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History of economic thought. Course of lectures: briefly, the most important

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Table of contents

1. At the origins of economic thought (Economic thought of ancient Greece and ancient Rome. Economic thought of the Middle Ages)
2. First economic schools (Mercantilism - theory and practice. Physiocrats)
3. Classical political economy (Classical economic theory - origins. Economic views of W. Petty. The formation of political economy as a science. Economic views of A. Smith. Economic views of D. Ricardo)
4. The development of classical political economy in the works of economists of the 19th century: followers and opponents (Economic views of J. B. Say. Economic views of T. Malthus. Economic views of S. Sismondi. Economic views of J. Mill)
5. Marxist political economy (Economic views of K. Marx. Social and philosophical views of K. Marx)
6. Austrian School of Economics (Marginal utility theory as a pricing theory. Production cost theory. Böhm-Bawerk interest theory)
7. Anglo-American School of Economics (The theory of marginal productivity by J. Clark. Economic views of A. Marshall)
8. Historical school and institutionalism (The contribution of the historical school to the development of economic theory. Institutionalism. Economic views of T. Veblen)
9. Theories of general equilibrium and economic development (L. Walras. Creation of a model of general economic equilibrium. Economic views of J. Schumpeter. Evolution of the theories of profit and entrepreneurship)
10. Theories of monopoly and monopolistic pricing (Analysis of the process of monopolization of the economy by representatives of the historical school and Marxism. The theory of monopolistic competition by E. Chamberlain. The theory of imperfect competition by J. Robinson)
11. Economic theories of welfare (Evolution of views on welfare problems. A look at the economic theory of welfare by V. Pareto. “Pareto Optimum”. The theory of economic welfare by A. Pigou)
12. Economic views of John Keynes (Theory of effective demand. Price and inflation in the theory of J. Keynes. Economic program of J. Keynes)
13. Neoliberalism (Economic ideas of the founder of neoliberalism L. Mises. Economic views of F. Hayek)
14. Monetarism and the theory of rational expectations (Evolution of the quantity theory of money. Basic postulates of monetarism. Economic views of M. Friedman. Friedman's equation. Theory of rational expectations)
15. Russian economic thought
16. Conclusion
17. Short Biographies of Economists

LECTURE 1. AT THE ORIGINS OF ECONOMIC THOUGHT

1. Economic thought of ancient Greece and ancient Rome

Why do we start the study of the course "History of Economic Doctrines" with an examination of the views of the thinkers of Ancient Greece? Did humanity really have no idea about the economy before them? Apparently, this is not the case, given that the economy is as old as human society. But since economic thought is not initially separated from other forms of thinking about society, it is impossible to accurately determine its first manifestations. If you wish, you can prove that the first economic work is the Bible. This is a matter of the author's preferences and an argument here would be meaningless.

So, why does our course begin with the economic thought of Ancient Greece? First, we pay tribute to the people who gave science its name. "Economics" - a word of ancient Greek origin, literally means "housekeeping". For the first time it is found in the Greek thinker Xenophon, being the title of an essay in which reasonable rules for housekeeping and agriculture are considered. By the way, this word (the science of household) has retained this meaning for centuries. But not only this determines our attention to the economic views of this era.

Economic thought is not just the sum of observations and information about economic life. It presupposes a certain generalization, abstraction, that is, a definite economic analysis. The ancient Greek thinker Aristotle (384-322 BC) was the first to analyze economic phenomena and tried to identify the patterns of development of society. Therefore, he can rightfully be called the first economist in the history of science.

We will dwell on the views of Aristotle in more detail, because:

▪ firstly, his economic views were developed in the economic thought of the Middle Ages; we can say that, to a certain extent, it all rests on the so-called dogmas of Aristotle.

▪ and secondly, and more importantly for us, Aristotle was the first to pose a problem that has become central to economists for many centuries and is still the subject of debate.

At first glance, the question is simple: "What determines the proportions of the exchange of goods?" Or, in other words, what makes products comparable? It was the answer to this question that divided economists into two of the largest currents in the history of economic thought: supporters of the labor theory of value, and supporters of various versions of the theory, the essence of which is that value is a subjective category and is derived from people's assessment of the utility of a product. Aristotle himself had several points of view on solving this problem. In his writings, one can find the beginnings of the labor theory of value, and references to the fact that the proportions of the exchange of goods are based on their utility, and the assertion that money, which is a common need for all, makes comparable goods. But let's not look for an exhaustive answer to this question from Aristotle. His contribution to the history of economic thought is already in the fact that he clearly formulated the problem. And to clearly formulate the problem is half to solve it.

Aristotle is also interesting in his analysis of capital, which in the ancient world existed in commercial and monetary form. For his analysis, he even introduces a new term "chrematistics". Under chrematistics, Aristotle understood activity aimed at making profit, at the accumulation of wealth, in contrast to the economy - as an activity aimed at acquiring goods for the home and the state. At the same time, Aristotle considered the first form of economic organization to be unnatural, and his particular indignation was caused by interest, which he regarded as the most unnatural form of income, because, in his opinion, money is intended only for exchange and cannot give birth to new money. According to the views of Aristotle, interest is a "profit" at the expense of the debtor, which the usurer appropriated and thereby enriched himself, and this appropriation is an expression of his vicious greed and stinginess. The usurer appropriated the interest unfairly, since he did not create it, but forced him to give it to himself, making money a source of acquiring new money, embarking on the path of a radical perversion of its nature.

Analyzing the nature of money, Aristotle insisted that money is the result of an agreement between people and “it is in our power to make it unusable.” But here, too, his position is ambivalent. Distinguishing between economics and chrematistics, Aristotle emphasizes that if money refers to “economics”, then it is a sign of value determined by law or custom, and if it refers to “chrematistics,” then it acts as a real representative of untrue wealth. Moreover, it is with the invention of money that the economy is destroyed, turning it into chrematism, into the art of making money. And in the art of making a fortune, “...there is never a limit to achieving the goal, since the goal here is unlimited wealth and the possession of money... Everyone involved in money turnover strives to increase their capital to infinity.” Therefore, the wealth that chrematistics strives for is limitless. Aristotle states with regret that chrematistics inevitably grows out of economics. In modern terms, this recognition means that capitalist relations inevitably grow out of simple commodity production.

Among other things, Aristotle worried about the problem of establishing justice in exchange. Exchange, according to Aristotle, is a special form of equalizing justice, where the principle of equality, equivalence is manifested. But equality is impossible without commensurability. However, it is difficult to assume that heterogeneous objects are commensurable, that is, qualitatively equal. From this, Aristotle concludes that equalization can be something alien to the true nature of things, an artificial device. And their comparison by means of money becomes such an artificial device. Being the son of his time, Aristotle could not accept the idea of ​​the equality of labor of socially unequal people (slaves and citizens) and therefore took the position of the futility of searching for the commensurability of goods by labor, its duration. On the other hand, and here again the duality of Aristotle's position is manifested, in the composition of production costs, he attached the greatest importance to labor. Ultimately, Aristotle comes to the conclusion that an exchange on the principles of justice means an exchange "on merit." He argues that knowing the true dignity of the exchanging persons, it is possible to establish the proportions of the exchange. And he gives the following example: if 100 pairs of shoes = 1 house, and the value of the builder is twice that of the shoemaker, then the builder is related to the shoemaker as 200 pairs of shoes are to one house. And it is precisely this ratio of exchange that should be considered fair. As we can see, in the ancient world, economic and ethical problems were not yet considered separately.

But the ethical orientation of economic life is rather characteristic of ancient Greek thinkers, while for ancient Roman thinkers who study economic problems, practical issues related to the rational organization of a large-scale slave-owning economy come to the fore.

The representative of this direction of economic thought was Mark Cato (234-149 BC). This author not only developed criteria for choosing land for organizing the economy (good climate, a rich city nearby and convenient means of communication), but also gave detailed recommendations for determining the structure of land, which can be considered as a scale of profitability of agricultural sectors.

Cato also gave recommendations on the organization of forced labor. As a practicing economist, Cato tried to establish the optimal proportions of the elements of production of specialized slave farms, while assigning a huge role to the owner of the estate. In his opinion, it is the "master's eye" that is the most important factor in the organization of labor on the estate.

