1) Adam Smith was a key figure of the Scottish Enlightenment who is best known for his 1776 work The Wealth of Nations, which is considered a foundation of modern economics. It used the early economy of the Industrial Revolution as a starting point to discuss topics like division of labor, productivity, and free markets. 2) The document discusses many influential economic thinkers from the 18th-19th centuries like David Ricardo, John Stuart Mill, Karl Marx, and John Maynard Keynes and summarizes some of their major works and contributions to fields like macroeconomics, political economy, and theories of value and capital. 3) It also outlines economic concepts discussed by these thinkers like supply and

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 ADAM SMITH
- “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from
their regard to their own interest.”
- Met the philosopher David Hume, and collaborated with him on writings covering history, politics, philosophy,
economics, and religion.
1) The Theory of Moral Sentiments (1759)
- Provided the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works,
a) Essays on Philosophical Subjects (1795)
b) Lectures on Justice, Police, Revenue, and Arms (1763)
2) An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
- Published in 1776 by W. Strahan and T. Cadell, London
- Published during the Scottish Enlightenment and the Scottish Agricultural Revolution.
- Offers one of the world's first collected descriptions of what builds nations' wealth and is today a fundamental
work in classical economics.
- Used as starting point the economy at the beginning of the Industrial Revolution.
- Touches upon such broad topics as the division of labor, productivity, and free markets.
 Classical theory of Macroeconomics
- Unemployment is an abnormal case
- Unemployment is a self-correcting problem
- Wages are flexible downwards
- Full employment: D=S
- Unemployment: D<S
 WILLIAM PITT THE YOUNGER
- Youngest prime minister (24 y/o)
- Lowered the duties, and to compensate the immediate loss of revenue he imposed a window tax which could
not be evaded because the number of windows in a house could be ascertained by the simple process of
counting.
- Taxation is to a certain extent a check upon the increase of wealth, the state, which must impose taxation for
the purposes of revenue, should see that the whole of the tax goes to the revenue.
 EDMUND BURKE
- Founding father of conservatism
- Supported economic liberty because society could allocate resources better than a few individuals, but liberty
did not imply license.
- If nobility was the “soul” of the social order, freedom was the “vital spring” of economic energy and the key to
national prosperity
- Private property is the foundation of a just social order and the spur to personal industry and national
prosperity.
- Strong supporter of the free market system
 JEREMY BENTHAM
- Father of Utilitarianism
- The happiness of the greatest number of people in the society is considered the greatest good
- Felicific Calculus - an attempt to measure economic welfare in the scientific sense
 The principles of morals and legislation - Nature has placed mankind under the governance of two sovereign
masters, pain and pleasure.

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 JEAN BAPTISTE SAY
- Say’s Law: Supply creates its own demand
- it is not the abundance of money but the abundance of other products in general that facilitates sales
- A glut of goods cannot persist over a long term because the production of goods will motivate producers to buy
other goods
 DAVID RICARDO
1) On the Principles of Political Economy and Taxation
- Land rent grows as population increases
- Theory of Comparative Advantage
2) Distribution Theory
- All land is used for production of corn
 3 kinds of people:
- Capitalists - start the economic growth process by saving and investing. In return, they receive profits
- Workers - represent the labor force in return for wages
- Landlords - allow production to take place in their lands in return for rent
- Profits are determined as a surplus of production
3) Theory of Comparative Advantage
- In favor of free trade and specialization
- A country that trades for products it can get at a lower cost from another country is better off than if it had been
made at home
- each country specializes in producing the good for which its comparative cost is lower
4) Rent of Land
- Borrowed from Thomas Malthus’ ideas
- As more land was cultivated, farmers would have to start using less productive land
- Tenant farmers would be willing to pay more to rent the highly productive land
- Result: the landowners are the ones who gain from productive land
 JOHN STUART MILL
- Liberty: “There are many truths of which the full meaning cannot be realized until personal experience has
brought it home.”
1) Utilitarianism
- The "greatest-happiness principle“
- Argument: qualitative separation of pleasures
- All forms of happiness is equal
2) Principles of Political Economy
- Differentiating restrictions on "unearned" incomes, which he favored, and those on "earned" incomes
- Production and distribution of wealth, which he defines as everything that serves human desires that is not
provided gratuitously by nature. The most important elements in wealth are goods currently produced.
- The produce of society is divided among the three classes who provide productive agents: labor, capital, and
land.
 KARL MARX
- focused on capitalism and economic theory
- Marx held that history was a series of class struggles between owners of capital (capitalists) and workers (the
proletariat). As wealth became more concentrated in the hands of a few capitalists, he thought, the ranks of an
increasingly dissatisfied proletariat would swell, leading to bloody revolution and eventually a classless society.

