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MOST IMPORTANT SCIENTIFIC DISCOVERIES
Fundamentals of classical economics. History and essence of scientific discovery
Directory / The most important scientific discoveries “Sporadic economic views, rather fragmentary and naive, have been known since ancient times. The term “economy” itself comes from the Greek “housekeeping,” writes V.N. Kostyuk. And then he continues: "... In particular, the writings of J. Calvin (1509-1546) became a harbinger of the economic views of the New Age. Despite their distinct religious form, they had a very specific economic content. The world is ruled by divine predestination (God predestined some to eternal bliss, others to eternal torment), however, each person, not knowing this, must think that he is God's chosen one, and prove his chosenness with all his activities. Monetary success is evidence of this. A person must be thrifty, prudent, active and honest - this is his moral duty to God. The doctrine of Calvin (in general, Protestantism) helped to develop the spirit of enterprise and thrift in Holland and England, and then in the USA ... ... Gradually, a school of mercantilists arose, the creation of which meant the appearance of the first more or less systematized economic views. According to mercantilists, wealth is money and money is gold and silver. A commodity has a value because it is bought with money. The source of wealth is foreign trade. XVI century - early mercantilism. The economic goal of the state is to increase the amount of gold in the country. The export of money abroad was prohibited. ... Late mercantilism (XVII century) arose after the great geographical discoveries. The state is richer, the greater the difference between the value of exported and imported goods (trade surplus and the capture of foreign markets). Export is encouraged, and the import of foreign goods (with the exception of cheap raw materials) should be subject to duties. Such economic measures were later called protectionism. The most famous representatives of mercantilism were W. Petty, D. Locke, D. Lowe. Later, in the second half of the XNUMXth century, the French economists, the Physiocrats, replaced the mercantilists. According to them, the laws of economics are natural. They cannot be violated without harm to production and to the people themselves. The laws are so natural that they are clear to everyone and everyone. No one needs to be taught what to do and how to do it. The source of wealth is land and labor, not foreign trade. However, money is only a medium of exchange. They do not represent wealth. The difference between the physiocrats and the mercantilists manifested itself in another aspect. The first believed that all wealth is created in agriculture, only agricultural labor is productive, since God creates the harvest. The most prominent physiocrats were Cantillon, Gourney, Quesnay and Turgot. Such were the economic views until the famous book appeared in 1776 Adam Smith "A Study on the Nature and Causes of the Wealth of Nations" is a work that combines abstract theory with a detailed description of the features of the development of trade and production. This work is rightfully considered the beginning of classical economics. Adam Smith (1723–1790) was born in the small Scottish town of Kirkcaldy. His father, a petty customs officer, died before his son was born. Mother zealously raised Adam and had a great moral influence on him. At the age of fourteen, Smith comes to Glasgow to study mathematics and philosophy at the university. The most vivid and unforgettable impressions left him with the brilliant lectures of Francis Hutchison, who was called "the father of speculative philosophy in Scotland in modern times." In 1740, Smith went to study in England at Oxford. Smith considered the six years spent here the most unhappy and mediocre in his life. Smith returned to Scotland and, abandoning his intention to become a priest, decided to earn his livelihood through literary activity. In Edinburgh he prepared and delivered two courses of public lectures on rhetoric, belles-lettres and jurisprudence. These speeches brought Smith the first glory and official recognition: in 1751 he received the title of professor of logic, and the very next year - professor of moral philosophy at the University of Glasgow. Smith befriended the noted Scottish philosopher, historian and economist David Yutz in 1752. In many ways, they were similar, both were interested in ethics and political economy, had an inquisitive mindset. Some of Hume's brilliant guesses were further developed and embodied in Smith's writings. In 1759, Smith published his first work, which brought him wide fame - "The Theory of Moral Sentiments". This is one of the most remarkable works on ethics of the eighteenth century. Smith became so popular that shortly after the publication of Theory, he received an offer from the Duke of Buckley to accompany his family on a trip to Europe. The journey took almost three years. They left England in 1764, visited Paris, Toulouse, other cities of southern France, and Genoa. The months spent in Paris were remembered for a long time - here Smith met almost all the outstanding philosophers and writers of the era. He met with d'Alembert, Helvetius, but especially became close to Turgot - a brilliant economist, the future inspector general of finances. Smith's poor knowledge of French did not prevent Smith from having long conversations with him about political economy. Their views had much in common: the ideas of free trade, restrictions on state intervention in the economy. Returning to his homeland, Adam Smith retires to the old parental home, devoting himself entirely to working on the main book of his life. In 1776, An Inquiry into the Nature and Causes of the Wealth of Nations was published. The Wealth of Nations is an extensive treatise of five books, containing an outline of theoretical economics (I-II books), a history of economic doctrines, in connection with the general economic history of Europe after the fall of the Roman Empire (III-IV books) and financial science, in connection with the science of management (V book). Smith obstructs the ideas of mercantilism. This criticism was not abstract reasoning: he described the economic system in which he lived and showed its unsuitability for new conditions. Probably helped