Continuing general characteristics almost two hundred years of history of classical political economy, it is necessary to highlight its common features, approaches and trends in terms of the subject and method of study and give them an appropriate assessment. They can be reduced to the following generalization.
Firstly, the rejection of protectionism in the economic policy of the state and the preferential analysis of problems in the sphere of production in isolation from the sphere of circulation, the development and application of progressive methodological research techniques, including cause-and-effect (causal), deductive and inductive, and logical abstraction. At the same time, an approach from a class perspective to the observable “laws of production” and “productive labor” removed any doubt that the predictions obtained through logical abstraction and deduction should be subjected to experimental verification. As a result, the opposition between the spheres of production and circulation, productive and unproductive labor, characteristic of the classics, became the reason for underestimating the natural relationship of economic entities in these spheres (“human factor”), the reverse influence on the sphere of production of monetary, credit and financial factors and other elements of the sphere of circulation.
Thus, taking as the subject of study only the problems of the sphere of production, classical economists, in the words of M. Blaug, “emphasized that the conclusions of economic science are ultimately based on postulates drawn equally from the observed “laws of production” and subjective introspection » 16.
Moreover, when solving practical problems, the classics gave answers to basic questions by posing these questions, as N. Kondratiev put it, “evaluatively.” For this reason, he believes, “... answers were obtained that have the nature of evaluative maxims and rules, namely: a system based on freedom of economic activity is the most perfect, freedom of trade is most conducive to the prosperity of the nation, etc.” 17. This circumstance also did not contribute to the objectivity and consistency of economic analysis and theoretical generalization of the classical school of political economy.
Secondly, relying on causal analysis, calculations of average and total values economic indicators, the classics (as opposed to the mercantilists) tried to identify the mechanism of origin of the value of goods and fluctuations in the level of prices on the market not in connection with the “natural nature” of money and its quantity in the country, but in connection with production costs or, according to another interpretation, the amount of labor expended . Undoubtedly, since the times of classical political economy in the past there has not been another economic problem, and N. Kondratiev also pointed out this, which would attract “... such close attention of economists, the discussion of which would cause so much mental tension, logical tricks and polemical passions, as a problem of value. And at the same time, it seems difficult to identify another problem, the main directions in the solution of which would remain as irreconcilable as in the case of the problem of value” 18.
However, the cost principle of determining the price level by the classical school was not linked to another important aspect of market economic relations - the consumption of a product (service) with a changing need for a particular good with the addition of a unit of this good. Therefore, the opinion of N. Kondratiev is quite fair, who wrote: “The previous excursion convinces us that until the second half of the 19th century in social economy there was no conscious and distinct division and distinction between theoretical and practical judgments of value. As a rule, the authors are convinced that those judgments which are factual judgments of value are as scientific and valid as those which are theoretical judgments." A few decades later (1962), von Mises made a largely similar judgment. “Public opinion,” he writes, “is still under the impression of the scientific attempt of representatives of classical economic theory to cope with the problem of value. Unable to resolve the obvious paradox of pricing, the classics could not trace the sequence of market transactions down to the final consumer, but were forced to begin their constructions with the actions of the businessman, for whom consumer assessments of utility are given” 20.
Thirdly, the category “cost” was recognized by the authors of the classical school as the only initial category of economic analysis, from which, as in the diagram family tree other derivatives of the inherent category 21 bud off (grow). In addition, this kind of simplification of analysis and systematization led the classical school to the fact that economic research itself seemed to imitate mechanical adherence to the laws of physics, i.e. the search for purely internal causes of economic well-being in society without taking into account psychological, moral, legal and other factors of the social environment.
These shortcomings, referring to M. Blaug, could partly be explained by the impossibility of a fully controlled experiment in the social sciences, as a result of which “economists, in order to discard any theory, need much more facts than, say, physicists” 22 . M. Blaug himself, however, clarifies: “If the conclusions from the theorems of economic theory could be unambiguously verified, no one would ever hear about the unrealistic premises. But the theorems of economic theory cannot be unambiguously verified, since all predictions here are probabilistic in nature” 23 . And yet, if we do not avoid condescension, we can agree with L. Mises that “many epigones of classical economists saw the task of economic science in studying events that did not actually occur, but only those forces that in some, not entirely clear way, predetermined the emergence of real phenomena" 24 .
Fourthly, when exploring the problems of economic growth and improving the well-being of the people, the classics did not simply proceed (again, unlike the mercantilists) from the principle of achieving an active trade balance (positive balance), but tried to substantiate the dynamism and equilibrium of the state of the country's economy. However, as is known, they did without serious mathematical analysis and the use of mathematical modeling methods economic problems, allowing you to choose the best (alternative) option from a certain number of states of the economic situation. Moreover, the classical school considered achieving equilibrium in the economy to be automatically possible, sharing the above-mentioned “law of markets” by J.B. Say.
Finally, fifthly, money, which has long been traditionally considered an artificial invention of people, during the period of classical political economy was recognized as a product spontaneously released in the commodity world, which cannot be “cancelled” by any agreements between people. Among the classics, the only one who demanded the abolition of money was P. Boisguillebert. At the same time, many authors of the classical school until the middle of the 19th century. did not attach due importance to the various functions of money, highlighting mainly one - the function of a medium of exchange, i.e. treating a monetary commodity as a thing, as a technical means convenient for exchange. The underestimation of other functions of money was due to a misunderstanding of the reverse influence of monetary factors on the sphere of production.
Questions and tasks for control
1. What are the socio-economic prerequisites for the emergence of classical political economy? Describe the opposite essence and orientation of the principles of protectionism and laissezfaire.
2. What are the advantages and disadvantages of the subject of study and methodology? economic analysis classical political economy compared to mercantilism? Explain why the source of national wealth cannot be considered either in the sphere of circulation or in the sphere of production.
3. Highlight the criteria for periodizing the stages of evolution of the “classical school”. Give K. Marx's arguments about the time of completion of “bourgeois classical political economy”.
4. What is the essence of the general features of classical political economy? Why did the “classics” underestimate the principle of “money matters” in creating national wealth and proceeded from the principle of self-government and automatic equilibrium of the economy?
5. Explain the inconsistency of the cost principle of determining the cost of goods and services by the “classics” of labor theory or the theory of production costs.
Anikin A.V. The youth of science. M.: Politizdat, 1985. Blaug M. Economic thought in retrospect. M.: "Delo Ltd", 1994.
Galbraith J.K. Economic theories and goals of society. M.: Progress, 1979.
Gide S., Rist III. Story economic studies. M.: Economics, 1995.
Kondratyev N.D. Favorite op. M.: Economics, 1993.
Leontyev V.V. Economic essays. M.: Politizdat, 1990.
Marx K., Engels F. Soch. 2nd ed. T. 23.
Mises L. von. About some common misconceptions about the subject of economic science //THESIS. 1994. T. II. Vol. 4.
Samuelson P. Economics: In 2 volumes. M.: NPO "Algon", 1992.
Seligman Ben B. Main currents of modern economic thought. M.: Progress, 1968.
Schumpeter J. Theory of economic development. M.: Progress, 1982.
Lecture 5. The first stage of the evolution of classical political economy
This topic will introduce you to:
That W. Petty and P. Boisguillebert are the founders of the labor (cost) theory of the cost of goods and services;
That with the advent of the teachings of the physiocrats, the “classics”, moving further, “fell into the rut of a static idea” (I. Schumpeter), but at the same time designated “already a system of theoretical economic views” (N. Kondratiev);
How the physiocrats “provided an analysis of capital within the bourgeois horizon” and became “the real fathers of modern political economy” (K. Marx);
What meaning did the ideologists of physiocratism put into the concept of “pure product” they introduced;
What were the first options for dividing society into classes that were proposed by the physiocrats;
What was the first analytical concept of the circulation of economic life in the theory of reproduction put forward by F. Quesnay?
