What are the main issues studied in economics?

Economics is a social science that studies human behavior and how to rationally allocate limited or scarce resources. The so-called social science is the study of human behavior and group relations, or behavioral science. Economics studies the economic behavior of individuals and society. The so-called economic behavior is the behavior of choice.

Economics studies the production, distribution, and consumption of goods or services, and the consumption and use of finite resources in this process.

Origin and development

Adam Smith

Adam Smith, an Englishman who is recognized as the "father of economics," wrote The Wealth of Nations in 1776 (the full title is An Inquiry into the Nature and Causes of National Wealth). The Wealth of Nations is the founding work of modern economics and the theoretical foundation of capitalist free economy. Adam Smith put forward the concept of the "invisible hand", i.e. the market automatically regulates the allocation of resources. At the same time, he advocated government inaction and non-interference in economic development.

Under the guiding principle of The Wealth of Nations, the governments of early bourgeois countries provided the necessary free space for the development of capitalism in their countries. Modern capitalism has thus flourished through the technological and navigational advances of the emerging industrial revolution.

Karl Marx

100 years after The Wealth of Nations, the inevitability of cyclical economic crises and the ills of uneven distribution of social wealth and disparity between the rich and the poor gradually emerged behind the liberal economic boom. The German Karl Marx believed that a country's economy was represented by its labor force, and the liberal capitalist economy aimed at maximizing profits. In order to achieve this, capitalists are extremely harsh on their workers in order to reduce the cost of production. In his 1867 book Capital, Marx put forward the theories of "primitive accumulation of capitalism" and "surplus value," and argued that the contradictions of the developing classes in capitalism were irreconcilable. He predicted that the bourgeoisie would be replaced by the proletariat, that the concept of the state would disappear, that there would be a renewal of society at all levels and a redistribution of resources, and that an ideal ****proletarian society would eventually emerge.

John Keynes

Entering the 20th century, the liberal capitalism advocated by Adam Smith has shown all kinds of pathologies and crises. The high development of productive forces has led to the overproduction of commodities, destroying the economy's equilibrium between supply and demand. Monopolistic capitalist enterprises have cut wages drastically and even laid off workers in order to maintain profits. This led to a decline in the incomes of workers as well as consumers, and an even tighter demand for commodities, which ultimately led to a collapse of supply and demand. the Great Depression in the United States at the beginning of the twentieth century is a typical example.

In 1936, British economist John Maynard Keynes published The General Theory of Employment, Interest and Money. He advocated that the state should adopt an expansionary economic policy at the macro level, using methods such as regulating interest rates, tax rates and increasing government spending to balance the structure of supply and demand. Keynesianism broke the dogma of the "invisible hand" and became the mainstream of Western economics after World War II. Keynes himself is also known as the "father of post-war prosperity".