Economics is a social science which studies interaction of people in markets. It is concerned with production, consumption, distribution and transfer of wealth from one individual or organization to another. It is a dynamic subject based on postulations and hypothesis. We have to modify its very aspects according to the situation in which it is applied. Classical, Keynesian and Neo-classical are regarded as the three major theories of economics. There were some notable pre-classical economists.
He is remembered for his contribution in the field of economic theory and is regarded as the founder of political economy and statistical method. His contribution to economics was his three most important theories namely- “The Treaties of taxes and contributions” -1662. “A track concerning money”- 1682 and “Discourses on political arithmetic”- 1660.
John Law: (1671-1729)
He is regarded as the man of practical affairs. He made important contribution to the theory of money. He made distinction between use value and market value of a commodity. He is regarded as the founder of subjected theory of value. Richard Cantillon: He was an economic thinker who wrote essay on “nature of commerce in general” which is regarded as the most systematic statement before Adam Smith’s Wealth of Nations.
Sir David Hume: (1711-1776)
He was Philosopher, economist and was regarded as liberal mercantilist because of his advance economic theories. His work “Political discourses” collection of economic essays is regarded as most important.
James Stuart: (1712-1780)
He was Chief English Mercantilist writer of 18th century. He wrote a book names “An enquiry into principles of political economy” – essay on science of domestic policy in free nations which focused mainly on aspects like population, agriculture, trade, industry, money, coin, interest, circulation, banks, exchange, public credit and taxes
These were some important pre-classical economists who helped shape the foundation of other important economic theories.
Adam Smith is regarded as the father of economics. His book “An enquiry into nature and causes of the wealth of nations (1776) is regarded as the very first book on classical economics. His concepts of supply side economics and supply side policies majorly focuses on the presence of invisible hand in markets. According to his theories markets can flourish without intervention from external authority which is government here. Invisible hand draws market forces into equilibrium. His theories very widely used before 1930s ‘The great economic’ depression.
Other notable classical thinkers include – Jean Baptiste who propounded say’s law which states that supply creates its own demand (1803). David Ricardo who developed classical theory of comparative advantage in 1817, Labor theory of value and law of diminishing returns. Thomas Robert Malthus in 1798 wrote a book on “An essay on the principle of population”. John Stuart Mill propounded Utilitarianism in 1881.
After 1930 John Maynard Keynes developed his economic theories which is regarded as Keynesian economics. His book on ‘The theory of employment, interest and money’ publish in 1936 was revolutionary. His theories mainly focuses on demand side economics. Government spending is critical factor to drive economy’s demand. Expansionary fiscal policy is regarded as main tool and was widely used after the great depression. Other Keynesian economists include: Dean Baker, Evsay domar, Wynne Godley and several other who found several new theories which gets its foundation from Keynesian economics.
Neo- Classical economists:
This theory focuses on supply and demand as driving forces behind production, pricing and consumption of goods and services. It emerged in 1900 to compete with other theories of classical economics.