After studying this chapter, you will know:
- the reasons that led to the displacement of the concept of mercantilism and the dominance of classical political economy;
- as in economic science interpret the term “classical political economy”;
- features of the study of the subject and methods of the classical school of political economy;
- stages of development of classical political economy;
- the main representatives of classical political economy;
- general features and features of the views of representatives of the classical school.
Basic concepts: political price, natural price, market price, division of labor, theory of value, use value, exchange value, materialized labor, wages, surplus value, profit, rent, rate of profit, capital, fixed capital, circulating capital, productive labor, rarity of goods , market price of labor, profit, principle of comparative efficiency, theory of economic harmonies, wage fund, static and speculative market conditions, theory of equilibrium.
General characteristics of the classical school of political economy
XVII century was a turning point in the establishment of capitalism. But the transition to a new society in Western European countries took place differently.
The classic version of the genesis of capitalism was demonstrated by England. It was here that capitalist relations were formed at the fastest pace. The most important sources accumulation of capital were colonies that provided a rapidly developing market with cheap raw materials, goods, foreign trade and government loans. Capital was invested in industry and agriculture. The number of manufacturing enterprises increased, and with them the role of industry in the economy. English industrial goods found wide sales in the markets of other countries, but the remaining system of protectionism, guild restrictions and laws regulating economic life hampered the activities of the emerging capitalist class.
The agricultural revolution accelerated the development of productive forces agriculture, contributed to the emergence of capitalist relations in the countryside. The process of formation of the hired labor market was gaining momentum.
England stood out among other countries relatively high level development of capitalism. A powerful boost to the economic and social development was given by the bourgeois revolution of the mid-17th century, which determined the mindset of leading public figures of that time.
In the second most important country in Western Europe - France, the formation of capitalism began in the 16th century, but this process had its own unique forms. Agriculture remained the main branch of the national economy, and the largest class was the peasantry. In France, there was no mass dispossession of peasants, as in England, and the property stratification of the peasantry began due to increasing taxes and increased usury. The French bourgeoisie bought the rights of the nobility to collect rent, farmed out indirect taxes, engaged in mortgage lending, and bought up land. If the English bourgeoisie was actively involved in trading activities, participated in colonial adventures and invested cash into industry, then in France the bourgeoisie preferred usury and tax farming, as well as public service.
The widely practiced system played a huge role in the formation of new socio-economic relations. government loans. In conditions of a narrow domestic market and low purchasing power of the main class - the peasantry, the development of the manufacturing industry had its own characteristics. If in England the development of manufactures became the work of the bourgeoisie, then in France industry was created with significant participation of the state. To support manufactures, the absolutist power endowed them with monopoly rights, privileges and subsidies. To a certain extent, the underdevelopment of French industry was explained by the state economic policy aimed at robbing the “third estate” and the peasantry.
A new social and economic situation was emerging in leading Western European countries. Entrepreneurial activity, following the sphere of trade, money circulation and lending operations, extended to industry. The transition to the industrial stage of development created the necessary preconditions for the emergence of a new economic theory.
For the first time the term “classical political economy” (from Lat. classicus– exemplary, first-class) was introduced into scientific circulation by K. Marx. “I will note once and for all,” he wrote, “that by classical political economy I understand all political economy, starting with V. Petty, which explores the internal dependencies of bourgeois relations of production...”
In its development, classical political economy went through four stages.
- First stage– period from the end of the 17th century. and until the beginning of the second half of the 18th century. Its main representatives were W. Petty and P. Boisguillebert. Unlike the mercantilists, they saw the basis of the wealth and well-being of the state not in the sphere of circulation, but in the sphere of production. They were the first in the history of economic thought to put forward the idea of the labor theory of value, according to which the source and measure of value is the amount of labor spent on the production of a product or benefit. However, their works were not widely known to the reading public, since mercantilism continued to be the dominant economic concept.
- Second stage – last third of the 18th century It is associated with the name of A. Smith. His “economic man” and the “invisible hand” of the market convincingly proved the inevitability of the action of “natural” objective economic laws that manifest themselves independently of the will, consciousness and desire of people. Thanks to A. Smith until the 30s. XX century The provisions on non-interference of the state in the economy and freedom of competition were considered indisputable. The ideas he expressed became new concept economic liberalism, and the laws of the division of labor and the growth of its productivity were recognized as classical. The theoretical views of A. Smith formed the basis of modern concepts about a product and its properties, income (wages, profits), capital, productive and unproductive labor, etc.
* Third stage – first half of the 19th century A. Smith's followers rethought his main ideas and enriched political economy with fundamentally new and significant theoretical principles. The most prominent representatives of this stage were the Englishmen D. Ricardo, T. Malthus, and the Frenchman J.B. Say. Following A. Smith, they determined the cost of goods and services through the amount of labor expended or production costs. Each of them left a noticeable mark on the history of economic thought.
Fourth stage – second half of the 19th century J. S. Mill is the most prominent representative of this period. He generalized the theoretical views of his predecessors and expressed a number of new ideas. Being a supporter of the concept of efficient pricing under conditions of competition and condemning class bias and apologetics in economic thought, J. S. Mill sympathized with the working class. His ideas were directed "toward socialism and reforms."
Item. The subject of study of classical political economy was the sphere of production, which was considered the main, primary sphere of the economy. Therefore, the wealth of the people began to be considered the product created in the production process. The view on the subject of study and the concept of the wealth of the people has thus changed in comparison with the ideas of mercantilism. The emergence of a new subject of study is associated with the development of capitalist relations. The first stage of classical political economy corresponded to the period of development of manufacturing production, the second - the period of the “industrial revolution” in England and France.
Over the more than two hundred year history of classical political economy, its representatives have significantly expanded the range of issues under consideration and made scientific discoveries that remain significant to this day. The classical school was constantly improved, while maintaining a number of common basic principles.
The classics advocated ideology laissez faire– freedom of market relations and entrepreneurial activity, non-interference of the state in the economy. Even figures of the early period (with the exception of J.S. Mill) actively criticized the mercantilists for state protectionism in the economy and had a negative attitude towards state intervention in the economy. Classical political economy proved the scientific inconsistency of mercantilism. The wealth of a nation, its representatives believed, is created not by trade, but by production. Production is based on natural laws and does not need the state.
Methods. The formation of the methodology of classical political economy was greatly influenced by a change in priorities in the process of development of philosophy and, in particular, by the rapid growth of natural science knowledge. Having accumulated significant experimental material, natural sciences in the 17th century. moved on to the development of a general theory of the surrounding world. I. Newton developed a theory classical mechanics, which began to be used to explain all natural phenomena. The same mechanistic approach began to extend to the explanation of social relations. Society is an ordered world, developing according to “natural” laws, a rational world, i.e. knowable by man. These ideas were actively developed in the 17th century. by English philosophers T. Hobbes and J. Locke, and in the 18th century by French philosophers and educators.
The methodology of classical political economy differed significantly from the methodology of mercantilism. Unlike the mercantilists, the classics no longer described, but analyzed economic phenomena using logical abstraction method, then they systematized the theoretical categories obtained as a result of the analysis using deduction method moving from general theory to its more specific manifestations.
The basic theory was labor theory of value (value), which was the basis for the theory of price, money, income, etc. Thus, principle of systematization classical political economy is the principle of the initial category through which all other economic categories are interconnected. It should be noted that all sciences in their initial stage used this principle. Thus, the natural sciences went through theories of the primary elements of the surrounding world, or primary energy (phlogiston): philosophers argued for a long time what was primary – matter or consciousness, etc.
In classical political economy, similar ideas were manifested in the position of “natural” (objective) economic laws in the theories of F. Quesnay and A. Smith and the Smithian category of “economic man,” who is mechanically directed to maximum benefit. The economy was presented to them as the sum of “economic people” or, in other words, as a kind of mechanism where economic entities act as cogs and gears. In addition to the idea of “economic man,” classical political economy was characterized by the interpretation of economic relations as relations between classes.
