view: 531.

Institutionalists criticize neoclassicism for the apologetics of the capitalist market economy.

Economic theory should take into consideration other social sciences, such as sociology, politilogy, law.

Neoconservative counter-revolution stated that the former destroyed the motivation to invest

while the latter destroyed the motivation to work. Monetarism pays major attention to money. (Milton Friedman)

Neoliberalism. (Friedrich von Hayek and Ludwig von mises) – a planned socialist economy would lack incentives for people to take risks. They blamed the government interference for all the economic disturbances and for people's liberties.

Neoclassical synthesis: Keynesian concepts did not prove to be a panacea. The neoconservative ideas are very

disputable, and the success of their implementation in practice is doubtful. That is why there appeared

the intention to find a compromise between the Keynesian and the neoclassical approaches. The basic principle is that of mixed economy. That demands both market self-regulation and government interference. (Paul Samuelson)

Economics is the social science that analyzes the production, distribution, and consumption of goods and services. (Subject of economics - the social science that studies the production, distribution, and consumption of goods and services.)

The three basic economic questions – what to produce, how to produce, who will get what is produced. ( who'll produce) Instinct, Command, Customs, Market.

Microeconomics – the branch of economics that studies individual units: households, firms and industries. It studies the interrelationships between these units in determining the pattern of production and distribution of goods and services. (компании; trees)

Macroeconomics - the branch of economics that studies economic aggregates (grand totals): the overall level of prices, output and unemployment in the company. (общий уровень цен; forest)

Two key words in economics –scarcity (дефицит) and choice.

Positive economics - the branch of economics that concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect relationships and includes the development and testing of economics theories. (каков фактический уровень инфляции и как он влияет на урвоень занятости)

1) Descriptive economics - the complilation of data that describe phenomena and facts. Such data appear in the Statistical Abstract (or Statistical Yearbook) of a nation. (собрание данных описывающих явления и факты)

2) Economic theory attempts to generalize about data and interpret them. ( попытки обобщения о данных и их интерпретации.)

Normative economics – the branch of economics that incorporates value judgments (that is, normative judgements) about what the economy ought to be like or what particular policy actions ought to be recommended to achieve a desirable goal. Normative economics looks at the desirability of certain aspects of the economy. It underlies expressions of support for particular economic policies. (насколько плох или хорош ежегодный объем затрат на вообружение)

Analysis – the process of breaking a complex topic or substance into smaller parts to gain a better understanding of it. (процесс разбиения сложной теме или вещества на более мелкие части, чтобы получить более глубокое ее понимание)

Synthesis– is used in many fields, usually to mean a process which combines together two or more pre-existing elements resulting in the formation of something new. (используется во многих областях, как правило, для обозначения процесса, который объединяет вместе две)

Induction (введение) – constructing general theories on the basis of specific observations.

Deduction (логический вывод)– using a theory to draw conclusions about specific circumstances.

The major assumption in economics – is a proposition that is taken for granted, that is, as if it were known to be true. (это положение, что считается само собой разумеющимся, то есть, как если бы было известно, чтобы быть правдой.)

Dialectical logic uses a system approach and considers all the phenomena in their inter-relationship and in development.

Fallacy of composition – what applies to the individual does not necessarily apply to the whole. ( что хорошо для 1, не значит, что для всех)

“After this, because of this” fallacy = Post hoc ergo propter hoc - is a logical fallacy which states, "Since that event "followed" this one, that event must have been "caused" by this one." It is a particularly tempting error because temporal sequence appears to be integral to causality. ( The rain isn't a result of forgetting an umbrella)

Correlation and causation – fallacy, when two variables are said to be correlated if one of them changes when the other one changes. (соотношение и причины)

Bias, or preconception – fallacy, when an economic hypothesis is to be tested against real facts. (заблуждение, когда экономическая гипотеза должна проходить проверку на реальных фактах.)

Loaded terminology- when speech is overloaded with terminology and not clear to the public. (когда речь перегружен терминологией и не понятно для общественности.)

Economic resources =factors of production – anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants.

Natural resourcesoccur naturally within environments that exist relatively undisturbed by mankind, in a natural form.

Capitalism is an economic system in which the means of production are privately owned and operated for profit, usually in competitive markets.

Three majors types of resources:

Capital– all inputs into production that have themselves been produced: factors of production, labor, land, Natural resources.

Land – inputs into production that are provided by nature: unimproved land

and mineral deposits in the ground. (земля)

Labor– all forms of human input, both physical and mental, into current production. (труд) Labor force-рабочая сила.

Factors of production – the inputs into the production of goods and services: labor, land and raw materials, and capital

Natural economy – when households produce practically everything they want to consume, they produce to satisfy their own wants.

Entrepreneurial ability – specific set of human talents, is the skill to combine resources and use them efficiently in production at one's own risk.

Scarcity =дефицит – the excess of human wants over what can actually be produced to fulfil these wants. (превышение человеческих потребностей над тем, что действительно может быть произведен для выполнения этих желаний.)

Marginal cost- the cost of producing or consuming one more unit of output, or that is the additional cost of doing a little bit more. (затраты на производство или потребление на одну единицу продукции).

Marginal benefit of producing or consuming one more unit, or that is additional benefit of doing a little bit more (Предельная выгода от производства или потребления на одну единицу)

PPC (production possibility curve) shows all the combinations of goods and services that can be produced at a given time moment and at a given technology if all of society's resources are used completely and efficiently. (спрос взаимодействует с предложением)

MRT (margenal rate of transformation) – is the number of units of good Y (capital goods) one should sacrifice to produce one more unit of good X (consumptions good). MRT=slope of PPC=-9change in Y)/(change in X) (сколько нужно затратить, чтобы получить такой же продукт)

Means of production – include objects of labour and means of labour.

Object of labour – are used as material in production, they are transformed into final goods and services. Include natural raw materials (and land in general) and manufactured materials.

Means of labour – are used as devices to transform objects of labour into final goods and services. Means of labour include land, instruments, equipment, highways, buildings, communications, bridges, etc.

Labour force – labour skills and knowledge, physiological and mental talents that make people able to work.

Economic system – a system of links between producers and consumers, a system of economic relations, a system of institutions and mechanisms that regulate or affect human decisions on production, distribution, change and consumption.

Market economy – when production is held to satisfy other people's wants, while individuals pursue their own self-interests. (advantages: economic flexibility, adaptability, consumer sovereignty, freedom of choice and private initiative, market competition as the factor of technical progress, high labour motivation; disadvantages: economic instability, high risks, bankruptcy, economic crises, unemployment, no satisfaction of society interests if there is no pay, inequality, inflation)

Consumer sovereignty – the determination by consumers of the types and quantities of goods and services that are produced from the scarce resources of the economy. Income – the amount that a household earns each year. It comes in a number of forms: wages, salaries, interest, dividends, profit, rent. Is received regularly and refers to a certain time period. This is a flow concept.

Wealth- the amount that households have accumulated out of past income through saving or inheritance. Wealth always refers to a certain time moment (certain date). It's a stock concept.

Centrally planned economy – an economy in which a central authority or agency draws up a plan that establishes what will be produced and when and where. The plan sets production goals, and makes rules for distribution. (advantages: stability, no overproduction and crises, resources can be concentrated on the prior directions and used to satisfy social interests, no unemployment, no inequality, stable prices, confidence in tomorrow; disadvantages: low flexibility and adaptability of economic system, heavy and costly decision making process, bureaucracy, lack of private initiative, no market competition, no feedback between production and consumption, deficit of goods.