Also of interest are the views of Yu. Columella (1st century BC), who was the first in the history of ancient thought to pose the problem of the intensive path of development of the slave economy, while considering the reorganization of slave labor to be a necessary condition for the intensification of the economy. Columella recommended using all methods of turning slaves into hard workers: from prison in the basement to exchanging jokes with slaves and discussing new jobs together. The latter proposals can be seen as the beginnings of a “theory of human relations” that became widespread in the second half of the twentieth century.

As you can see, in ancient Rome, the range of economic issues under consideration was reduced to the issues of ensuring the efficiency of economic management and the rational combination of production factors. By the way, in the last third of the nineteenth century, it was these questions that became central to economic theory and now represent an essential part of the modern course "Microeconomics".

The return to the philosophical, ethical aspects of economic issues is associated with the economic views of the representatives of the Middle Ages.

2. Economic thought of the Middle Ages

As already mentioned, the economic thought of the Middle Ages relied heavily on the works of Aristotle, in particular on the provisions that were called “Aristotle’s dogmas.” This influence is also visible in the economic views of the greatest thinker of the Middle Ages, F. Aquinas (1225-1274).

Let me remind you that Aristotle approved of the type of management, which was reduced to the acquisition of goods for the home and the state. This natural (according to Aristotle) ​​economic activity, which, since the time of Xenophon, received the name "economy", included exchange within the limits necessary to satisfy reasonable personal needs. At the same time, activities aimed at enrichment, i.e., the activities of commercial and usurious capital, Aristotle characterized as unnatural, calling it "chrematistics".

Following Aristotle, F. Aquinas develops the idea of ​​the naturalness of natural economy and, in connection with this, divides wealth into natural (products of natural economy) and artificial (gold and silver). The latter, according to F. Aquinas, does not make a person happy and the acquisition of such wealth cannot be a goal, since the latter should consist of “moral improvement.” This conviction stems from the ideology of Christianity, where economic interests must be subordinated to the true cause of life - the salvation of the soul. In medieval theory there is no place for economic activity that is not connected with a moral purpose. And therefore, at every step there are restrictions, prohibitions, warnings not to allow economic interests to interfere in serious matters.

In accordance with the dogmas of Aristotle and the traditions of the Catholic Church, F. Aquinas condemned usury, calling it "a shameful craft." He wrote that when lending money at interest, lenders, in an effort to present a fair deal, demand interest as payment for the time they provide to the borrower. However, time is a common good given by God to everyone equally. Thus, the usurer deceives not only his neighbor, but also God, for whose gift he demands a reward. Among medieval philosophers, there was a common belief that usurers were unworthy of an honest name and superfluous for society, since they did not provide it with the items necessary for life. However, with regard to trade, medieval scholastics, including Fakvinsky, believed that it was a legitimate occupation, since the difference in the natural wealth of different countries indicates that it was provided for by Providence. Trading profits in themselves do not contribute anything vicious to economic life and can be used for an honest purpose. In addition, profit can be a payment for labor if there was a sale of a thing "changed for the better." But at the same time, trade is a dangerous business (in terms of temptation) and a person must be sure that he is engaged in it for the benefit of all and that the profit he derives does not exceed the fair wage for his labor.

F. Aquinas is also interested in his view of private property and the problem of justice. As is known, in early Christianity the idea of ​​equality was embodied in the idea of ​​renunciation of private property, the socialization of property, and in the affirmation of the universal obligation to work. In accordance with the long traditions of Christianity, work was positively assessed by F. Aquinas as necessary for life, getting rid of idleness, and strengthening morality. At the same time, following Aristotle, F. Aquinas rejects the idea of ​​the equivalence of all types of labor, considering physical labor as a slave occupation. Significant difficulties arise with the problem of justifying private property. Departing from the ideas of early Christianity, the thinkers of the Middle Ages argue that private property is necessary, at least in this imperfect world. When good belongs to individuals, people work more and argue less. Therefore, it is necessary to tolerate the existence of private property as a concession to human weakness, but at the same time, in itself, it is by no means desirable. The prevailing view, at least in the field of normative ethics, was that possessions, even at their best, were a burden. At the same time, it should be obtained legally, belong to as many people as possible and give funds to help the poor. They should be shared as much as possible. Its holders must be ready to share with those who are in need, even if their need does not reach poverty. The philosophical substantiation of these provisions are: the idea of ​​a just God and the idea of ​​a limited amount of material wealth. The latter is rooted in paganism, to the ideas prevailing during the collapse of tribal life that an overly successful farmer or hunter is a sorcerer and a thief. If someone got the best harvest, it means that he stole it from a neighbor and this harvest is a "harvest of spirits." Here we see the idea of ​​a closed universe with a constant, unchanging sum of goods. Hence the desire to share equally, so that everyone will have everything they need and no one will have a surplus. It should be noted that this is not only the area of ​​normative ethics: charity in the Middle Ages was huge, but as wasteful as it was ineffectual.

The rejection of excessive wealth connects the medieval scholastics not only with Aristotle, but also with Plato. For the latter, the goal of the ideal state is “to expel the ignoble passion for profit,” since it is surplus that gives rise to such disgusting qualities as laziness and greed. And it was from the ancient Greek thinkers that the belief that it was impossible to become very rich while remaining virtuous entered into medieval scholasticism. According to Plato, any surplus product should be considered as a disruption of social order, as theft. In this case, it is not the amount of social welfare that decreases first, but the amount of public virtue. The phrase will seem strange if you do not take into account that the thinkers of Ancient Greece were primarily concerned with issues of ethics, and not economic efficiency. As K. Marx argued, among the “ancients” you will not find discussions about which form of ownership is most effective. They are interested in the question of what form of ownership produces the best citizens for society.

However, despite the generally negative attitude towards private property, trade, and even more so towards interest, they existed in real economic life and it was impossible to ignore this. And the question arises - what are the criteria of justice in these conditions, including a fair exchange and a fair price?

Even Aristotle, in contrast to those who demanded the establishment of property equality for the community of the free, put forward the thesis that the distribution of goods should be based on the principles of justice, that is, “according to dignity.” This meant, in turn, the fairness of the existence of property inequality. Aristotle's idea was adopted and developed by F. Aquinas. In his view, society was conceived as hierarchical and class-based, where it is sinful to rise above one’s class, for the division into classes was established by God. In turn, belonging to a class determines the level of wealth to which a person should strive. In other words, a person is allowed to strive for such wealth as is necessary to live at a level appropriate to his social position. But the desire for more is no longer enterprise, but greed, which is a mortal sin.

These provisions formed the basis of F. Aquinas's reasoning about a fair price. During the Middle Ages, the discussion about the fair price included two points of view:

▪ first - the fair price is the one that ensures the equivalence of the exchange;

▪ second - the fair price is one that provides people with the well-being befitting their class.

F. Aquinas in his theory of fair price incorporated both of these provisions, distinguishing two types of fairness in exchange. One type of justice guarantees a price “in accordance with the thing,” that is, in accordance with labor and expenses (here equivalence is interpreted in terms of costs). The second type of justice provided more benefits to those who “mean more to public life.” Here, equivalence is interpreted as the appropriation in exchange of that share of goods that corresponds to the dignity of the exchanger. This meant that the pricing process was made dependent on the social status of the participants in the exchange. The defense of the privileges of the ruling classes is found in the works of F. Aquinas and in the justification of the legality of receiving land rent, which he views as a product created by the forces of nature and therefore sown by the land owner. It is the receipt of rent, according to F. Aquinas, that makes it possible for the chosen to engage in spiritual labor “for the sake of the salvation of the rest.”

In conclusion, it seems interesting to trace the evolution of views on the percentage of medieval thinkers - from complete rejection to partial justification. It is known from the history of usury that initially cash or material loans were taken for unproductive use, often out of "hopelessness". This practice dominated until the late Middle Ages. For example, a city dweller borrowed money so as not to starve to death; a knight to go on a crusade; community to build a temple. And it was considered unjust if someone made a profit on the distress or piety of others. At that time, canon law recognized two arguments in favor of charging interest: reimbursement of expenses for the organization and maintenance of credit institutions and compensation for damage due to the inability to dispose of the money lent. But this damage still had to be proven. When, by the sixteenth century, the productive and profitable investment of capital had become widespread, then it was enough for the usurer or banker to prove its commercial or industrial purpose in order to have grounds to demand compensation for the capital occupied. The reason was the loss by the creditor of the opportunity to benefit from those operations that could be presented to him during the absence of money. The deprivation of probable profit required a reward, since the principle of the equivalence of exchange, the main principle for canon law, was violated. In fact, the debtor, thanks to someone else's capital, enriched himself, and the creditor, due to his absence, suffered a loss. Due to changes in economic life, the justified charging of interest became fixed in canon law in the sixteenth century. It was forbidden only to collect the "interest" or excess profits of the usurer, for which an official maximum loan interest was set. Nevertheless, in general, the attitude towards usury still remained negative, which is not surprising, given the initial postulates of Christianity.