Representatives of the classical school concentrated on analyzing the sphere of production and distribution of material goods. Using new methodological techniques in economic research, for example, cause-and-effect (causal) analysis, deductive and inductive methods, logical abstraction, having carried out calculations of average and total values of economic indicators, they identified the mechanism of origin of the value of goods and fluctuations in the price level on the market not in connection with the “natural nature” of money and its quantity in the country, but with production costs.
It was the classics who consolidated the shift in the methodology of economic analysis carried out by the physiocrats from problems of ethical business management to the study of factors associated with the creation and distribution of material wealth.
Directions of research. The purpose of economic research for the classical school was to study the internal causes of the economic development of society. They perceived the economy as a developing system. Representatives of the classical school contributed to the formation of the conviction that universal and objective economic laws dominate in the capitalist economy. At the same time, they paid insufficient attention to psychological, moral, legal and other factors of economic life, which somewhat impoverished the conclusions.
The main direction of economic analysis of classical political economy has become problem of value which its representatives considered as a value determined production costs. However, in the classical school there were two theories of value. The first is the labor theory of value, developed by the founder of the classical school A. Smith and D. Ricardo, and then developed in the works of K. Marx. According to this theory, the value of a product is determined by the labor costs for its production. The second is the factor theory of production. Founded by A. Smith, it was developed in the works of J. B. Say and T. R. Malthus, and then entered as an important component of neoclassical microeconomics. According to this theory, the value of a product consists of the income of the owners of production factors involved in the production of the product.
Representatives of the classical school paid great attention to the study laws of development, those. study of patterns, trends, dynamics of the capitalist economy, economic growth, changes in the share of the main groups of owners of production factors (labor, capital and land) in the national product.
Money, which has long been considered an artificial invention of people, was recognized by representatives of classical political economy as a product that spontaneously emerged in the commodity world, which cannot be “cancelled” by any agreements between people. The classics perceived money as a technical means that helped facilitate exchange. One of the founders of classical political economy, P. Boisguillebert, even demanded their abolition, and J. S. Mill wrote: “... it is hardly possible to find in the social economy a thing more insignificant in its importance than money, unless one touches on the method which saves time and labor." Many representatives of the classical school until the middle of the 19th century. did not attach importance to money, highlighting only the function of money as a means of circulation. Their underestimation of other functions of money, ignoring the role of money as a liquid means of storing value, was due to a misunderstanding of its reverse influence on the sphere of production.
- Marx K., Engels F. Essays. T. 23. M.: Politizdat, 1960. P. 91, 610.
- Samuelson P. Economy. T. 2. M.: Algon, 1992. P. 342.
- Mill J.S. Fundamentals of political economy. T. 2. M.: Progress, 1981. P. 234.
Introduction
Main part
Chapter 1. General characteristics of the classical direction:
1.1 Definition of classical political economy
1.2. Stages of development of classical political economy
1.3. Features of the subject and method of studying classical political economy
Chapter 2. The first stage of development of classical political economy
2.1. Economic doctrine of W. Petty
2.2. Economic doctrine of P. Boisguillebert
2.3. Economic doctrine of F. Quesnay
Chapter 3. The second stage of development of classical political economy
3.1. Economic doctrine of A. Smith
Chapter 4. The third stage of development of classical political economy
4.1. Economic doctrine of D. Ricardo
4.2. Economic doctrine of Zh.B. Sowing
4.3. Economic doctrine of T. Malthus
Chapter 5. The fourth stage of development of classical political economy
5.1. Economic teachings of J. S. Mill
5.2. Economic teachings of K. Marx
Conclusion
References
Introduction
This work characterizes the classical direction in the history of economic doctrines. It examines the following range of questions: what led to the displacement of the concept of mercantilism and the two-hundred-year dominance of classical political economy; how the term “classical political economy” is interpreted in economics; what stages does classical political economy cover in its development; what are the features of the subject and method of study of the “classical school”, as well as the main economic theories at the four stages of development of the classical school of political economy.
CHAPTER 1. General characteristics of the classical direction
1.1. Definition of classical political economy
Classical political economy arose when entrepreneurial activity, following the sphere of trade, money circulation and lending operations, also spread to many industries and the sphere of production as a whole. Therefore, already in the manufacturing period, which brought capital employed in the sphere of production to the forefront in the economy, the protectionism of the mercantilists gave way to its dominant position to a new concept - the concept of economic liberalism, based on the principles of non-interference of the state in economic processes, unlimited freedom of competition for entrepreneurs.
This period marked the beginning of truly new school political economy, which is called classical primarily for the scientific nature of many of its theories and methodological provisions, which underlie modern economic science.
As a result of the disintegration of mercantilism and the strengthening of the growing tendency to limit direct state control over economic activity, “pre-industrial conditions” lost their former significance and “free private enterprise” prevailed. The latter, according to P. Samuelson, led “to conditions of complete laissez faire (i.e., absolute non-interference of the state in business life), events began to take a different turn,” and only “... from the end of the 19th century. in almost all countries there was a steady expansion of the economic functions of the state.”
In fact, the principle of “complete laissez faire” became the main motto of a new direction of economic thought - classical political economy, and its representatives debunked mercantilism and the protectionist policies in the economy it promoted, putting forward an alternative concept of economic liberalism. At the same time, the classics enriched economic science with many fundamental provisions, which in many respects have not lost their relevance today.
It should be noted that for the first time the term “classical political economy” was used by one of its finalists, K. Marx, in order to show its specific place in “bourgeois political economy.” And the specificity, according to Marx, is that from W. Petty to D. Ricardo in England and from P. Boisguillebert to S. Sismondi in France, classical political economy “studied the actual relations of production of bourgeois society.”
In modern foreign economic literature, while paying tribute to the achievements of classical political economy, they do not idealize them. At the same time, in the economic education system of most countries of the world, the identification of the “classical school” as the corresponding section of the course on the history of economic doctrines is carried out primarily from the point of view of the general characteristic features and traits inherent in the works of its authors. This position allows us to classify a number of scientists of the 19th century - followers of the famous A. Smith - among the representatives of classical political economy.
For example, one of the leading economists of our time, Professor of Harvard University J.K. Galbraith, in his book “Economic Theories and Goals of Society” believes that “A. Smith’s ideas were further developed by David Ricardo, Thomas Malthus and especially John Stuart Mill and were called classical system". The textbook “Economics”, widely distributed in many countries, by the American scientist, one of the first Nobel Prize laureates in economics, P. Samuelson, also states that D. Ricardo and J.S. Mill, being “the main representatives of the classical school... developed and improved Smith's ideas.
1.2. Stages of development of classical political economy
According to the generally accepted assessment, classical political economy originated in the late 17th - early 18th centuries. in the works of W. Petty (England) and P. Boisguillebert (France). The time of its completion is considered from two theoretical and methodological positions. One of them - Marxist - points to the period of the first quarter of the 19th century, and the English scientists A. Smith and D. Ricardo are considered to be the finalists of the school. According to another - the most widespread in the scientific world - the classics exhausted themselves in the last third of the 19th century. through the works of J.S. Mill.
In the development of classical political economy, with a certain convention, four stages can be distinguished.
First stage covers the period from the end of the 17th century. until the beginning of the second half of the 18th century. This is a stage of significant expansion of the sphere of market relations, reasoned refutations of the ideas of mercantilism and its complete debunking. The main representatives of the beginning of this stage, W. Petty and P. Boisguillebert, regardless of each other, were the first in the history of economic thought to put forward the labor theory of value, according to which the source and measure of value is the amount of labor expended on the production of a particular commodity product or good. Condemning mercantilism and based on the causal dependence of economic phenomena, they saw the basis of the wealth and well-being of the state not in the sphere of circulation, but in the sphere of production.
