History of Economic Thought. Economic views of W. Petty (most important)

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History of Economic Thought. Economic views of W. Petty (most important)

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22. ECONOMIC VIEWS W. PETTY

Along with the emergence of mercantilism, the prerequisites for a powerful economic doctrine arise. - classical political economy. The founder of this area of economic science is the English economist W. Petty (1623-1687).

The main ideas of classical political economy in the views of Petty:

1) research not into the circulation process, but directly into the production process;

2) a critical attitude towards unproductive classes (merchant) who do not create any product;

3) attributing material production labor to productive labor.

The wealth of the nation is created in all spheres of material production.

Labor - the basis of wealth.

Wealth Criteria: the richest will be the period in which each participant in the division (provided that the money is divided equally) will be able to hire more workers.

Influenced by mercantilists W. Petty singled out foreign trade, which, in his opinion, contributes to the increase of wealth to a greater extent than other industries. He formulated fundamentals of the labor theory of value (the basis of the equality of exchange of goods is the equality of costs). Value is created by the labor that is spent on the production of gold and silver (this shows the influence of the mercantilists).

The value of the products of labor in other branches of production is determined only as a result of their exchange for precious metals.

Surpassing the physiocrats, W. Petty suggested that surplus product is equal to the difference between the cost of the product and the costs.

rent considered not a gift of the land, but a product of labor, which has greater productivity on lands of better quality.

Fifth introduced the concept differential rent (the cause of which is the difference in fertility and location of the land). Having analyzed the rent and defined it as the net income from the land, W. Petty raises the question of land price (defining it as the sum of a certain number of annuities).

Percent defined as compensation for the inconvenience that the creditor creates for himself by suing money.

"Natural" rate of interest is equal to the rent on as much land as could be bought with the money lent (here also an allusion to the opportunity cost doctrine). All economic ideas are presented in the form of conjectures and do not represent a complete theory.

W. Petty went down in history as an inventor Statistics. He created an analysis of meager data, described methods for indirectly determining the values of certain indicators, in particular the sampling method. Using these methods, Fifth first calculated the national income and national wealth of England.

National income defines as the sum of consumer spending of the population, neglecting the share of national income going to accumulation.

National Treasure Petty defines as material wealth and includes there the monetary value of the population itself.

The birth of classical political economy is associated with the name of Petty, and its creators were A. Smith и D. Ricardo.

Author: Tatarnikov E.A.

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