The ethical orientation of economic thought permeates the works of all thinkers of the Middle Ages, and the final rupture of economic and ethical problems is associated with the emergence of the first economic schools.

LECTURE 2. THE FIRST ECONOMIC SCHOOLS

1. Mercantilism - theory and practice

Prior to the era of development of capitalism, economic research was fragmentary, mainly concerned with the analysis of economic practical activity, occasionally illuminated by brilliant conjectures regarding the underlying laws of the flow of economic processes. Economic research was not of an independent nature, but acted as an integral part of the work devoted to the study of general problems of the functioning of society, in particular religious, political, and moral ones. And this is not accidental, since the economy was predominantly natural in nature with minor elements of commodity-money relations. The situation changes dramatically with the beginning of the development of capitalist economic relations. This happens in Europe in the 15th-16th centuries of our era in an era that has been called the "age of great geographical discoveries", as well as the "era of primitive accumulation of capital." It is known that both historically and logically originally capital appears in the form of merchant and money capital. The discovery of new territories and the capture of colonies greatly accelerated the process of formation of national trade and money capital, which in turn drew attention to the study of patterns in the sphere of trade and money circulation. The first school in the history of economic thought arose, later called mercantilism.

What are the distinctive features of this school? Naturally, being representatives of the interests of merchant capital, representatives of this school cannot help but regard money as the absolute form of wealth. Identifying their interests with the interests of the state, representatives of mercantilism argue that a nation is richer the more gold and silver it has. The accumulation of wealth (naturally, in monetary form) occurs in the process of foreign trade or during the extraction of precious metals. This implies the statement that only labor engaged in the extraction of precious metals is productive. However, purely theoretical studies are of little interest to representatives of the mercantilist school. The main focus of their research is on economic policy issues and lies in the area of ​​recommendations for increasing the flow of gold and silver into the country. The words attributed to H. Columbus that “gold is an amazing thing that opens the way to heaven for souls” became the banner of this period of development of bourgeois society.

Within the framework of the "epoch of mercantilism", early and late mercantilism are distinguished. Representatives of early mercantilism rely on administrative measures to keep precious metals in the country. In particular, foreign merchants, under pain of severe penalties, are forbidden to export gold and silver from the country, and the proceeds from the sale of goods are ordered to be spent on the territory of this country. Such harsh measures could not but impede the development of foreign trade relations, which led to the transition to the policy of the so-called late mercantilism.

The essence of this policy is the following: ensuring an increase in precious metals in the country not by administrative, but by economic means. These include all means that contribute to achieving a trade surplus, that is, an excess of exports over imports of goods, since the positive difference in the form of precious metals will remain in the country. These means were described in detail by T. Mann (1571-1641), an influential English merchant and the most famous representative of late mercantilism. T. Mann wrote that there are no other ways to get money except trade, and when the cost of exported goods exceeds the cost of annual imports of goods, the country's monetary fund will increase. To increase this fund, T. Mann proposed, among other things, to cultivate land for crops that would help get rid of the import of certain goods (in particular, hemp, flax, tobacco), and also recommended abandoning excessive consumption of foreign goods in food and clothing by introducing laws on the consumption of goods of own production. Mann also notes that domestic goods should not be burdened with too many duties, so as not to make them too expensive for foreigners and thereby prevent their sales. The focus on boosting the export of national products is clearly expressed here. The economic policy proposed by T. Mann was later called the policy of protectionism, or the policy of protecting the national market. In general, this policy boils down to limiting imports and promoting exports, and measures aimed at achieving this result remain unchanged to this day. These include: protectionist tariffs on imported goods, quotas, export subsidies and tax breaks for exporters, etc. Of course, these measures cannot be implemented without state support, which is why representatives of both early and late mercantilism take for granted active government intervention in economic processes.

To sum up the distinctive features of mercantilism as an economic school, then they should include:

▪ exceptional attention to the area of ​​circulation

▪ consideration of money as an absolute form of wealth

▪ classification as productive labor only for the extraction of gold and silver

▪ justification of the economic role of the state

▪ the belief that the excess of exports over imports is an indicator of the country's economic well-being.

Critics of mercantilism have pointed out that the desire to achieve a trade surplus has only a fleeting effect, since the influx of precious metals into the country raises domestic prices and the doctrine of "sell high, buy low" turns against the country itself.

The French economist R. Cantillon and the English philosopher D. Hume described in general terms the so-called “mechanism of gold-money flows,” which automatically leads to the natural distribution of precious metals between countries and the establishment of such levels of domestic prices at which the exports of each country become equal to its imports. The essence of this mechanism is as follows: an additional amount of gold in a particular country will increase the level of domestic prices relative to other countries, this, in turn, will weaken the competitiveness of goods in foreign markets, reduce the volume of exports and increase the volume of imports, and the difference in the excess of imports over exports will be be paid for by the outflow of gold. The process will continue until a new equilibrium between exports and imports is established in all trading countries, corresponding to a higher supply of gold. And since foreign trade and gold are like water in two communicating vessels, which constantly strives to be at the same level, the policy of pursuing a trade surplus cancels itself.

It should be noted that representatives of mercantilism, in particular T. Mann, were aware that the influx of gold into the country raised domestic prices. And perhaps their recommendations in the field of economic policy in the light of the above are difficult to understand if one does not take into account one of the main beliefs of the era of mercantilism. State power was the main goal for representatives of mercantilism, and this goal could be achieved, in their opinion, by weakening the economic power of neighboring states to the same extent as by strengthening their own. Based on the premise that the economic interests of nations are mutually antagonistic, since there is a fixed amount of resources in the world that one country can acquire only at the expense of another, mercantilists did not hesitate to defend the policy of “beggar thy neighbor” and advocate the reduction of domestic consumption as a goal of national policy. In the figurative expression of F. Engels, “...nations stood against each other like misers, clasping their dear money bag with both hands, looking around at their neighbors with envy and suspicion.” By the way, the understanding of economic activity as a zero-sum game (the gain of one person or country is the loss of another) was characteristic of economic views until the end of the 18th century.

As another argument in favor of protectionism, in particular import restrictions, mercantilists put forward labor balance arguments. It was generally accepted that imports should consist of capital-intensive raw materials and semi-finished products, while exports should consist of labor-intensive final products so as to support domestic employment. T. Mann, who has already been mentioned by us, writes, “... it would be a correct policy and beneficial for the state to allow goods made from foreign raw materials to be exported duty-free. These industries will give work to many poor people and will greatly increase the annual export of such goods abroad, thanks to which will increase the import of foreign raw materials, which will improve the receipt of state duties...". To this widespread and now protectionist argument were added arguments of a military-strategic nature, as well as arguments in defense of fledgling industry.

The desire for an influx of precious metals was due not least to the belief that money is the "muscular force of war" and the implicitly present thesis that defense is more important than wealth.

However, the motives of ensuring welfare are still present among mercantilists. They believe that money stimulates trade: an increase in the supply of money is accompanied by an increase in the demand for goods, and therefore it is the volume of trade, not prices, that is directly affected by the influx of gold. The latter increases the spending of the rich on luxury goods, and until the end of the eighteenth century the prevailing idea was that it was “luxury living” that formed needs and generated monetary incentives. Moreover, the authors of the 17th and 18th centuries were characterized by the idea that it is better to spend money on luxury than to give it away, since in the first case industry is stimulated, and in the second case the money remains idle. From a modern standpoint, it is very strange to believe that it is the upper classes of society who are responsible for providing jobs, spending money on expensive indulgences and maintaining a magnificent retinue of servants. This paradox was noticed by B. Mandeville, a man without specific occupations, a philosopher by vocation, and, as A.V. Anikin writes, a lover of revelry in a cheerful company, who lived in London at the beginning of the eighteenth century. Mandeville owes his fame to one work called “The Fable of the Bees, or Private Vices - Public Benefits.” Mandeville's main paradox is contained in the phrase “private vices - public benefits,” which clearly conveys the idea that the poor have jobs only because the rich love comfort and luxury and spend a lot of money on things, the need for which is often caused only by fashion and vanity. Rich slackers are necessary in a given society, since their needs generate demand for all kinds of goods and services, pushing hard work and ingenuity. As Mandeville writes, "...envy and vanity themselves served industriousness, and their generation - inconstancy in food, decoration and clothing, this strange and funny vice - became the most important engine of trade." However, the mercantilists did not hide this. One of the representatives of this school writes that “... extravagance is a vice that harms a person, but not trade... Greed is a vice that is harmful both to a person and to trade.” And the other argued that if everyone spent more, then everyone would receive greater income and could live in greater prosperity. This shows how deeply rooted was the belief in the usefulness of luxury and the harm of frugality.