by the observations he made earlier in Glasgow, then still a provincial city, gradually turning into a major commercial and industrial center. According to the apt remark of one of his contemporaries, here after 1750 "not a single beggar was seen on the streets, every child was busy with work." The main idea of the theoretical part of The Wealth of Nations can be considered the position that the main source and factor of wealth is human labor - in other words, the person himself. The reader encounters this idea in the very first pages of Smith's treatise, in the famous chapter "On the division of labor." The division of labor, according to Smith, is the most important engine of economic progress. Smith was not the first to seek to debunk the economic fallacies of the policy of mercantilism, which assumed artificial encouragement by the state of certain industries, but it was he who managed to bring his views into a system and apply it to reality. He defended freedom of trade and non-intervention of the state in the economy - "the free disposal of one's labor is the most sacred and inviolable kind of property." Smith believed that only they would provide the most favorable conditions for obtaining the greatest profit, which means that they would contribute to the prosperity of society. Smith believed that the functions of the state should be reduced only to the defense of the country from external enemies, the fight against criminals and the organization of those economic activities that are beyond the power of individuals. As a condition that places a limit on the possible division of labor, Smith points to the vastness of the market, and in this way raises the whole doctrine from a simple empirical generalization, expressed by the Greek philosophers, to the level of a scientific law. In the doctrine of value, Smith also highlights human labor, recognizing labor as the universal measure of exchange value. According to Smith, society is an exchange union where people exchange the results of labor. At the same time, each person pursues his own personal interests: "We do not expect our dinner from the disposition of the butcher, brewer or baker, but from their predilection for their own benefits." Mutually beneficial exchange in saving the labor of each of its participants. He also emphasizes that exchange and division of labor are interrelated. The certainty of being able to exchange all that surplus of the product of his own labor, which exceeds his own consumption, for that part of the product of other people, which he may need, induces each person to devote himself to a certain special occupation and develop to perfection his natural gifts in this special field. ". Through such a division of labor, people cooperate in creating a national product. Speaking about the theory of value, Smith distinguishes between use value and exchange value. Consumer allows you to directly meet the needs of a person. The exchange allows you to purchase other items. V.N. Kostyuk writes in his article about Smith: "... A market economy, not subject to a single plan and a common center, nevertheless works according to quite certain strict rules. The influence of each individual individual is imperceptible. He pays the prices that are asked of him , choosing the goods and services of interest to him, taking into account the size of his income.But the totality of all these individual actions sets prices, and thereby incomes, costs and profits.Thus, the action of the market provides a result that does not depend on the will and intention of individual individuals.Expanding the scale of the market increases over time the advantages associated with the division of labor, and thus provides a long-term increase in wealth. This is the famous "invisible hand" principle. Contrary to the popular view that the public good is higher than the personal and that the common good should be sought, Smith showed that individual interests should be put at the forefront, that is, "the natural desire of each person to improve his situation." The growth of social wealth and the priority of social values will then be established by themselves (market self-regulation of the economy). The desire of people to improve their situation, to have money and to make a profit will restore order and realize social ideals spontaneously, regardless of the desire of anyone. We must not allow free competition to be violated by the state, otherwise a monopoly will arise. "The price charged by a monopoly ... is the highest that can be obtained. The natural price resulting from free competition, on the contrary, is the lowest." Obstacles to the movement of labor also lead to similar results. "Everything that hinders the free circulation of labor from one industry to another, likewise constrains the circulation of capital, since the amount of the latter ... is highly dependent on the amount of labor circulating in it." An analysis of the concept of natural price leads Smith to single out three main parts in it: wages, profits and rents. Each piece represents someone's income. Let us say that wages are the income of wage-workers, profit is the income of capitalists, and rent is the income of landowners. So, we can conclude that there are three main classes of society. Smith emphasizes that the functioning of money is impossible without the trust of citizens in them: “When ... people have such faith in the welfare, honesty and prudence of a banker that they believe that he will always be able to pay in specie on presentation of tickets and obligations, in whatever No matter how many they were presented at the same time, these tickets soon receive the same circulation as gold and silver coins, precisely because of the certainty that they can be exchanged for money as soon as it pleases. Smith develops the "invisible hand" principle. Initially developing it in relation to one country, he then spreads his findings to the whole world. The originality of Smith's theory was not in particulars, but in general: his system was the most complete and perfect expression of the ideas and aspirations of his era - the era of the fall of the medieval economic system and the rapid development of the capitalist economy. Gradually, Smith's ideas found practical application in his homeland, and then everywhere. Author: Samin D.K.
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