The first stage of classical political economy was completed by the so-called school of physiocrats, which became widespread in France in the middle and early second half of the 18th century. The leading authors of this school, F. Quesnay and A. Turgot, in their search for a source of pure product (national income), along with labor, attached decisive importance to land. Criticizing mercantilism, the physiocrats went even deeper into the analysis of the sphere of production and market relations, although mainly in the field of agriculture, unduly moving away from the analysis of the sphere of circulation.
Second stage The development of classical political economy covers the period of the last third of the 18th century. and is undoubtedly associated with the name and works of A. Smith, the central figure among all its representatives. His “economic man” and the “invisible hand” of providence convinced more than one generation of economists about the natural order and inevitability of the spontaneous action of objective economic laws, regardless of the will and consciousness of people. Largely thanks to him until the 30s. In the 20th century, the provision regarding the complete non-interference of government regulations in free competition was considered irrefutable. And it is about him, as a rule, that they say that “...not a single Western student or scientist can consider himself an economist without knowledge of his (A. Smith - Ya.Ya.) works.”
According to N. Kondratyev, under the influence of the views of A. Smith, among the classics, all their teaching is the preaching of an economic system based on the principle of freedom of individual economic activity as an ideal.” The authors of one of the popular books of the early 20th century. “History of Economic Doctrines” by S. Gide and S. Rist noted that it was mainly the authority of A. Smith that turned money into “a commodity even less necessary than any other commodity, a burdensome commodity that should be avoided whenever possible. This tendency to discredit money, shown by Smith in the fight against mercantilism, - they write, - will later be picked up by his followers, and exaggerating it, they will lose sight of some features of money circulation. " Schumpeter claims something similar, saying that A. Smith and his followers "try to prove that money is not important, but at the same time they themselves are not able to consistently adhere to this thesis." And only some condescension to this omission of the classics (primarily A. Smith and D. Ricardo) is made by M. Blaug, believing that “...their skepticism in relation to monetary panaceas was quite appropriate in an economy suffering from a lack of capital and chronic structural unemployment."
It should be noted that the laws of the division of labor and the growth of its productivity discovered by A. Smith (based on the analysis of the pin manufactory) are also considered classical. His theoretical research is also largely based on modern concepts about the product and its properties, income (wages, profits), capital, productive and unproductive labor and others.
Third stage evolution of the classical school of political economy occurs in the first half of the 19th century, when in a number of developed countries the end industrial revolution. During this period, followers, including A. Smith's students (as many of them called themselves), subjected in-depth study and rethinking to the basic ideas and concepts of their idol, enriching the school with fundamentally new and significant theoretical positions. Among the representatives of this stage, we should especially highlight the French J.B. Say and F. Bastiat, the English D. Ricardo, T. Malthus and N. Senior, the American G. Carey and others. Although these authors, following, as they argued, A Smith, the origin of the value of goods and services was seen either in the amount of labor expended or in production costs (but this kind of cost approach in reality remained unproven), yet each of them left a rather noticeable mark in the history of economic thought and the formation of market relations.
Thus, J.B. Say, in his dogmatic “law of markets” from the standpoint of modern economic theory, for the first time introduced into the framework of economic research the problems of balance between supply and demand, the realization of the total social product depending on market conditions. As is obvious, both J.B. Say and other classics based this “law” on the proposition that with flexible wages and moving prices interest rate will balance supply and demand, saving and investment at full employment.
D. Ricardo, more than any of his contemporaries, polemicized with A. Smith. But, fully sharing the latter’s views on the income of the “main classes of society,” he was the first to identify the pattern of the ongoing tendency of the rate of profit to decrease, and developed a complete theory about the forms of land rent. His merits also include one of the best justifications for the pattern of changes in the value of money as goods depending on their quantity in circulation.
Fourth stage The development of classical political economy covers the period of the second half of the 19th century, during which the above-mentioned J.S. Mill and K. Marx summarized the best achievements of the school. On the other hand, by this time new, more progressive directions of economic thought were already acquiring independent significance, which later received the name “marginalism” (late 19th century). As for the innovation of the ideas of the Englishman J.S. Mill and K. Marx, who wrote their works in exile from his native Germany, these authors of the classical school, being strictly committed to the position of the efficiency of pricing in competitive conditions and condemning class bias and vulgar apologetics in economic thought , still sympathized with the working class, were turned “toward socialism and reforms.” K. Marx, in addition, especially emphasized the increasing exploitation of labor by capital, which, intensifying the class struggle, should, in his opinion, inevitably lead to the dictatorship of the proletariat, the “withering away of the state” and the equilibrium economy of a classless society.
1 .3. Features of the subject and method of studying classical political economy
When studying the general characteristics of the history of classical political economy, it is necessary to highlight its common features, approaches and trends in terms of the subject and method of study and evaluate them.
Firstly, primary analysis of problems in the sphere of production in isolation from the sphere of circulation, development and application of progressive methodological research techniques, including cause-and-effect, deductive and inductive, logical abstraction. At the same time, an approach from a class perspective to the observable “laws of production” and “productive labor” removed any doubt that the predictions obtained through logical abstraction and deduction should be subjected to experimental verification. As a result, the opposition between the spheres of production and circulation, productive and unproductive labor, characteristic of the classics, became the reason for underestimating the natural relationship of economic entities in these spheres (“human factor”), the reverse influence on the sphere of production of monetary, credit and financial factors and other elements of the sphere of circulation.
When solving practical problems, the classics gave answers to basic questions by posing these questions, as N. Kondratiev put it, “evaluatively.” This circumstance also did not contribute to the objectivity and consistency of economic analysis and theoretical generalization of the classical school of political economy.
Secondly, Based on cause-and-effect analysis, calculations of average and total values of economic indicators, the classics tried to identify the mechanism of origin of the value of goods and fluctuations in the price level on the market not in connection with the “natural nature” of money and its quantity in the country, but in connection with production costs.
However, the cost principle of determining the price level by the classical school was not linked to another important aspect of market economic relations - the consumption of a product (service) with a changing need for a particular good with the addition of a unit of this good.
Thirdly , the category “cost” was recognized by the authors of the classical school as the only initial category of economic analysis, from which, as in a family tree diagram, other inherently derivative categories bud off (grow). In addition, this kind of simplification of analysis and systematization led the classical school to the fact that economic research itself seemed to imitate mechanical adherence to the laws of physics, i.e. the search for purely internal causes of economic well-being in society without taking into account psychological, moral, legal and other factors of the social environment.
Fourth , While exploring the problems of economic growth and improving the well-being of the people, the classics did not simply proceed from the principle of achieving an active trade balance (positive balance), but tried to substantiate the dynamism and equilibrium of the state of the country's economy. However, they did this without serious mathematical analysis, the use of methods of mathematical modeling of economic problems, allowing them to choose the best (alternative) option from a certain number of states of the economic situation.
Fifthly, money, which has long been traditionally considered an artificial invention of people, during the period of classical political economy was recognized as a product spontaneously released in the commodity world, which cannot be “cancelled” by any agreements between people. Among the classics, the only one who demanded the abolition of money was P. Boisguillebert. At the same time, many authors of the classical school until the middle of the 19th century. did not attach due importance to the various functions of money, highlighting mainly one - the function of a medium of exchange, i.e. treating a monetary commodity as a thing, as a technical means convenient for exchange. The underestimation of other functions of money was due to a misunderstanding of the reverse influence of monetary factors on the sphere of production.
Chapter 2. The first stage of development of classical political economy
2.1. Economic doctrine of W. Petty
William Petty (1623-1687) - the founder of classical political economy in England, who outlined his economic views in works published in the 60-80s of the 17th century.
In the works of W. Petty, the subject of study of economic science (political economy) is the analysis of problems in the sphere of production. This is particularly obvious from this scientist’s conviction that the creation and increase of wealth supposedly occurs exclusively in the sphere of material production, and without any participation in this process of trade and commercial capital.