But back to The Fable of the Bees. In the second part, Mandeville describes an economic system where all vices disappear. Waste is replaced by thrift. Luxury disappears, the consumption of everything that goes beyond simple physiological needs stops. But this is precisely what brings ruin and destruction to society. Mandeville describes it this way:

Compare the hive with what it was: // Trade was destroyed by honesty. // Luxury has disappeared, arrogance has gone, // Things are not going that way at all. // Not only the spendthrift is gone, // Who spent money without counting // Where will all the poor go, // Who sold him their labor? // Everywhere now there is one answer: // There is no sales and there is no work!.. // All construction has stopped at once, // Handicraftsmen have no more orders. // Artist, carpenter, stone cutter - // All without work and without funds

Looking ahead, it should be said that the idea of ​​​​the economic necessity of the unproductive classes (landowners, priests, officials, etc.) was picked up at the end of the eighteenth century by T. Malthus, and the idea of ​​​​the harmfulness of excessive frugality and the need for unproductive expenses that increase demand and providing employment to the population, was resurrected and elevated to the rank of an immutable truth in the twentieth century by J. Keynes. By the way, Keynes positively assessed the contribution of mercantilists to the development of economic theory, moreover, he formulated a number of provisions that make him similar to the mercantilists. Firstly, this is the provision about lack of money as the cause of unemployment. As we will see later, Keynes defended the idea that increasing the supply of money through bank credit expansion could be the most important weapon in the fight against unemployment. Secondly, this is the provision for high prices as a factor in the expansion of trade and production. As you know, Keynes is one of the founders of the modern concepts of “moderate inflation” as a means of maintaining economic activity. Thirdly, Keynes believed that the mercantilists, through increasing the money supply, sought to reduce interest rates and encourage investment. In Chapter 23, entitled "Notes on Mercantilism..." of his work The General Theory of Employment, Interest and Money, he stated that the mercantilists' concern with the flow of precious metals into the country was the result of an intuitive feeling of the connection between the abundance of money and low interest rates. And this is one of the key ideas of Keynes himself.

Indeed, in most of the works of the later mercantilists there is the idea that an increase in the amount of money in circulation can have a significant impact on the growth of production, "... trade increases only when there is an abundance of money and goods rise in price due to demand." Perhaps the most prominent representative of the doctrine of “money stimulates trade” is the Scot J. Law (1671-1729), who believed that the key to economic prosperity was the abundance of money in the country. It’s not that he considered money itself to be wealth, he understood perfectly well that true wealth is goods, enterprises, trade. But the abundance of money, in his opinion, ensures the full use of land, labor, and entrepreneurial talents. “No laws,” writes J. Law, “can give people jobs if there is not enough money in circulation to pay wages to more people.” It is the increase in money, drawing in the now idle people, that ensures the full use of labor and other factors of production.

It was the mercantilists who pioneered the idea of ​​a lack of money as the cause of unemployment, which classical economists later rejected as absurd. A striking example is the debate about the lack of money that took place in the English House of Commons in 1621. It was pointed out that farmers and artisans were almost universally experiencing hardship as "...looms lay idle and peasants were forced to cancel their contracts." And all this is due to lack of money! In view of the current situation, it was even decided to undertake a detailed investigation into where the money, the lack of which was so acutely felt, could have gone. As we see, the state authorities had no other generally accepted means of counteracting unemployment within the country, except for the struggle to increase the export of goods and import of monetary metal at the expense of neighbors.

But back to J. Lo. In his opinion, an increase in the money supply will lower the interest rate and give an impetus to the growth of production, since it creates the possibility of increasing profits due to lower production costs, and the income of the previously unemployed will give a new impetus to consumer demand. The main difference between J.Lo and the classical mercantilists is that he believed that money should not be metallic, but credit, created by the bank in accordance with the needs of the national economy. It is not difficult to assume that Law envisaged a policy of credit expansion for banks, that is, the provision of loans many times greater than the stock of metallic money stored in the bank. This is the so-called fractional reserve principle, which underlies all modern banking. Thanks to this principle, banks are able to expand loans elastically and replenish the channels of money circulation. But this same principle poses a danger to the stability of the banking system and the stability of the development of the national economy as a whole. What will happen if the bank has to expand the issuance of its banknotes not to meet the needs of the national economy, but to cover the deficit in the state budget? And the fact that this danger is real is shown to us by the entire economic history of the twentieth century, and we are well aware of its consequences - inflation. And although the word "inflation" has not yet been introduced into the economic vocabulary, it was she who threatened the country where J. Lo was able to implement his ideas.

At the beginning of the eighteenth century, J. Law's attempt to practically realize his ideas about the principles of the functioning of the banking system in France ended in failure. Nevertheless, the main provisions of his economic theory found their embodiment in the twentieth century, being an integral part of the economic policy of Keynesianism.

Concluding the consideration of this economic school, it should be noted that the policy of mercantilism, i.e., the policy of accumulating money in the form of precious metals, protectionism and state regulation of the economy was carried out in the 15-18 centuries. throughout Europe and, apparently, it could not be different in the period of the formation of absolutist states, the creation of national economies. Accelerated capitalist development was possible only within the national framework and largely depended on state power, which promoted the accumulation of capital, and thus economic growth. With their views, the mercantilists expressed the true patterns and needs of economic development. It is important to note that mercantilism breaks with the traditions of medieval economic thought, its search for a fair price, the condemnation of usury, the justification of the regulation of economic life, and moralizing dogmas. Representatives of mercantilism allow the free movement of interest on loans, condemn the accumulation of treasures and focus on trade as a source of capitalist profit.

2. Physiocrats

An interesting school of economics, standing somewhat apart in the history of economic thought, is the school of the Physiocrats in France. However, "Physiocrats" - the name that they received later, they called themselves "Economists". The name given to this school by later researchers is by no means accidental, since it accurately reflects the essence of their economic views. The word "physiocrats" comes from two Latin words - "physios" (nature) and "kratos" (power).

Indeed, the Physiocrats saw the source of the wealth and prosperity of the nation exclusively in the development of agriculture. By the way, the influence of ancient Greek thinkers, in particular Xenophon, who wrote that agriculture is the mother and nurse of all professions, can be clearly seen here. Xenophon praises agriculture as yielding fruits suitable even for sacrifices, physically training citizens, making them excellent warriors, pushing people on the path of mutual assistance, and providing everything necessary. In the traditions of his time, considering economic and ethical problems in unity, Xenophon notes that the earth also teaches justice, for it gives more to those who work harder.

But let's return to the physiocrats. The founder and head of this school was F. Quesnay (1694-1774), court physician of Louis XV. He not only formulated the basic theoretical principles, but also the economic and political program of physiocratism. It must be said that, to a certain extent, physiocratism was a reaction to the mercantilist policy of Colbert during the reign of Louis XIV, the policy of encouraging and developing manufactures while completely neglecting agriculture.

The physiocrats declared agriculture to be the only industry that creates the country's wealth. They insisted that it was the ever-reproducing wealth of agriculture that provided the basis for all other forms of wealth, supported the employment of all kinds of professions, promoted the welfare of the population, set in motion industry and supported the prosperity of the nation. Quesnay criticized the mercantilists' thesis that wealth is generated by exchange and emphasized that "...purchases are balanced on both sides, their effect is reduced to the exchange of value for equal value and exchange actually produces nothing." Moreover, Quesnay interpreted money as useless wealth, declaring it only an intermediary in exchange, thereby denying the fundamental thesis of the mercantilists. Only in agriculture, according to Quesnay, is new wealth created, and the greater productivity of agricultural labor is due to nature itself. Substantiating this thesis, the physiocrats developed in detail the doctrine of the “pure product”. By net product they understood the excess of production obtained in agriculture over production costs. “The net product,” wrote Quesnay, “is the wealth created annually, which forms the income of the nation, and represents the product extracted from land holdings after the removal of all costs.” Thus, the physiocrats believed that a pure product arises only in agriculture. And obviousness was on their side, because nowhere is the increase in production demonstrated as clearly as in the field of livestock and crop production

But what is the role of industry in increasing the wealth of a nation? The Physiocrats argued that in industry there is only consumption, industry was declared a "barren industry" due to the fact that the form of the product given by nature was only transformed there. Since, according to the Physiocrats, pure (or surplus product) is created exclusively in agriculture, land rent turns out to be the only form of pure product for them. In industry, however, because of its "sterility", no surplus product is created, and the income of the entrepreneur and the wages of the worker are the costs of production.

