The Evolution of Western Economics

First, domestic management originated in ancient Greece.

Aristotle (384-322 BC) was a famous philosopher and scientist in ancient Greece. His economic thoughts are mainly reflected in politics and ethics. In his view, the word economy should include two aspects: one is to study family relations, mainly the relationship between slave owners and slaves except husband and wife; The second is to learn the technology of getting rich.

Second, the stage of classical economics (political economy)

1. Adam Smith: master of classical economics (the first synthesis or revolution of economics)

Adam Smith (1723- 1790), a British ethicist and economist, is the founder of the classical political economy theory system. His main work is the study of the nature and causes of national wealth, also known as the wealth of nations. The starting point of Smith's study of economic problems is "economic man", that is, the self-interested nature of human beings. Inherited the tradition that British and French classical economists shifted their research focus from the circulation field to the production field, criticized the wrong view of mercantilism that foreign trade is the source of wealth, and got rid of the one-sided view of physiocratism that only agriculture can create wealth. He systematically expounded the basic principle of labor theory of value, and accordingly put forward that profit and land rent are part of the value created by labor. He opposes state intervention in the economy and advocates laissez-faire. His famous thesis "the invisible hand" is still one of the heated debates among economists.

2. The division of classical economics: Marxist political economics and (vulgar political) economics.

Smith has made great contributions to the development of economics. Say and others are committed to separating the vulgar elements in Smith and developing it into a vulgar economic system, that is, the present western economic system. On the one hand, Marx absorbed the scientific elements in Smith's theory, on the other hand, he criticized the wrong elements in his theory and created a scientific political economy system.

Characteristics of classical Marxist political economy: Classical Marxist political economy dissects and criticizes capitalist society, and it is a revolutionary political economy in which the proletariat opposes the bourgeoisie and overturns the capitalist system. Therefore, the classical Marxist political economy mainly studies the relations of production related to or behind material production or the conflicts of interests between people under the capitalist mode of production. At the same time, it also makes Marxist political economy focus on the behavior analysis and interest contradiction analysis of different classes, while ignoring the analysis of specific people's behavior and economic behavior. In Marx's view, man is human-like, social and abstract, with only class nature and concrete humanity. Therefore, Marxist political economy can well explain the laws of change, development and historical change of production relations, but it fails to explain people's economic behavior, economic development and economic operation under specific historical conditions.

(Vulgar Politics) Economics: As the ideology of capitalist superstructure, classical (political) economics began in the second half of18th century, and its main task shifted to defending capitalist order and developing capitalist economy, thus forming what Marx called vulgar political economics or modern economics. From the academic point of view, vulgar political economy inherits Smith's vulgar part and regards capitalist society as the end of eternal society and history, so it only studies the external relationship of economic phenomena and defends the capitalist system (free market economic system). Finally, at the end of 19 and the beginning of 20th century, political economics was replaced by economics, and policy economics was regarded as political economics.

Third, Marshall: neoclassical school economics (from political economics to economics, the second synthesis)

1. "Neoclassicism School"

It is an influential school founded by Marshall, a famous British economist, at the end of 19. They analyze the process of price formation and resource allocation in the economic system with the local equilibrium theory as the analytical tool and the value and distribution theory as the core. Marshall absorbed various new vulgar economics theories on the basis of traditional British vulgar economics, and wrote Principles of Economics (1890), which eclectically combined supply and demand theory, production cost theory, marginal utility value theory and marginal productivity theory, and established an economic system with "equilibrium price theory" as the core. Its characteristics are: explaining human economic behavior with subjective psychology; Analyze social and economic phenomena with social Darwinian evolution theory and "continuity principle"; In methodology, it absorbs the marginal analysis method of marginal utility school and the concept of equilibrium in mechanics. Regarding the decision of value and price, classical economists generally explain it from the supply side as the production cost, while marginal utility school focuses on the demand side as the utility. Marshall integrated the two and thought that the value and price of goods depended on the equilibrium point of supply and demand. Contemporary western economists call the Cambridge School "neoclassical school", mainly because it is "new" to the classical school in this respect. He is an active advocate of laissez-faire

2. Keynesian Revolution

Keynes John Maynard, 1883- 1946, was the most influential British bourgeois economist in modern times. He has held many important positions in the British government and served as a senior official of the British Treasury. His main work is General Theory of Employment, Interest and Money. In view of the periodic economic crisis in capitalist society, the theory of effective demand is put forward, which holds that the lack of effective demand is due to three basic psychological laws (the law of decreasing consumption tendency-leading to insufficient consumption demand, the law of decreasing marginal efficiency of capital and the law of liquidity preference, that is, people prefer assets that are easy to flow, so they like to keep some assets in cash-leading to insufficient investment demand); The investment multiplier theory is put forward, which holds that if the investment expenditure or government expenditure increases to a certain extent, the national income will definitely increase exponentially. On this basis, Keynes emphasized the implementation of national macro-control, stimulating consumption, investment and improving "marginal efficiency of capital" through monetary policy and fiscal government, expanding the export policy of goods and capital, and adding welfare policy, so as to adjust the domestic class interest contradiction, smooth periodic economic fluctuations and promote the sustained and stable development of capitalism.

Since Keynes, western economics has been divided into microeconomics and macroeconomics. Macroeconomics, on the other hand, involves more social and economic issues, including how the state manages the social economy, what kind of economic policies it adopts to promote social and economic development, resolve conflicts of different interests in society and achieve social stability.

Fourth, contemporary western mainstream economics (Samuelson, neoclassical comprehensive school, the third comprehensive school)

Professor Samuelson of MIT is a representative scholar of contemporary western mainstream economics. Starting from 1948, his book Economics, co-authored with William .Nordhaus, a professor at Yale University, was published in 1998. It is the best-selling economics professor's book in the world with more than 40 translations.

Samuelson's "neoclassical synthesis" keeps pace with the times on the basis of adhering to the basic principles of neoclassical school. His economics covers (comments or reflects) the forefront of contemporary economics, thus becoming the mainstream economics in the contemporary west.