His views were transitional from mercantilism to classical political economy. He explained such economic phenomena as the price of goods, wages, the price of land and others. Petty distinguished between the “natural price” of a product (the value determined by labor) and the market price. He was the first to formulate the rudiments of the theory of labor value. He considered only one type of labor to be a direct source of value - the extraction of gold and silver (i.e., monetary material).
Petty's theory of value is directly related to his doctrine of wages and rent. He reasoned like this: the commodity is not labor power, but labor, and wages are the price of labor; you just need to determine its value.
Rent, according to Petty, is the cost of the crop (it depends on the quality of the plot) without taking into account production costs, i.e. excess value created by labor over wages. Petty does not consider profit separately. Petty’s teaching on the price of land is interesting: the sale of land is the sale of the right to receive rent and should be calculated from the amount of annual rent (without loan interest).
2.2. Economic doctrine of P. Boisguillebert
Pierre Boisguilbert (1646-1714) - the founder of classical political economy in France. Like the founder of a similar school of economic thought in England, W. Petty, he was not a professional scientist or economist.
P. Boisguillebert, like W. Petty, contrasting the mercantilists with his own vision of the essence of wealth, came to the so-called concept of social wealth, the latter, in his opinion, manifests itself not in the physical mass of money, but in the whole variety of useful goods and things.
Thus, according to Boisguillebert, not the increase in money, but, on the contrary, the increase in the production of “food and clothing” is the main task of economic science. Like W. Petty, Boisguillebert considers the subject of studying political economy to be the analysis of problems in the sphere of production, recognizing this sphere as the most significant and priority in comparison with the sphere of circulation.
2.3. Economic doctrine of F. Quesnay
The formation of economic thought in France in this period is associated with the ideas of Pierre Boisguillebert and Francois Quesnay (1694-1774).
Francois Quesnay in 1758 created his “Economic Table”, which became the basis for the physiocrats who turned to the sphere of production, looking for a source there surplus value. They limited this area to agriculture only.
In his famous “Economic Table” F. Quesnay performed the first scientific analysis the cycle of economic life, i.e. social reproductive process. The ideas of this work indicate the need to comply with and reasonably predict certain national economic proportions in the structure of the economy. He identified a relationship, which he characterized as follows: “Reproduction is constantly renewed by costs, and costs are renewed by reproduction.”
Further, Quesnay put forward the concept of “natural order,” by which he understood an economy with free competition, the spontaneous play of market prices without government intervention. Quesnay also argued that when exchanging things of equal value, wealth is not created and profit does not arise, so he looked for profit outside the sphere of circulation.
Chapter 3. The second stage of development of classical political economy
3.1. Economic teachings of Adam Smith
In the second half of the 18th century, favorable conditions developed in England for the rise of economic thought. Your higher development classical political economy reached its peak in the works of British scientists Adam Smith and David Ricardo. Like their predecessors, the founders of the classical school viewed economics as the study of wealth and how to increase it.
Adam Smith's main work on political economy is the fundamental work “An Inquiry into the Nature and Causes of the Wealth of Nations.” Smith's book is divided into five parts. In the first, he analyzes issues of value and income, in the second, the nature of capital and its accumulation. In them he outlined the foundations of his teaching. In other parts, he examines the development of the European economy during the era of feudalism and the emergence of capitalism, the history of economic thought and public finance.
Adam Smith explains that the main theme of his work is economic development: the forces that operate temporarily and control the wealth of nations.
“An Inquiry into the Nature and Causes of Wealth” is the first full-fledged work in economic science, setting out the general basis of science - the theory of production and distribution. Then an analysis of the effect of these abstract principles on historical material and, finally, a number of examples of their application in economic policy. Moreover, this entire work is imbued with the lofty idea of an “obvious and simple system of natural freedom,” towards which, as it seemed to Adam Smith, the whole world was moving. The central motif - the soul of The Wealth of Nations - is the action of the "invisible hand"; We get our bread not by the baker’s mercy, but from his selfish interest. Smith was able to guess the most fruitful idea that under certain social conditions, which we today describe with the term “working competition,” private interests can indeed be harmoniously combined with the interests of society. A market economy, not governed by a collective will, not subordinated to a single plan, nevertheless follows strict rules of behavior. The impact on the market situation of the actions of one individual, one of many, may be imperceptible. Indeed, he pays the prices that are asked of him, and can choose the quantity of goods at these prices based on his greatest benefit. But the totality of these individual actions sets prices; Each individual buyer is subject to prices, and the prices themselves are subject to the totality of all individual reactions. Thus, the “invisible hand” of the market ensures a result that does not depend on the will and intentions of the individual.
Moreover, this market automation may well, in a certain sense, optimize the allocation of resources. Smith lifted the burden of proof and created a postulate: decentralized, atomistic competition in a certain sense provides “maximum satisfaction of needs.” Undoubtedly, Smith gave deep meaning to his doctrine of "maximum satisfaction of needs." He showed that:
· Free competition strives to equate prices to production costs, optimizing the distribution of resources within these industries;
· Free competition in factor markets tends to equalize the net advantages of these factors across all industries and thereby establishes the optimal allocation of resources between industries.
He did not say that various factors would be combined in optimal proportions in production or that goods would be optimally distributed among consumers. Nor did he say that economies of scale and side effects production often interfere with the achievement of a competitive optimum, although the essence of this phenomenon is reflected in his discussions of public works. But he did take the first step towards the theory of optimal allocation of given resources under conditions of perfect competition.
To be fair, his own belief in the benefits of the “invisible hand” has little to do with considerations about the efficiency of resource allocation in the static conditions of perfect competition. He considered a decentralized price system desirable because it produces dynamic results: it expands the scale of the market, multiplies the advantages associated with the division of labor - in a word, it works like a powerful engine that ensures capital accumulation and income growth.
Smith was not content with declaring that a free market economy provides the best way to live. He pays a lot of attention to the precise definition of the institutional structure that would guarantee best job market forces.
He understands that:
· personal interests can equally hinder and contribute to the growth of the welfare of society;
· market mechanism will establish harmony only when it is included in the appropriate legal and institutional framework.
Chapter 4. The third stage of development of classical political economy
4.1. Economic doctrine of D. Ricardo
All economic system Ricardo arose as a continuation, development and criticism of Smith's theory. At the time of Ricardo, the industrial revolution was in its early stages, and the essence of capitalism was far from fully manifested. Therefore, Ricardo's teaching continues the ascending line of development of the classical school.
The peculiarity of Ricardo's position is that the subject of political economy is the study of the sphere of distribution. In his main theoretical work, Elements of Political Economy and Taxation, Ricardo writes, referring to the distribution of the social product: “To determine the laws that govern this distribution is the main task of political economy.” One may get the impression that on this issue Ricardo takes a step back compared to A. Smith, since he puts forward the sphere of distribution as the subject of political economy. However, in reality this is not at all the case. First of all, Ricardo did not exclude the sphere of production from the object of his analysis. Moreover, the emphasis that Ricardo places on the sphere of distribution is intended to highlight the social form of production as its own subject of political economy. And although Ricardo did not bring the problem to its full scientific solution, the significance of such a formulation of the question in the works of the finalist of the classical school cannot be overestimated.
In Ricardo's writings, in fact, there is an attempt to distinguish the production relations of people in contrast to the productive forces of society and to declare these relations their own subject of political economy. Ricardo actually identifies the entire set of production relations with distribution relations, thereby significantly limiting the scope of political economy. Nevertheless, Ricardo gave a deep interpretation of the subject of political economy and came close to the secrets of the social mechanism of the capitalist economy. For the first time in the history of political economy, he based the economic theory of capitalism on the labor theory of value, which reflects the general relations most typical of capitalism, namely commodity relations.
What is new that Ricardo introduced into the labor theory of value is due, first of all, to a change in the historical situation, the transition of manufacturing capitalism to capitalism at the machine stage. Ricardo's important merit is that, relying on the labor theory of value, he came closer to understanding the single basis of all capitalist income - profit, ground rent, interest. Although he did not discover surplus value and the law of surplus value, Ricardo clearly saw that labor is the only source of value and, therefore, the income of classes and social groups not participating in production are actually the result of the appropriation of others' unpaid labor.