The physiocrats' concept of productive and unproductive labor is closely connected with the doctrine of the pure product.

For the first time in the history of economic thought, they referred to productive labor only labor that creates a pure product. Accordingly, according to their views, only labor employed in the sphere of agriculture is productive, and labor in other spheres of the national economy is unproductive or "fruitless".

This criterion (participation in the creation of a pure product) was the basis for the classification of society in the analysis of the process of social reproduction, given by Quesnay in his famous work The Economic Table (1758), which entered the history of economic thought as the first attempt at macroeconomic analysis. This work was an attempt to answer the question of how the gross and net product created in agriculture is circulated in natural and monetary form. In the "Economic Table" society is considered as a single organism, uniting three main classes:

▪ productive class (all persons employed in agriculture),

▪ sterile class (all persons employed in industry),

▪ class of owners (all persons receiving the net product created in agriculture, i.e. rent).

And although the division of society into farmers, property owners and industrialists actually corresponded to the division of society in the Middle Ages (peasants, nobles, townspeople), it is important to note that Quesnay was one of the first who divided society into classes on an economic basis, based on the relationship of each class to production and appropriation of surplus product. As regards the analysis of the reproduction process given by Quesnay in the Table of Economics, here the starting point was the annual harvest, the movement of which between classes in kind and in money is considered by Quesnay. And again, for the first time in the history of economic thought, Quesnay showed the main ways of realizing the social product by combining numerous acts of exchange into a mass movement of money and goods. And although Quesnay excluded the accumulation process from the analysis and considered simple reproduction, it can be said with good reason that the "Economic Table" anticipated modern schemes for the reproduction of the social product.

Of considerable interest are the view of the physiocrats on the problem of taxation, which is directly related to their view of the nature of the "pure product". Based on their doctrine of net income (monetary expression of the net product), the Physiocrats demanded that land rent should also be the only source of taxation. The logic is simple. Since all taxes are paid out of net income, then theoretically all existing taxes can be replaced by one: a tax on the net product as the only true economic "surplus". This single and direct tax is determined on the basis of the cadastre and is commensurate with labor productivity. According to Quesnay, this tax should reach 2/7 of the land income. Its sphere of action always covers only landowners, since the incomes of all other classes consist of "necessary" costs of production. Thus, the demand of the Physiocrats to introduce a single tax was aimed at minimizing the costs of collecting taxes by directly taxing those incomes that ultimately bore the tax burden. If we formalize the main provisions of the tax views of the physiocrats, then they boil down to three principles:

▪ firstly, taxation should be based directly on the source of income itself,

▪ secondly, it must be in a certain constant relationship with these incomes,

▪ Thirdly, it should not be overly burdened with collection costs.

Here we can clearly see the similarity with the well-known principles of taxation formulated by A. Smith. But the similarity lies not only in this. The physiocrats, putting forward the demand for a single land tax, unanimously advocated proportional taxation. And the belief in the fairness of taxes proportional to income has been firmly established in economics since the time of A. Smith.

The economic views of the physiocrats, in particular, the doctrine of productive labor, the denial of the role of foreign trade as a source of increasing the wealth of the nation and the idea of ​​a “natural” pattern of social life based on the principles of “natural law”, characteristic of the physiocrats, allowed A. Smith to say that the physiocratic system is " the best approximation to the truth that has hitherto been published on the subject of political economy."

LECTURE 3. CLASSICAL POLITICAL ECONOMY

1. Classical economic theory - origins. Economic views of W. Petty

We have already said that mercantilism as an economic theory was the dominant direction of economic thought for almost three centuries (from the beginning of the sixteenth to the first half of the eighteenth century). But not the only one. At the same time, the prerequisites for another powerful economic doctrine emerged, which later became known as classical political economy. W. Petty is considered the founder of this trend. W. Petty (1623-1687), an Englishman, a man of diverse interests, who went from a cabin boy to a landlord and, as if by the way, expressed in his works devoted mainly to the justification of economic policy (in particular, in the “Treatise on Taxes and Duties”, 1662), those economic ideas that later became part of classical political economy. In Petty we already see the basic premises of classical political economy:

▪ research not into the circulation process, but directly into the production process,

▪ a critical attitude towards the unproductive classes that do not provide any product, to which he included merchants,

▪ classification of labor employed in the sphere of material production as productive.

Petty was the first to formulate the thesis fundamental for all classical political economy that the wealth of a nation is created in all spheres of material production, and it is labor that is the basis of this wealth. His phrase "Labor is the father and the active principle of Wealth, and the earth is his mother" is widely known. Proceeding from this axiom, it is necessary to analyze all other economic views of Petty, in particular the assertion that it is precisely the rarity of the population that is the true source of the poverty of the state. Disagreeing with the mercantilists that the nation's wealth is embodied in precious metals, Petty formulates his criterion of wealth, considering that the period in which each participant in the division will be the richest (assuming that all the money available in the country is divided equally between residents - author's note) will be able to hire more workers, i.e., to use more labor.

However, living in an era dominated by the ideas of mercantilism, Petty cannot completely avoid their influence, although here he remains an original thinker. Therefore, it seems interesting to give a comparative analysis of the views of Petty and the mercantilists on the problems of foreign trade, the policy of protectionism, and a number of other problems.

Under the influence of mercantilists, Petty still singles out foreign trade, which, in his opinion, to a greater extent than other sectors of the economy, contributes to the growth of the wealth of the nation, sharing the point of view that the real meaning of wealth lies in attitude rather than in quantity and therefore It is beneficial for any country to have more money (precious metals) in reserve than other countries have. At the same time, Petty proposed to reduce a significant part of the merchants, leaving just enough of them so that they would be able to exchange the surplus goods of a given country for the surplus goods of other countries, since, in his opinion, merchants “... do not deliver any product to society, but play only the role of veins and arteries, distributing back and forth... agricultural and industrial products.”

To be sure, Petty saw the negative effects of the influx of precious metals, expressed in rising prices. In his writings, he repeatedly emphasized that there is a certain measure or proportion of money necessary for the conduct of the trade of a country, where a surplus or shortage of them against this measure will be harmful. Surplus, as we have already said, causes prices to rise, but Petty immediately offers an antidote - excess money should be kept in the state treasury, which, in his opinion, will not harm either the country, or the king, or private individuals. At the same time, the lack of money has harmful consequences. Firstly, it is the reason for the poor payment of taxes, and secondly, it leads to a reduction in the number of work performed. Petty gives the following proof: "100 pounds, having passed through 100 hands in the form of their wages, gives an impetus to the production of commodities worth 10 thousand pounds; These same hands would remain idle and useless if there were no constant incentive to their use".

Petty also shares the policy of protectionism aimed at protecting the national market by introducing customs duties, believing that the size of duties should be such that the prices of imported goods become somewhat more expensive than the same items produced within the country. Petty also supports the thesis that the passion for luxury of the rich stimulates trade and production. In particular, he writes, considering the problems of taxation, ".. People become indignant at the thought that the collected money will be spent on entertainment, magnificent spectacles, triumphal arches... but such a waste means the return of this money to the fishing people engaged in the production of these of things".

The influence of mercantilist views on Petty seems significant, however, we consider Petty to be the founder of the classical movement. In addition to the fundamental thesis common to all representatives of classical political economy that the wealth of a nation is created in all spheres of material production, Petty formulates the foundations of the labor theory of value, arguing that the equality of goods means nothing more than the equality of labor spent on their production. This idea is most clearly expressed by Petty in the following sentence: "...if anyone can extract from the soil of Peru and bring to London one ounce of silver at the same time in which he can produce one bushel of corn, then the first represents the natural price of another." However, again finding himself to a certain extent in captivity of mercantilist ideas, Petty adds that value is created not by all labor, but only by that spent on the production of gold and silver, and the value of labor products in other branches of production is determined only as a result of their exchange for noble metals.

