Our first lecture was about classical economics and Keynesian theory. Need I say more?!
I'm going to be very honest and say that I was and still am completely baffled by the lecture...but here are the notes that I made along with some notes that I made after reading Bry's blog (it's very helpful!)
One thing (I'm not too sure what it directly relates to) which stood out from what Chris said was that "there is one thing money cannot buy; poverty".
Classical economics is closely linked with Utilitarian ideas. To illustrate these Chris used two examples. The first was that a train carrying hundreds of people was doomed to crash unless a lever was pulled. But if this was pulled a blind and deaf man in front of the train would surely be killed. Who do you choose to save?
The second was about the NHS choosing who to give treatment to, a tiny baby or an elderly person - who would gain the most from being saved. His exact words were in fact 'you're in the hospital, a baby is going to die. SHIT! give in an injection. (He does give the lecture a bit of pazaz and humour!)
Adam Smith was a mechanistic economist and believed that people respond to stimuli - pleasure and displeasure. He said that people were easy to read from their utility (their amount of pain and pleasure) and that people were of course more likely to seek out pleasure and not pain. Seeking out pleasure maximises our utility.
Smith believed in Free Trade as it stimulated economic growth and prosperity.
Jeremy Bentham's Hedonism theory also says that human beings seek out pleasure rather than pain, so to maximise their utility.
J.S.Mill saw utility as an actual thing that could be measured by price.
Malthus "iron law on population." He argued that population was the main cause of change.
Marx argues that the free market constantly impoverished people that work for wages because the Iron Law on wages mean that the working class will never get out of poverty.
Marshal spoke about 'loose money'. This was were more money would be printed and circulated, creating more liquidity. He did not understand that money had an actual effect on people.
The History of Money
- Money is a way of exchange
- It allows trade to occur
- Before 1844 there were no money notes, only gold sovereigns
- Later on bank notes were issued by English banks - they realised that they could issue more notes than they had in gold sovereign because *hopefully* no-one would cash in their notes at the same time!
It is set by the Government issuing bonds, the more bonds the higher the interest rates!
I'm still unsure about what the Keynesian Theory is...so I'll have to do some more research and come back to this but Bryony does make some good points about the problems with the theory so check those out!
For now ta ta.
[Image from Google Images]
No comments:
Post a Comment