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- The labor theory of value, decreasing rates of profit, and increasing concentration of wealth
- Capitalism contained the seeds of its own destruction
- Communism was the inevitable end to the process of evolution begun with feudalism and passing through
capitalism and socialism.
- Marx wrote extensively about the economic causes of this process
1) Das Kapital – centralization of economic decisions
 GEORG WILHELM FRIEDRICH HEGEL
1) Critical Journey on Philosophy: collaboration with Schelling
2) The Difference Between the Philosophical Systems of Fichte and Shelling - critique some of the basic assumptions
of Kantian idealism
3) Phenomenology of Spirit - history of consciousness in the lived world
 ROSA LUXEMBURG
- One of the founders of the Social Democratic party of Poland
- Developed a humanitarian theory of Marxism, stressing democracy and revolutionary mass action to achieve
international socialism.
1) Accumulation of Capital
- the analysis of the methods and practices of Imperialism
- how the development of capitalism is enforced by the great capitalist powers onto non-capitalist regions
- to carry on simple reproduction, the product produced by the workers with the help of the means of production
must again find a market
 SIDNEY WEBB
- Co-founder of London School of Economics
1) History of Trade Unionism
- Tackles the idea of poverty in London, the eight hour day, land nationalization, the nature of socialism,
education, eugenics, and reform of the house lords.
 WILLIAM STANLEY JEVONS
- Advances the so-called marginal revolution.
- Theory of marginal utility to understand and explain consumer behavior.
- The theory held that the utility (value) of each additional unit of a commodity—the marginal utility—is less and
less to the consumer.
 equation of exchange
- Shows that for a consumer to be maximizing his or her utility, the ratio of the marginal utility of each item
consumed to its price must be equal.
 ALFRED MARSHALL
- Economics of Industry
 Supply-Demand Synthesis
- supply and demand simultaneously operate to determine price
- prices reflect both the marginal evaluation that consumers place on goods and the marginal costs of producing
the goods
 ARTHUR CECIL PIGOU
- Externalist Father of Economics
- Externality: An external effect, often unforeseen or unintended, accompanying a process or activity

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1) The Economics of Welfare (Externality)
- Costs imposed or benefits conferred on others that are not taken into account by the person taking the action.
He argued that the existence of externalities is sufficient justification for government intervention, corrected by
the imposition of a Pigovian tax.
- Externality occurs when some of the costs or the benefits of a good or service are passed onto or “spill over to”
someone other than the immediate buyer or seller.
2) Positive Externalities
- Benefit that is enjoyed freely by a third-party as a result of an economic transaction
- Causes demand-side market failures because of the unwillingness to pay of the third party who receive the
external benefits caused by the positive externality.
3) Negative Externalities
- Pollution
- Causes supply-side market failures, in which their supply curves do not capture all the costs legitimately
associated with the production of their goods.
4) Pigovian Tax
- tax on such activities to discourage creation of negative externalities
 CARL MENGER
- Austrian economics and a cofounder of the marginal utility revolution
- “Goods are valuable because they serve various uses whose importance differs”
1) Diamond-Water Paradox
- Paradox of value
- Water is more useful in terms of survival than diamonds, diamonds command a higher price in the market
because of its rarity
- Diamonds and other precious stones derive their value from their relative scarcity and the intensity of labor
required to extract them.
2) Subjective theory of Money
- An object’s value is not inherent, and is instead worth more to different people based on how much they desire
or need the object.
- Both sides gain from exchange. People will exchange something they value less for something they value more
 LEON WALRAS
1) General Equilibrium Theory
- Macroeconomic theory
- It shows how supply and demand are in equilibrium prices in multiple markets
- All markets excess demands or excess supply must be zero or sum to zero
- If a demand or supply shifts the other market should shift as well and must sum to zero
2) Walras Law
- Existence of excess supply in one market must be matched by excess demand in another market so that it
balances out. So when examining a specific market, if all other markets are in equilibrium
 VILFREDO PARETO
1) Pareto Distribution Diagram
- Vertical bar graph in which values are plotted in decreasing order of relative frequency from left to right.
- Useful for analyzing what problems need attention first because the taller bars on the chart (frequency) clearly
illustrate which variables have the greatest cumulative effect on a given system.
2) Pareto Principle
- Observation (not law) that most things in life are not distributed evenly.