Anticipating the Physiocrats, Petty suggested that the surplus product is the part of the product that remains after the deduction of costs and takes the form of rent. However, unlike the Physiocrats, he considered rent not a gift of land as such, but a product of labor, which has greater productivity on lands of better quality. Petty introduces the concept of differential rent, the reasons for the existence of which he sees in the different fertility and location of plots of land. After analyzing the rent and defining it as a net income from the land, Petty raises the question of the price of land, which should be equal, in his opinion, to a certain amount of annual rents. But what is the quantification of this certainty? According to Petty, the price of land is the sum of annual rents for 21 years, the time of the simultaneous life span of three generations.

In close connection with the theory of rent, Petty has the question of interest on loans. By the way, finally breaking with medieval ideas about the predatory essence of interest, Petty justifies the collection of interest as compensation for the inconvenience that, by lending money, the creditor creates for himself, since he cannot demand them back before a certain period, no matter how much he himself needs during this time. With a little effort, one can see here the rudiments of the theory of interest as the price of abstinence, which finally took shape only in the nineteenth century. Determining the "natural" level of interest, Petty argues that it should be equal to the rent on as much land as can be bought with the money lent, under conditions of complete public safety. But if this condition is in doubt, the natural interest is intertwined with something like an insurance premium, which can increase the interest to any amount. Here, too, a hint of the opportunity cost doctrine can be seen.

A significant place in Petty's works is devoted to issues of taxation and finance. One of Petty's fundamental ideas, which connects him with the principles of classical political economy, is the idea of ​​the natural order and the harmfulness of its violations by state power. The defect of government, according to Petty, is that "too much of what should have been governed by nature, by ancient customs, and by universal convention, has fallen under the regulation of law." It is no coincidence that Petty sharply opposes government regulation if it contradicts the “laws of nature.” At the same time, it assigns important functions to the state to ensure the full use of the labor force, as well as to improve its quality. Petty proposes using public funds to provide homeless people and beggars with work building roads, erecting bridges and dams, and developing mines. And here it is not only humanity that speaks, but also economic calculation, because, according to Petty’s views, “... allowing someone to beg is a more expensive way of maintaining those people whom the law of nature does not allow to die of hunger.” And further, being consistent in his assertion that the quality of the labor force, the quality of human capital, is the most important factor in increasing the wealth of a nation, Petty writes that “it is better to burn the product of the labor of one thousand people than to allow these people to do nothing and, as a result, They lost their ability to work." By the way, the positive effect of ensuring full employment is considered in the works of such a famous twentieth-century economist as John Keynes, albeit from a slightly different perspective.

In accordance with his views on the role of the state in the economy, Petty in his "Treatise on taxes and fees" thus regulates the targeted spending of the state:

▪ defense spending;

▪ management costs;

▪ church expenses;

▪ expenses for schools and universities;

▪ expenses for the maintenance of orphans and disabled people;

▪ expenses for roads, water pipelines, bridges and other items necessary for the benefit of everyone.

As you can see, the structure of expenses resembles the expenditure part of the budget of modern states. As for taxation, Petty advocates predominantly indirect taxation. Agreeing with the generally accepted point of view of this era that the population should participate in covering government expenses in accordance with their interest in public peace, that is, in accordance with their property or wealth, Petty distinguishes two types of wealth - actual and potential. Actual wealth, in his opinion, means a high real level of consumption, and potential wealth means the ability to provide it. In the latter case, people who are rich, but who make little use of their wealth, are rather managers of their capital. Within the framework of these views, Petty's arguments in favor of an excise tax boil down to the following: first, justice requires that everyone pay according to what he consumes, and such a tax is not imposed by force and is easy to pay for those who are content with the necessities of nature ; secondly, such a tax encourages frugality, which is the only way to enrich the nation. Here Petty casually expresses the idea of ​​the exceptional role of frugality in increasing the wealth of the nation, which sounds like a leitmotif in A. Smith.

But all the economic ideas expressed by Petty are rather in the form of guesses and do not represent a complete theory. Perhaps it was precisely the fragmentation and scattering of W. Petty’s economic ideas across numerous pamphlets written on the topic of the day that was the reason that Petty entered the history of economic thought primarily as the inventor of statistics, which he called “political arithmetic.” In a work called “Political Arithmetic” (1676), Petty not only gave an analysis of a specific economic situation based on the widespread use of factual data, but also described methods for indirectly determining the value of certain indicators, in particular, the sampling method, which without doubt was important given the paucity of statistical data at that time.

Using his method, Petty made the first calculations of the national income and national wealth of England. It is interesting to note that Petty included in the national wealth not only material wealth, but also the monetary value of the population itself, in order to somehow assess the value of human capital (its labor skills, dexterity, qualifications). Petty paid great attention to determining the economic value of the population, g.k. He believed that it was the rare population that was the true source of the country's poverty. In this we see a fundamental difference between Petty's views and the mercantilists, who reduced the country's wealth to gold and silver reserves. In the calculations of Petty himself, the share of precious metals in the total wealth of England was less than 3%.

Petty carried out not only calculations of England's national wealth, but also its national income. True, in contrast to modern ideas, Petty calculated national income only as the sum of consumer expenditures of the population, neglecting the share of national income going to accumulation. But since the share of accumulation in seventeenth-century England was extremely low, the admitted inaccuracy did not distort the overall picture. Despite this significant (from modern point of view) lack of calculations, it can nevertheless be said with good reason that the modern system of national accounts grew out of these calculations by W. Petty.

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

2. The formation of political economy as a science. Economic views of A. Smith

The term “political economy” itself arose long before political economy became a science. It was introduced into circulation by the representative of mercantilism Montchretien de Votteville back in 1615, writing “Treatise of Political Economy,” a purely practical work containing recommendations in the spirit of representatives of this school. The meaning that was invested in the concept of “political economy” is important to us. Since the time of Xenophon, economics has been understood as the science of rational housekeeping. Montchretien, like other representatives of mercantilism, was interested in issues related to the prosperity of the state and the national economy as a whole. And the emergence of a new term (“polis” - state) meant the emergence of a new science - the science of the prosperity of the national economy. Although in the strict sense there was no science yet, since science begins where deep, stable, repeating cause-and-effect relationships and dependencies are discovered. And the formation of political economy as a science is associated with the name of the outstanding English scientist A. Smith. It is thanks to him that political economy stands out as an independent branch of knowledge from the circle of humanities, ceases to be the lot of self-taught geniuses, and becomes an academic discipline and an obligatory element of the education of young people of the highest, and then other classes.

A. Smith's services to political economy are so great that it is worth saying a few words about him. A. Smith (1723-1790), a Scot by nationality, was born in 1723 in the family of an official, at the age of fourteen he entered the University of Glasgow in the class of moral philosophy. In 1746, Smith was already lecturing on natural law, which in the eighteenth century included jurisprudence, political doctrine, sociology, and economics.

Already during that period, Smith formed the basic ideas of economic liberalism. The end of the eighteenth century - the formation of bourgeois ethics and special attention was paid to substantiating the concept of natural, inalienable rights and freedoms of the individual. This also implied human freedom in the sphere of economic activity. A person always uses freedom to achieve his own selfish interests. It is impossible not to admit this, but the conclusions from this situation may be exactly the opposite. English philosophers of the seventeenth century, in particular T. Hobbes (1588-1679), recognized the existence of selfish interest, considering it “the most powerful, most destructive human passion,” concluding from this that an authoritarian state is necessary, which should keep a person’s individual egoism in check. Among the French rationalist philosophers, for example, Helvetius (1715-1771), egoism was declared a natural property of the human personality and a factor of social progress. Smith adopted the ideas of the latter, applying them to the sphere of economic activity.

A. Smith recognizes that the main motive of human activity is selfish interest. But a person, in his opinion, can pursue his interest only by offering his goods and services for exchange to other people. As Smith writes, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect to get our dinner, but from their observance of their own interests. We appeal not to their humanity, but to their selfishness, and never tell them our needs, but theirs.” benefits." And consequently, the natural desire of people to improve their condition is such a powerful stimulus that he himself is able to lead society to well-being. The policy of non-intervention or "natural freedom" also followed from the concept of self-interest. After all, if the economic activity of everyone ultimately leads to the good of society, it cannot be constrained.