Ricardo's theory of profit has two major contradictions:
· The contradiction between the law of value and the law of surplus value, which was expressed in Ricardo’s inability to explain the origin of surplus value from the point of view of the law of value;
· The contradiction between the law of value and the law of average profit, which was expressed in the fact that he was unable to explain the average profit and the price of production from the position of the theory of labor value.
The main drawback of D. Ricardo's theory is his identification of labor power as a commodity with its function - labor. Thus, he avoids the problem of clarifying the essence and mechanism of capitalist exploitation. But, nevertheless, Ricardo comes quite close to the correct quantitative determination of the price of labor, in fact the cost of labor power. Distinguishing between the natural and market prices of labor, he believes that under the influence of supply and demand, the natural price of labor is reduced to the cost of a certain amount of means of subsistence, necessary not only for the maintenance of workers and the continuation of their family, but also, to a certain extent, for development. Consequently, the natural price of labor is a cost category.
According to Ricardo, the market price of labor fluctuates around the natural price under the influence of the natural movement of the working population. If the market price of labor exceeds the natural price, the number of workers increases significantly, the supply of labor increases, which at a certain stage increases the demand for it. Due to these circumstances, unemployment arises and the market price of labor begins to fall. Its decline continues until the size of the working population begins to decline and the supply of labor decreases in accordance with the amount of demand for it. At the same time, the market price of labor decreases in relation to the natural price. Thus, D. Ricardo’s interpretation of the natural price of labor is quite contradictory.
David Ricardo was the finalizer of bourgeois political economy precisely because the scientific truths he revealed became increasingly socially dangerous for the political and economic positions of the ruling class.
4.2. Economic doctrine of Jean Baptiste Say
Official economic science in France in the first half of the 19th century. represented by the “Say school”. "Say's School" praised the capitalist entrepreneur, preached the harmony of class interests, and opposed the labor movement.
In 1803, Say published an essay called “A Treatise of Political Economy, or a Simple Statement of the Method in which Wealth is Generated, Distributed, and Consumed.” This book, which Say subsequently revised and expanded many times for new editions (only five were published during his lifetime), remained his main work. The labor theory of value, which the Scot followed, although not entirely consistently, gave way to a “pluralistic” interpretation, where value was made dependent on a number of factors: the subjective utility of the product, the costs of its production, demand and supply. Smith's ideas about the exploitation of wage labor by capital (i.e., elements of the theory of surplus value) completely disappeared from Say, giving way to the theory of factors of production. Say followed Smith in his economic liberalism. He demanded "cheap government" and advocated minimizing government intervention in the economy. In this respect, he also adhered to the physiocratic tradition. In 1812, Say published the second edition of the Treatise. In 1828-1930 Say published the 6-volume “Complete Course of Practical Political Economy,” which, however, did not provide anything new compared to the “Treatise.”
In the first edition of the Treatise, Say wrote four pages about sales. They presented in a vague form the idea that general overproduction of goods in the economy and economic crises were impossible in principle. Any production itself generates income, with which goods of appropriate value are necessarily purchased. Aggregate demand in an economy is always equal to aggregate supply. In his opinion, only partial imbalances can arise: too much of one product is produced, too little of another. But this is being corrected without a general crisis. In 1803, Say formulated a law according to which the supply of goods always gives rise to a corresponding demand. Those. by this, he excludes the possibility of a general crisis of overproduction, and also believes that free pricing and minimizing state intervention in the market economy will cause automatic regulation of the market.
Production not only increases the supply of goods, but also, by covering the necessary costs of production, creates demand for these goods. “Products are paid for products” - this is the essence of Say’s law of markets.
The demand for the products of any industry must increase in real terms when the supply of all industries increases, because it is supply that creates the demand for the products of that industry. Say's Law, therefore, warns us against applying to macroeconomic indicators judgments derived in microeconomic analysis. A single good can be produced in excess relative to all other goods, but relative overproduction of all goods at once cannot occur.
If we talk about the application of Say's law to the real world, then this affirms the unreality of excess demand for money. “Unreality” in this case can hardly mean logical impossibility. It must be understood that the demand for money cannot always be excess, because this corresponds to a situation of disequilibrium.
Using Say's arguments, the bourgeoisie put forward progressive demands for a reduction in the bureaucratic state apparatus, freedom of enterprise and trade.
4.3. Economic doctrine of T. Malthus
A representative of the classical school, the Englishman T. Malthus, made a bright, original contribution to economic science. T. Malthus's treatise "An Essay on the Law of Population", published in 1798, made and continues to make such a powerful impression on the reading public that discussions about this work are still ongoing. The range of assessments in these discussions is extremely wide: from “brilliant foresight” to “anti-scientific nonsense.”
T. Malthus was not the first to write about demographic problems, but, perhaps, was the first who tried to propose a theory describing the patterns of population change. As for his system of evidence and statistical illustrations, a lot of claims were made against them already at that time. In the 18th-19th centuries, the theory of T. Malthus became known mainly due to the fact that its author first proposed a refutation of the widespread thesis that human society can be improved through social reform. For economic science, T. Malthus’s treatise is valuable for its analytical conclusions, which were subsequently used by other theorists of the classical and some other schools.
As we know, A. Smith proceeded from the fact that the material wealth of society is the ratio between the volume of consumer goods and the population. The founder of the classical school paid the main attention to the study of the patterns and conditions of growth in production volume, but he practically did not consider issues related to the patterns of population changes. T. Malthus took upon himself this task.
From the point of view of T. Malthus, there is a contradiction between the “instinct of procreation” and the limited availability of land suitable for agricultural production. Instincts force humanity to reproduce at a very high rate, "in geometric progression". In turn, agriculture, and only it produces the food products necessary for people, is capable of producing these products at a much lower rate, "in arithmetic progression." Consequently, any increase in the volume of food production will sooner or later be absorbed by an increase in population. Thus Thus, the cause of poverty is the ratio of the rate of population growth and the rate of increase in living goods. Any attempt to improve living conditions through social reform is thereby nullified by the growing mass of people.
T. Malthus associates the relatively low growth rate of food products with the action of the so-called law of diminishing soil fertility. The meaning of this law is that the amount of land suitable for agricultural production is limited. The volume of production can only grow due to extensive factors, and each subsequent plot of land is included in economic turnover with more and more costs, the natural fertility of each subsequent plot of land is lower than the previous one, and therefore general level the fertility of the entire land fund as a whole tends to decline. Progress in the field of agricultural production technology is generally very slow and is not able to compensate for the decline in fertility.
Thus, by endowing people with the ability for limitless reproduction, nature, through economic processes, imposes restrictions on the human race that regulate population growth. Among these limiters, T. Malthus identifies: moral limiters and poor health, which lead to a decrease in the birth rate, as well as vicious life and poverty, which lead to an increase in mortality. The decline in the birth rate and the increase in mortality are ultimately determined by the limited means of subsistence.
From this formulation of the problem, in principle, completely different conclusions can be drawn. Some commentators and interpreters of T. Malthus saw in his theory a misanthropic doctrine that justifies poverty and calls for wars as a method of eliminating the surplus population. Others believe that T. Malthus laid the theoretical foundations for the policy of “family planning,” which has been widely used over the past thirty years in many countries around the world. T. Malthus himself only emphasized one thing in every possible way - it is necessary for each person to take care of himself and be fully responsible for his own hindsight.
Chapter 5. The fourth stage of development of classical political economy
5.1. Economic teachings of J. S. Mill
John Stuart Mill is one of the finalists of classical political economy and “a recognized authority in scientific circles whose research goes beyond the boundaries of technical economics.”
