Impact Of Influential Economic Ideas
Throughout the history of nations, economic ideas, notably those of Adam Smith, Karl Marx, and John Maynard Keynes, have had a profound influence on politics and society. Economics has influenced the emergence of political systems, political ideology, and the societal organization of production and distribution. The political and economic systems of democratic capitalism and socialism owe their existence to the ideas of Adam Smith and his followers and Karl Marx, respectively. Recognizing this fact, Keynes, in a famous passage from chapter 24 of General Theory of Employment, Interest, and Money, states: "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."
Adam Smith's invisible hand of competitive markets, self-interest, and division of labor gave rise to the American style of individualistic market capitalism. Smith's notion of the natural tendency of an economic system to establish equilibrium through the pursuit of self-interest and competitive markets became the foundation of liberal economics in the nineteenth century. Likewise, Marx's analysis of capitalism, his prediction of its ultimate demise, and the triumph of socialism and communism became the foundation for the socialist economic systems of the former Soviet Union and other Eastern European, African, and Asian countries. His idea of the inevitability of the historical evolution of societies from primitive society to feudalism to capitalism to socialism, and ultimately to communism due to the internal conflicts resulting from the exploitation of workers, led to socialist ideas of centralization, planning, and public ownership of resources.
The commitment by governments to macroeconomic policies that ensure full employment and economic growth; the establishment of social security systems; and even deposit insurance guarantees in the banking system are all by-products of influential economic ideas of Keynes. Keynes argued that the answer to the existence of the Great Depression was insufficient aggregate demand and recommended increase in public demand by the government as a means of increasing total demand and output. Since then, discretionary macroeconomic stabilization has become a policy goal of many countries.
Much of the distinction between political conservatism and liberalism is based on economics and in this regard, the differentiation lies on the belief of the role of government versus the market and what type of government intervention, if any, will bring about the most optimum outcomes. In the United States, for instance, liberal politicians tend to favor government spending over lower taxes, while conservative politicians tend to favor tax reductions over government spending as fiscal policy measures against economic recessions.
Aghion, Philippe, and Peter Howitt. Endogenous Growth Theory. Cambridge Mass.: MIT Press, 1998.
Baran, Paul A. The Political Economy of Growth. New York: Modern Reader Paperbacks, 1975.
Basu, Kaushik. Analytical Development Economics: The Less Developed Economy Revisited, Cambridge, Mass.: MIT Press, 1997.
Benería, Lourdes. Gender, Development, and Globalization: Economics as if All People Mattered. New York and London: Routledge, 2003.
Blaug, Mark. Economic Theory in Retrospect. 5th ed. Cambridge, U.K., and New York: Cambridge University Press, 1997.
——. The Methodology of Economics, or, How Economists Explain. 2nd ed. Cambridge, U.K., and New York: Cambridge University Press, 1992.
Brewers. Anthony. Marxist Theories of Imperialism: A Critical Survey. London and Boston: Routledge and Kegan Paul, 1980
Frank, Andre Gunder. Latin America: Underdevelopment or Revolution. New York: Monthly Review Press, 1969.
Frankel, M. "The Production Function in Allocation and Growth: A Synthesis." American Economic Review 52 (1962): 995–1022.
Hunt, E. K. History of Economic Thought: A Critical Perspective. 2nd ed. New York: HarperCollins, 1992.
Hunt, E. K., and Howard J. Sherman. Economics: An Introduction to Traditional and Radical Views. 6th ed. New York: Harper and Row, 1990.
Lucas, Robert E. "On the Mechanics of Economic Development." Journal of Monetary Economics 22, no. 1 (January 1988): 3–42.
McGrew, Anthony G., and Paul G Lewis. Global Politics: Globalization and the Nation-State. Cambridge, Mass.: Blackwell, 1992.
Milgate, Murray, John Eatwell, and Peter Newman, eds. The New Palgrave: A Dictionary of Economics. 4 vols. New York: Palgrave 1998. Reprint, 2002.
Nelson, Judy A. Feminism, Objectivity and Economics. London and New York: Routledge, 1996.
Nnadozie, Emmanuel, ed. African Economic Development. San Diego, Calif.: Academic Press, 2003.
Romer, Paul M. "Endogenous Technological Change." Journal of Political Economy 98, no. 5 (1990): 71–102.
Schumpeter, Joseph A. History of Economic Analysis. Edited by Elizabeth Boody Schumpeter. New York: Oxford University Press, 1954.
Sen, Amartya. "The Concept of Development." In Handbook of Development Economics, edited by Hollis Chenery and T. N. Srinivasan. 3 vols. Amsterdam: Elsevier Science, 1988–1995.
Solow, Robert. M. "A Contribution to the Theory of Economic Growth." Quarterly Journal of Economics 70 (February 1956): 65–94.
Stern, Nicholas. "The Economics of Development: A Survey." The Economic Journal 99 (1989): 597–685.
Swan, T. W. "Economic Growth and Capital Accumulation." Economic Record 32 (1956): 334–361.
Tietenberg, Tom. Environmental Economics and Policy. New York: HarperCollins, 1994.
Science EncyclopediaScience & Philosophy: Dysprosium to Electrophoresis - Electrophoretic TheoryEconomics - Historical Development, Major Theories, Themes, Global Organization And Orientation, Impact Of Influential Economic Ideas