However, A. Smith's economic views will not be fully understood unless one takes into account his first major work, The Theory of Moral Sentiments, which was published in 1759 and contains his social and philosophical ideas. Based on the thesis of the existence of “natural laws,” characteristic of eighteenth-century philosophy, Smith introduces two basic concepts in his work as natural characteristics of a person: “feelings of sympathy” and “internal observer” (conscience). At the same time, Smith considered the basis of sympathy to be a person’s ability, through the power of imagination, to put himself in the place of other people and to feel for them. Remaining in the position of the existence of natural laws, Smith argues that what is natural is fair, and it is natural for a person to strive for his own good with a benevolent attitude towards other people. The possibility of reconciling egoism and sympathy is ultimately inherent in nature (God), which endowed man with conscience.

It is interesting to note that Smith’s thesis about the harmony of interests of different people is not a conclusion following from the action of the “invisible hand” (objective economic laws), but an initial ideological premise based on faith in God; Therefore, his search for economic laws is based on faith in natural, primordial harmony. It is no coincidence that Smith’s description of the action of the “invisible hand” contains not only an economic aspect, which boils down to the benefits for society of the unintended consequences of people’s purposeful actions, but also a worldview - faith in the wisdom of Providence, recognition of the limitations of the human mind. It is in “The Theory of Moral Sentiments” that Smith describes a situation where, guided by the “hand of Providence,” an insensitive, proud and greedy (A. Smith’s epithets - author’s note) rich owner without any deliberate desire serves the interests of society, for, caring exclusively about his own wealth, he provides work, and therefore food, to the poor. At the same time, the rich consume only a small part of their wealth, so small that, according to Smith, it is comparable to the level of consumption of each of the poor. Therefore, it only seems that Providence has given everything to a few, while disinheriting others and turning them into hired laborers. The seemingly enormous inequality of property between people, when carefully examined, is equality, and such as if the land were distributed equally among all people. The allusion to Providence seems to say that God created everything. He also cares about the structure of society. In appearance, the device seems unfair, but in fact, one only has to comprehend God’s secret plan and the world will appear in a different light.

We can rightfully say that the philosophical and ethical side of A. Smith’s economic teachings was laid down in the “Theory of Moral Sentiments”; it was in it that the idea of ​​justice and human nature, of freedom and moral obligations laid down by Nature and God, of the meaning of and the place of material interest in human life and society. The most important idea of ​​this work was the idea of ​​trust in a person, which was closely related to the recognition of his right to freedom, including freedom in the field of economic activity. It is interesting to note that at the end of The Theory of Moral Sentiments, Smith promises in his next work to explain the mechanism of the operation of the “natural law of justice”, as a result of which “everyone receives his share of all that the earth produces.”

“The Theory of Moral Sentiments” went through five editions during the author’s lifetime, but it was not it that immortalized the name of A. Smith. His second book, An Inquiry into the Nature and Causes of the Wealth of Nations, published in London in 1776, brought him world fame and influence, although internally both works remained sides of the same subject, studying human nature from different angles. And if, in the figurative expression of G. Buckle, in “The Theory of Moral Sentiments” Smith explores the sympathetic side of human nature, then in “The Wealth of Nations” - its self-interested side.

In accordance with the title of his book, Smith primarily explores the causes of the growth of the nation's wealth, the role of labor in this process, the factors that increase its productivity, the "natural" distribution of the product between different classes, the nature of capital, the methods of its gradual accumulation, and much more.

Since the work is called "An Inquiry into the Nature and Causes of the Wealth of Nations," the first chapter of the book gives the answer to this question. The wealth of a nation, according to Smith, is the products of material production, and the value of the latter depends on two factors:

▪ share of the population engaged in productive labor;

▪ and labor productivity.

At the same time, Smith understood productive labor as all labor employed in the sphere of material production, precisely that labor that increases the value of the object to which it is attached and in which it is fixed. Smith considered the division of labor or specialization to be the main factor in the growth of labor productivity, considering the operational one to be especially effective (a textbook example with a pin manufactory).

Depicting the advantages of the division of labor, Smith raises the question of money and considers it as a technical tool that facilitates the course of economic processes, as a result of an agreement between people. This idea, as you remember, was expressed by Aristotle. And then, like Aristotle, Smith proceeds to figure out the rules according to which people exchange goods for each other; rules that determine the relative or exchange value of a commodity.

This is one of the most difficult sections of the book. It is no coincidence that Smith asks his readers for attention and patience when he starts it. In this section, you can find elements of both the labor theory of value and the theory, which later became known as the theory of the three factors of production. Smith himself presents three concepts of value.

▪ On the one hand, recognizing the equivalence of all types of productive labor from the point of view of creating value, Smith comes to the conclusion that value is nothing more than the amount of necessary labor contained in a product. Thus, labor is not only a source of wealth, but also a measure of value. By the way, the labor theory of value also has social content: the determination of value by labor presupposes the universality and equality (in a qualitative sense) of all types of labor. This can be interpreted as recognition of the equality of all people: if goods are equal in exchange, then the labor of the producers of these goods is the same, and they are equal as individuals.

▪ The second concept comes down to the fact that value is determined by the amount of labor that can be purchased for a given product. If we consider simple commodity production, then there is no fundamental difference between the first and second concepts. However, if we take production in which there is capital and hired labor, then the picture is different. The entrepreneur receives more value than he pays for labor. There is a violation of the principle of equivalence, which is the basis of the labor theory of value. Avoiding this contradiction, Smith concludes that the value of goods is determined by labor only in the “primitive” state of society.

▪ Under the conditions of capitalist production, value, according to Smith, consists of costs, including wages, profit and rent. He writes that “Wages, profit and rent are the three original sources of all income, as well as of all exchange value.” And the price, or exchange value of any commodity, is reduced to all these three parts. This concept of A. Smith formed the basis of the theory, which later became known as the theory of three factors of production.

From A. Smith's theory of value follows his theory of product distribution. And it is as dual as his theories of value. On the one hand, if labor is considered the final basis of value, then the entire product of labor must belong to the direct producer. According to Smith, this was the case in a society where both the owner of the factors of production and the producer were united in one person. Under the conditions of capitalist production, when the worker is alienated from the means of production, part of the product he creates is deducted in favor of the landowner (in the form of rent) and in favor of the entrepreneur (in the form of profit). Essentially, Smith views these forms of income as the appropriation of unpaid labor. But at the same time, Smith has another interpretation of the source of these incomes, resulting from his concept of value as the amount of income. In this case, profit and rent cannot be deductions from the value of the created product, since capital and land, as factors of production, participate equally in the creation of the value of the product and, accordingly, claim their share.

By adding up the value of the incomes, Smith tries to determine what determines the natural rate of each income, paying particular attention to the factors that determine the level of wages. The usual level of wages, he observed, depends on the contract between employers and workers. But is its size determined by the subsistence minimum, which Smith calls "the lowest standard that is only compatible with simple humanity"? Smith does not accept this point of view, emphasizing that the theory of the living wage is of little use for explaining how wages are determined in real life. And gives the following arguments:

▪ wages for agricultural workers are always higher in summer than in winter, although the cost of living for workers in winter is certainly higher,

▪ wages are different in different parts of the country, but food prices are the same everywhere,

▪ wages and food prices often move in opposite directions, etc.

It is also interesting that Smith associated wage changes with the economic state of the country, believing that wage growth is evidence of economic progress, since wage growth is due to a large demand for labor.

Profit, according to Smith's ideas, is not only wages for a special type of management work, it also includes other elements, since it is obvious that the amount of profit is determined by the amount of capital and is not related to the severity of labor. As for the tendency in changes in the size of profits, they are caused, according to Smith, by the same reasons that cause an increase or decrease in wages, that is, they depend on the increase or decrease in the wealth of society. But these causes have very different effects on wages and profits. An increase in capital, which increases wages, leads to a decrease in profits, because in a situation where many capitals are invested in one branch, their mutual competition naturally leads to a decrease in their profits. Therefore, Smith repeatedly emphasizes that the private interests of entrepreneurs never coincide with the public interests, since the higher the level of production and national wealth, the lower the rate of profit. And since the rate of profit is inversely related to social welfare, the entrepreneurial class is usually interested in misleading and even oppressing society. It is no coincidence that Smith advises with extreme distrust of any proposal for a new law emanating from this category of people. He also notes the desire for monopolism inherent in this class.