J.S. Mill published his first Essays on Political Economy when he was 23 years old, i.e. in 1829. In 1843, his philosophical work “System of Logic” appeared, which brought him fame. The main work (in five books, like A. Smith) entitled “Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy” was published in 1848.
J.S. Mill adopted the Ricardian view on the subject of political economy, highlighting the “laws of production” and “laws of distribution.”
On the theory of value, J.S. Mill examined the concepts of “exchange value”, “use value”, “value” and some others; he draws attention to the fact that value (value) cannot increase for all goods at the same time, since value represents is a relative concept.
Wealth, according to Mill, consists of goods that have exchange value as a characteristic property. “A thing for which nothing can be obtained in return, no matter how useful or necessary it may be, is not wealth... For example, air, although it is an absolute necessity for a person, has no price on the market, since it can be obtained practically free of charge." But as soon as the limitation becomes perceptible, the thing immediately acquires exchange value. The monetary expression of the value of a product is its price.
The value of money is measured by the number of goods with which it can be purchased. “All other things being equal, the value of money changes in inverse proportion to the quantity of money: any increase in quantity lowers its value, and any decrease increases it in exactly the same proportion... This is a specific property of money.” We begin to understand the importance of money in the economy only when the monetary mechanism malfunctions.
Prices are directly set by competition, which arises due to the fact that buyers try to buy cheaper, and sellers try to sell more expensive. With free competition, the market price corresponds to the equality of supply and demand. On the contrary, “the monopolist can, at his discretion, set any high price, as long as it does not exceed that which the consumer cannot or will not pay; but it cannot do this only by limiting supply.”
Over a long period of time, the price of a product cannot be lower than the cost of its production, since no one wants to produce at a loss. Therefore, a state of stable equilibrium between supply and demand “occurs only when objects are exchanged for each other in proportion to their production costs.”
Mill refers to capital as the accumulated supply of products of labor that arises as a result of savings and exists “through its constant reproduction.” Savings themselves are understood as “abstaining from current consumption for the sake of future benefits.” Therefore, savings grow along with the interest rate.
Production activity is limited by the size of capital. However, “every increase in capital leads or can lead to a new expansion of production, and without a certain limit... If there are people capable of working and food for their sustenance, they can always be used in some kind of production.” This is one of the main provisions that distinguishes classical economics from more recent ones.
Mill acknowledges, however, that there are other limitations to the development of capital. One of them is the decline in returns to capital, which he attributes to the fall in the marginal productivity of capital. Thus, an increase in the volume of agricultural production “can never be achieved otherwise than by increasing the input of labor in a proportion that increases the one in which the volume of agricultural production increases.”
In general, when presenting the question of profit, Mill tends to adhere to the views of Ricardo. The emergence of an average rate of profit causes profits to become proportional to the capital employed, and prices to be proportional to costs. “So that profits can be equal where costs are equal, i.e. costs of production, things must be exchanged for each other in proportion to the costs of their production: things whose production costs are the same must have the same value, because only in this way will the same costs bring the same income.”
Mill analyzes the essence of money based on the simple quantity theory of money and the theory of market interest.
Mill's work marked the completion of the development of classical economics, which began with Adam Smith.
5.2. Economic teachings of Karl Marx
One of the fundamental economic doctrines of the 19th century is Marxism. The ideas of Marx and Engels were presented in many works, but the main one, containing the economic concept of Marxism in the most expanded form, is considered “Capital”.
The first volume of Capital contains the definition of the concepts of value, exchange value, forms of value and their development. The study of forms of value, from simple to monetary, was important for studying the essence and origin of money. An important conclusion of Marx was the proposition that in conditions of spontaneous commodity production, the economic relations of people are manifested through the relations of things. This gives rise to commodity fetishism.
Next, Marx analyzes the process of exploitation of hired labor, formulates the doctrine of surplus value, which reveals the essence of labor power as a commodity, its common features with ordinary goods and specific features as a commodity of a special kind. In addition, Marx considers the process of production of surplus value. Of particular importance in Marx’s study of the mechanism for creating surplus value is the analysis of constant and variable capital, as well as the two main ways of increasing surplus value: by lengthening the working day and by reducing the necessary working time. The main conclusion of the first volume of Capital is the idea of the historical tendency of the capitalist direction.
In the second volume of Capital Marx examines the process of circulation of capital. He examines the metamorphoses of capital and their circulation, the circulation of capital, the reproduction and circulation of all social capital. Of great importance in the development of the Marxist doctrine of capital and its structure was the division of capital into fixed and circulating capital.
Marx’s analysis of the reproduction of all social capital is based on its division into two divisions – the production of means of production and the production of means of consumption. Using this division, Marx constructs his schemes of simple and expanded reproduction. Based on the analysis of these schemes, the movement of the social product is studied both within each division and between them.
The third volume of “Capital” contains a study of the process of capitalist production taken as a whole. It reveals the dialectical unity of the process of reproduction and circulation of capital, examines the transformation of surplus value into profit, profit into average profit, and value into the price of production. In addition, loan capital and interest are examined. Marx shows that loan capital is an isolated part of industrial capital, that in loan interest the fetishization of production relations reaches its highest level. The study of transformed forms of surplus value ends with an analysis of land rent.
In general, the economic theory of Marxism had a great influence on the development of European, and especially Russian, economic science.
Conclusion
The classical school of political economy is one of the mature trends in economic thought that has left a deep mark in the history of economic teachings. The economic ideas of the classical school have not lost their significance to this day. The classical movement originated in the 17th century and flourished in the 18th and early 19th centuries. The greatest merit of the classics is that they placed labor as a creative force and value as the embodiment of value at the center of economics and economic research, thereby laying the foundation for the labor theory of value. The classical school became the herald of the ideas of economic freedom and the liberal direction in economics. Representatives of the classical school developed scientific presentation about surplus value, profit, taxes, land rent. In fact, economic science was born in the depths of the classical school.
The main ideas of classical political economy are:
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Economic teachings of the Ancient World and the Middle Ages
1. The history of economic doctrines dates back to the period of occurrence: simple
1) natural economic ideology
2) mercantilist ideology
3) the ideology of classical political economy
2. Studying the history of economic doctrines reveals that economic science is characterized by: average
1) unidirectional development
2) non-unidirectional development
3) rejection of “old” ideas and theories
3. Studying the history of economic doctrines allows us to better understand the development of economic science: simple
1) past
2) present
3) past and present
4. The subject of studying the history of economic doctrines covers economic theories: simple
1) individual economists
2) schools of economic thought
3) individual economists and schools of economic thought
5. Representatives of economic thought of the pre-market era idealized: simple
1) money economy
2) natural-economic relations
3) liberal market relations
4) large trade
5) usurious transactions
6. The final stage of the era of economic teachings of the pre-market economy was the stage: simple
1) mercantilism
2) physiocratic doctrine
3) Smithian economic doctrine
7. The displacement of the previous stage or direction of economic thought by a new (alternative) stage or direction in the history of economic teachings occurs: average
1) upon completion of this stage or direction
2) through a time lag after the completion of this stage or direction
3) even before the end of the existence of one or another stage or direction
8. The stage of idealization of the principles of “pure” economic science took place in the era of economic teachings: average
1) pre-market economy
2) unregulated market economy
3) regulated market economy
9. The laws of Hammurabi regulated debt slavery with the purpose of:average
1) elimination of the slavery system
2) improvements economic situation slaves
3) a speedy transition to a market economy
4) ensuring the growth of tax revenues to the treasury
5) prevent the destruction of the foundations of natural economy
10. Aristotle refers to the sphere of chrematistics:average
1) agriculture
2) craft
3) beekeeping
4) usury and trade and intermediary operations
5) small trade
11. In accordance with the economic views of Aristotle and F. Aquinas, money is:simple
1) a completely useless product
2) the result of an agreement between people
3) the only manifestation of the wealth of a person and a state
4) a technical tool that facilitates exchange
5) spontaneously arising goods
12. According to the concept of “fair price” by F. Aquinas, the cost (value) of a product is based on:average
1) moral principle
2) cost principle
3) moral and ethical principle
4) costly and moral and ethical principle at the same time
5) principle of limit analysis
Topic 2. Mercantilism - the first concept of market economic theory
1. At the stage of the priority role in the economic science of mercantilism, the concept dominated:simple
1) protectionism
2) economic liberalism
3) social control of society over the economy
2. The subject of the study of mercantilism is:simple
1) sphere of circulation (consumption)
2) sphere of production (supplies)
3) sphere of agricultural production
4) the sphere of circulation and the sphere of production at the same time
5) a combination of economic and non-economic factors
3. The priority method of economic analysis of mercantilism is: simple
1) empirical method
2) causal method
3) functional method
4) historical method
5) mathematical method
4. BAccording to the economic views of mercantilists, wealth is:simple
1. gold and silver money
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The classical school of political economy arose during the period of the emergence and establishment of the capitalist mode of production. In the 16th century in England, new capitalist relations began to develop within the feudal system. Gradually, with the development of manufactures, the subordination of commercial capital to industrial capital occurs. However, mercantilism, which studied the problems of circulation, gives way to the classical school, which transferred research to the sphere of production. Political economy as a science began with the works of the classical school. It was the classics who made an attempt - and not unsuccessfully - to present the entire diversity of the economic world as a single whole, to bring together individual provisions, guesses, observations, conclusions into a system, to isolate and harmonize categories and concepts.
