Ecm engineering
Decades of controversy about the nature and appropriate boundaries of his discipline led the economist Jacob Viner to observe that "economics is what economists do." Somewhat more precisely, economists engage in systematic inquiry into the effects of those human activities which are grouped under three broad headings: production, exchange, and consumption. The nature and magnitude of these activities and their implications for individual and social welfare constitute the focus of economics and the policy prescriptions that economists make.The basic objective of all economic activity is to achieve the highest possible level of present consumption of goods and services that is compatible with the supply of human and material resources (or factors) available to produce them. The scarcity of human and material resources, as evidenced by the existence of prices, imposes the necessity of allocating resources among alternative present and future uses (see PRICE SYSTEM). Choice, therefore, is the essence of economic decision making. It is necessary to evaluate the relative worth of different kinds and quantities of consumer goods and services (bread, automobiles, houses, schools, and health care, for example) against on
This, in Marx's view, cannot come about without revolution (see MARXISM). Inquiry into the nature and results of the choices that households and business firms make is the concern of microeconomic analysis, the focus of which is the behavior of the individuals, organizations, and institutions in the economy. The physiocrats maintained that tax abuses, large public debts, foreign wars, court extravagances, and special stimuli for the production of luxury goods (tapestries, silks, velvets, porcelain) that were exported--in accordance with the principles of MERCANTILISM--to obtain gold progressively diminished the economy's well-being. Say's method, and his arrangement of the subject matter of economics, has become classical. Households that are free to exercise their choices in the marketplace are assumed to behave in a manner that will yield maximum satisfaction, or utility. These actions accentuate the contradictions and conflicts that characterize the capitalistic system. His principal concern was to maintain the system of natural liberty that would facilitate the accumulation and direction of capital into employments that are most desirable from the standpoint of maximizing g!eneral welfare. The high interest rates recommended by the monetarists did not combat inflation, and the employment and related antipoverty programs recommended by latter-day Keynesians did not significantly reduce unemployment. Rational behavior in the business sector implies that firms direct their efforts toward maximizing profits. The central theme of the WEALTH OF NATIONS is the growth of national wealth. In their view, the goods derived from land (and therefore "natural"), not gold, constitute wealth. Smith believed that the natural trend of economic development is upward and that this trend is most likely to manifest itself within the framework of an "obvious and simple system of liberty," or perfect competition. Production costs, on the other hand (wages, rent, interest, depreciation, managerial profits, and taxes), that are incorporated into consumer prices constitute an income stream that corresponds to GNP--gross national income, which aggregates the income earn!ed by the owners of the productive factors (labor, capital, and natural resources) used by business firms (see INCOME, NATIONAL). , Ten Great Economists (1965); Silk, Leonard, The Economists (1976). , Development of Economic Analysis, 3d ed.
Common topics in this essay:
According Marx,
WEALTH NATIONS,
FRIEDMAN Espousing,
MARSHALL Whereas,
SYSTEM Choice,
DEMAND Rational,
Revolution PHYSIOCRATS,
Ronald Reagan,
David RICARDO,
SAVINGS INVESTMENT,
mode production,
means production,
labor capital,
business firms,
aggregate demand,
level employment,
monetary policy,
3d ed,
material resources,
savings investment,
human material resources,
level aggregate demand,
economics 3d ed,
households business firms,
3d ed 1987,
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Acceptance Essays