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3) Pareto Efficiency
- An economic state where resources are allocated in the most efficient manner.
- Obtained when a distribution strategy exists where one party's situation cannot be improved without making
another party's situation worse.
4) Pareto distribution
- Used in description of social, scientific, geophysical, actuarial, and many other types of observable phenomena.
5) Pareto Index
- A measure of the breadth of income or wealth distribution.
 FRANCIS YSIDRO EDGEWORTH
1) Edgeworth's conjecture
- Introduced into economics the generalized utility function, U (x, y, z, ...), and drew the first 'indifference curve‘
2) Taxation paradox
- Taxation of a good may actually result in a decrease in price.
- “Optimal distribution of taxes should be such that 'the marginal disutility incurred by each taxpayer should be
the same‘
3) Monopoly pricing
- Price competition between two firms with capacity constraints and/or rising marginal cost curves resulted in
indeterminacy
 FRIEDRICH HAYEK
1) Economic calculation problem
- A criticism of using economic planning as a substitute for maker-based allocations of the factors of production
2) Catallaxy
- Theory of the way the free market system reaches exchange ratios and prices.
3) Dispersed knowledge
- All factors that influence prices and production throughout the economic system is the dispersion of
controversial and knowledge in the economic world
4) Price signal
- Information conveyed to consumers and producers via priced charge for a product or service
5) Spontaneous order
- Describes the emergence of various kinds of social orders from a combination
 CLEMENT JUGLAR
- First to analyze periodic fluctuations in the general rate of economic activity, as measured by the levels of
employment
- Paid particular attention to the behavior of bank balances, which he regarded as a barometer of commercial
affairs.
 NIKOLAI KONDRATIEV
- Promoted small private, free market enterprises in the Soviet Union
- Best known for proposing the theory that Western capitalist economies have long term (50 to 60 years) cycles of
boom followed by depression.
1) Kondratiev waves
- A long-term cycle present in capitalist economies that represents long-term, high-growth and low-growth
economic periods.
- These long cycles were a feature of the economic activity of capitalist nations, and that they involved periods of
evolution and self-correction.

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 WILHELM GEORG FRIEDRICH ROSCHER
- Tried to establish the laws of economic development by using the historical method from the investigation of
histories legal, political, cultural and other aspects.
- Developed a cyclical theory where nations and their economies pass through youth, manhood and senile decay:
- “The method of a science is of greater significance by far than any single discovery, however amazing the later
may be.”
 THORSTEIN VEBLEN
1) The Theory of the Leisure Class
- “conspicuous consumption” - consumption undertaken to make a statement to others about one’s class or
accomplishments
 JOHN MAYNARD KEYNES
- Inflows > Outflows = increase in employment
- Outflows > Inflows = increase in unemployment
- Inflows = private/public investments, exports
- Outflows = savings, imports, taxes
- Higher interest rates = people saves more, less investment
- Lower interest rates = people saves less, more investments
- “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the
greatest good of everyone.”
- “In the long run we are all dead.”
- “The avoidance of taxes is the only intellectual pursuit that still carries any reward.”
1) The General Theory of Employment, Interest and Money
- Introduced the notion of aggregate demand as the sum of consumption, investment, and government spending;
and because it showed that full employment could be maintained only with the help of government spending.
- Advocated that wages must be kept stable. A general cut in wages, he argued, would decrease income,
consumption, and aggregate demand.
2) Modern Macroeconomic Theory
- Unemployment is a normal case
- Unemployment is not a self-correcting problem
- Wages are not flexible downwards
3) Stages in the economic cycle
- Prosperity
- Depression
- Recession
- Recovery
4) Monetary policy
- The way to stabilize the economy is to stabilize the price level, and that to do that the government’s central
bank must lower interest rates when prices tend to rise and raise them when prices tend to fall.
5) Fiscal Policy
- The use of government spending and taxation to influence the economy.
 JOSEPH SCHUMPETER
- Recession are how capitalism moves forward, weeding out the inefficient and making way for new growth
- Profit comes from innovation - does not derive from capital or labour
- Entrepreneurs: new class of person, an “upstart” outside the capital-owning or working class who innovates
- Innovation: creates new markets far more effectively than Smith’s “invisible hand” or free-market competition

7. @sirjeric
1) The Theory of Economic Development
- Economics is a natural self-regulating mechanism when undisturbed by social and other meddlers
 Features
1) Circular flow
2) Role of the entrepreneur
3) Business cycles or cyclical process
4) The decay of capitalism
 DOUGLASS NORTH
1) The New Institutional Economics and Development
- An attempt to incorporate a theory of institutions into economics
- Builds: Competition - The fundamental assumption of scarcity and hence the basis of the choice theoretic
approach that underlies microeconomics
- Abandons: Instrumental Rationality - The assumption of neoclassical economics that has made it an institution-
free theory.
L,N,K,E
R,W,I,
g/s
Consumption
Savings
Taxes
*Outflows*
Imports
*Inflows*
Exports