Appeal to the works of the founders of economic theory, as a rule, does not have a direct, narrowly utilitarian meaning. However, it is not without interest that some modern authors, using programming apparatus, are trying to mathematically verify the correctness of A. Smith’s basic postulates and the consistency of the most important provisions of his work.
Adam Smith (1723-1790) was a brilliant English economist, the founder of classical political economy. In 1776 The scientist’s famous work “An Inquiry into the Nature and Causes of the Wealth of Nations” was published. Since the appearance of this book, political economy has emerged as an independent economic science.
Smith's idea of the "invisible hand" is one of the main ideas of The Wealth of Nations. The meaning of this aphoristic expression is as follows.
Smith proceeds from the fact that everyone’s desire for their own benefit, to increase personal wealth, serves as the most important incentive human activity. This is the driving force behind actions. And this is a prerequisite for creating a fair and rational order in society.
Each participant economic activity is guided by his own interests and pursues personal goals. The influence of an individual on the implementation of the needs of society is almost imperceptible. But, chasing own benefit, a person ultimately contributes to an increase in the social product, the growth of the common good. The “invisible hand” of market laws leads to a goal that was not at all the intention of the individual. Smith showed the motivating power and significance of personal interest as an internal spring of competition and an economic mechanism.
David Ricardo (1772-1823) is one of the brightest personalities of classical political economy in England, a follower and active opponent of certain theoretical positions of Adam Smith. Economic theory Ricardo is the first scientific system of political economy of the period of industrial capitalism. Ricardo was a follower of Smith in an attempt to systematize economic knowledge and search for methods of theoretical explanation of the economy.
As is known, D. Ricardo consistently adhered to the labor theory of value. Labor has its price, which, in his opinion, is determined by the cost of subsistence required to support the worker and his family. Changes in wages do not affect the cost (and price) of the products produced. Only the ratio between wages and profits received by the entrepreneur changes: “Everything that increases wages necessarily reduces profits.” Thus, wages and profits are inversely related.
According to D. Ricardo, the value of a commodity or the quantity of any other commodity for which it is exchanged depends on the relative amount of labor that is necessary for its production, and not on the greater or lesser remuneration that is paid for this labor.
The prerequisite for the growth of wealth is the division of labor. Smith begins his study with an analysis of the division of labor. The division of labor increases the dexterity of each worker and saves time when moving from operation to operation. It promotes the use of more advanced machines and mechanisms, more effective techniques that make work easier and more effective.
Smith's famous example of the pin factory is mentioned in many textbooks. If everyone, working alone, performs all the operations, then in a day's work he is able to produce 20 pins. If a workshop employs 10 workers, each of whom specializes in one operation, then together they will produce 48,000 pins. As a result of the manufacturing organization of labor, its productivity increases 240 times.
Among other factors for the multiplication of wealth, Smith identifies population growth, an increase in the proportion of the population participating in production, the transition from manufacture to factory, freedom of competition, and the abolition of customs barriers.
In D. Ricardo’s work “Principles of Political Economy and Taxation” there is a special chapter “Cost and Wealth, Their Distinctive Properties.” Ricardo believes that it would be wrong to equate the increase in value with the increase in wealth. Unlike Smith, he distinguishes between value and material wealth. The size of wealth and its increase depend on the availability of essential necessities and luxuries at people’s disposal. No matter how the value of these items changes, they will equally give satisfaction to their owner. Value is different from wealth, it “depends not on abundance, but on the difficulty or ease of production.”
A prerequisite for increasing wealth, Ricardo notes, is an increase in labor productivity. The lower the cost of producing a unit of goods, the higher the results of labor efforts, the greater the amount of wealth. Ricardo considered the category capital as part of the country’s wealth, which is used in production and consists of food, clothing, tools, raw materials, machines necessary to set labor in motion.
John Stuart Mill (1806-1873) is the last representative of English classical political economy. His main work on economic theory, “Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy,” was published in 1848.
In his work “Principles of Political Economy,” he sought to combine and harmonize the ideas and provisions of his predecessors and colleagues, although there were many differences in their approaches to the analysis of economic reality. Mill acts not only as a taxonomist and popularizer of economic knowledge. He managed to deepen or clarify a number of provisions, find more comprehensive formulations, and more fully justify conclusions and conclusions.
Population theory is the only means of achieving full employment and high wages by voluntarily limiting population growth:
- 1. The theory of productive labor: only productive labor, the results of which are tangible, creates wealth. What is new is the work of protecting property and acquiring qualifications
- 2. wages are remuneration for labor and depend on the supply and demand for labor. Wages other things being equal, is it lower if labor is less attractive?
- 3. theory of rent - compensation paid for the use of land
- 4. value is relative: the creation of value by labor, the distinction between exchange and use value
- 5. a change in the quantity of money affects the change in the relative prices of goods (quantity theory of money)
Mill set the task of writing an updated version of A. Smith's The Wealth of Nations. And he succeeded to a certain extent. Throughout the second half of the nineteenth century, Mill's book (1848) was the undisputed bible of economists.
So, Mill systematized and deepened the ideas, provisions, and methodology of the classics. His “Principles of Political Economy” do not represent a new system, but a development of the previous concept of the classical school, its updated version.
The “classics” presented the processes occurring in the economy in the most general form as a sphere of interconnected laws and categories, as a logically coherent system of relations.
A. Smith and D. Ricardo showed that the source of wealth is not foreign trade (mercantilists), not nature as such (physiocrats), but the sphere of production, work activity in its diverse forms. The labor theory of value (value), which does not completely refute the usefulness of the product, served as one of the starting points of political economy.
The founders of the first truly scientific school tried to answer the question of what is the measure of labor. The interconnectedness of the main factors of production was demonstrated; identified problems that did not fit into the strict framework of classical theory.
From a search for external forces or an appeal to the “reason” of power structures, Smith and Ricardo turned their analysis into the sphere of identifying the internal reasons underlying the functioning of a market economy. The point is not just the versatility of the analytical conclusions of the classics, but their logic and consistency. The provisions and conclusions that the “classics” came to received a more complete and detailed disclosure in the works of followers and opponents.
The classical school is not just a set of principles and postulates. Such an assessment of the school would be too general and largely formal. Classical theory- this is “scaffolding” and at the same time the fundamental basis of science, open to development and deepening, clarification and expansion of topics, improving methodology, substantiating new findings and conclusions. The works of these greatest representatives of the school of classical political economy still remain relevant, because the world economy is developing according to their postulates.
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