Smith pays great attention to the problem of capital accumulation, considering it as the key to the wealth of the nation. As already mentioned, Smith made the wealth of a nation dependent on the proportion of the population engaged in productive labor, where by productive labor he understood all labor engaged in the sphere of material production (this is his difference from the mercantilists and physiocrats). It is curious that Smith also included entrepreneurs among the productive population, believing that they perform the most important social function - the function of accumulation. And, according to Smith, whoever saves is the benefactor of the nation, and the spendthrift is its enemy. Why? Yes, because thrift, by increasing the fund intended to attract additional productive workers, ultimately leads to an increase in the value of the country's annual product, i.e., to an increase in the wealth of the nation. It is not surprising that for Smith, thrift, and not industry, is the immediate cause of the growth of capital, since "... although industry creates that which accumulates savings, capital could never increase if thrift did not save and accumulate" .

In the last chapters of the book, Smith again returns to his "invisible hand" principle, proving the harmony of the interests of the individual and society, believing that the self-interest of each will lead to the public good. Hence the corresponding economic program, which requires the abolition of all measures restricting the mobility of the labor force, the abolition of government regulation of industry and trade, and the permission of free trade in land. Being consistent, Smith advocates reducing the role of the state, reducing its functions to providing military security, the administration of justice and the obligation to maintain public buildings and public institutions.

A. Smith also paid considerable attention to the issue of public finance, formulating, in particular, his famous four principles of taxation. Speaking about the sources of taxation, Smith, in accordance with his views on the unproductive nature of government spending, opposed attracting capital as a tax source, distinguishing between the concepts of capital and income. This view will be characteristic of all representatives of the classical school, who believed that to tax capital means to destroy it, in accordance with the principle “what is taxed decreases.” It is interesting to note that the theory of the unproductive nature of government spending does not, however, prevent Smith from recognizing the tax as a fair price for paying for government services. This gave grounds for later researchers to believe that in his interpretation of the tax, Smith stood on the position of the theory of equivalent exchange.

A. Smith laid the foundations of the theory of international trade, considering the development of foreign economic relations between countries, based on differences in the absolute levels of production costs in individual countries. Every country has goods whose price is lower than in other countries because their production costs are lower. Therefore, you need to buy goods where they are cheaper, accordingly offering in exchange your goods, the production costs of which are lower than in other countries. He wrote: “If any foreign country can supply us with any commodity at a cheaper price than we ourselves are able to manufacture it, it is much better to buy it from her with some part of the product of our own industrial labor applied in that area, in which we have some advantage." A. Smith also substantiated the principle of “free trade” between countries, according to which foreign trade should not be subject to any restrictions on the part of individual national states.

Concluding the consideration of the views of A. Smith, I would like to once again draw attention to the fact that he laid a certain idea of ​​​​human nature as the basis of an entire theoretical system, where the supporting structures are: the initial inclination to exchange and selfishness inherent in a person. The first leads to the division of labor, the second leads to the choice of an occupation that will bring a person more income, which means that a person will specialize in the production of those products that he produces of better quality and at lower costs than competitors. Here emerges the figure of the “economic man,” rational and self-interested, who will become the central figure of economic research in the next two centuries. But the classics’ model of economic man applies only to entrepreneurs.

Smith's rationality and morality still go hand in hand, and this belief in harmony permeates his entire economic theory with optimism. This is reflected in views on the prospects for economic growth and capital accumulation and on the relationships between classes. Considering labor to be the only source of a nation's wealth, Smith considers the increase in demand for it to be the most indisputable evidence of the prosperity of any country. Naturally, wages also increase. Smith writes on this subject, "Large wages are both the inevitable consequence and the natural symptom of the growth of national wealth... To complain about it is to lament the necessary effects and causes of the greatest public welfare."

But is not the growth of wages an obstacle to the growth of capital accumulation? Smith gives a negative answer to this question, believing that the growth of wages is accompanied by an increase in the productive power of labor due to various improvements. This results in lower labor costs per unit of output, which more than offsets the increase in labor costs, thereby increasing profits. Increasing profits, in turn, will increase the fund for the maintenance of productive workers and increase their wages. Thus, the dynamics of the social welfare of workers depends on the growth of capital: the higher the demand for labor, the higher the price of labor. But this is not the only beneficial effect of capital accumulation. An increase in the latter, by increasing the volume of production activity and the number of productive workers, leads to an increase in the value of the annual product, which in turn ensures an increase in the real wealth and income of the country's inhabitants. Do we still need proof of the harmony of interests of all classes of society?

Smith's merit in the development of classical political economy is indisputable, but it owes not only to him its influence on the economic thought of the next century. The completion of the system of classical political economy is associated with the name of another major English economist - D. Ricardo; it was in his works that political economy acquired the features of a science as a system of knowledge about the economic basis of society.

3. Economic views of D. Ricardo

D. Ricardo (1771-1823) - a talented financier and one of the richest people in the London financial world of his time - is at the same time a person who made a huge contribution to the development of classical political economy. D. Ricardo studied the economy as a complex system where objective economic laws operate and there is a mechanism that ensures the operation of these laws as prevailing trends. Ricardo most fully outlined his views in his work “Principles of Political Economy and Taxation” (1817), in the preface to which he writes that the main task of political economy is to determine the laws that govern the distribution of the created product.

However, initially Ricardo's sphere of interest was in the field of monetary circulation research. And here, considering his views, one cannot fail to mention the contribution of Ricardo to the development of problems of monetary circulation. According to Ricardo, the stability of money circulation, which is the most important condition for economic growth, can only be ensured by a monetary system based on gold. At the same time, gold can be largely or even completely replaced by banknotes (which will give the nation great savings), but only if they are freely exchanged for gold at a fixed rate. It is no coincidence that therefore Ricardo is considered the ideologist of the "gold standard". Speaking as a consistent supporter of the quantity theory of money, he considers the increase in the market price of gold to be a consequence and manifestation of the depreciation of banknotes as a result of their excessive issuance into circulation.

But let us return to the Principles of Political Economy. Ricardo shares Smith's position that the wealth of a nation is the product of material production, and labor is the main source of social wealth. However, being more consistent than Smith in developing the labor theory of value, Ricardo argues that value is determined solely by labor, "the determination of value by labor time is an absolute, universal law." Ricardo's theory of value is based on strict monism. An exception is made only for a very limited range of so-called non-reproducible goods (works of art, wines of a special taste, etc.), the value of which is determined by their rarity. Unlike Smith, who ultimately presented value as the result of the addition of wages, profits, and rents, Ricardo argued that value does not consist of these components, but is decomposed into them. Thus, the primacy of value in relation to these forms of distribution was recognized. And this is the essential difference between Ricardo and Smith.

Recognizing labor as the only substance of value, Ricardo made a logical conclusion that a change in wages without any change in labor productivity does not affect the price, but only changes the distribution of the value of the created product between the entrepreneur and the worker, that is, changes the ratio of wages and profit in the value of the product. According to Ricardo's ideas, wages and profits can only change in the opposite ratio, so Ricardo's theory was often called "a system of discord and enmity between classes."

On the basis of the labor theory of value, Ricardo also created the theory of rent, in which the source of rent is not the special generosity of nature, but the applied labor. And in this question one can see the difference between the views of Ricardo and Smith. The latter believed, not without the influence of the Physiocrats, that rent is a special gift of nature, since not only man works and creates a product in agriculture (as in industry), but also the land. Thus rent, as a surplus of production, which is always more than sufficient to replace capital and to make a profit on it, is the result of a special generosity of nature. Ricardo takes a completely different position. The starting point of his theory is the conviction that when there is an abundance of fertile land in a country, a small part of which needs to be cultivated, there is no rent, because no one will pay for the use of land if it is available in unlimited quantities and it is of the same quality. (This is consistent with the general laws of supply and demand). But when, in the course of the development of society, with an increase in population, land of poorer quality or less conveniently situated (let us call it land of the second category) comes into cultivation, rent immediately arises on the land of the first category, the amount of which will depend on the difference in the quality of these two plots. And so, with every increase in population, when the country resorts to the use of land of inferior quality, rent will rise from more fertile plots of land. It follows from this that rent is the result not of generosity, but of the special avarice of nature and the scarcity of resources.

But how is Ricardo's theory of rent related to the labor theory of value? In his opinion, the value of agricultural products is determined by labor costs in relatively worse areas, in modern terminology - marginal areas where marginal capital investments are made. The surplus of production, obtained on the lands of better quality, is the rent paid to the owner of the land. According to Ricardo's views, high rent payments are the result of high prices for agricultural products, which makes it necessary to involve land of inferior quality in circulation. And since the regulator of the price of agricultural products is the product produced with the greatest expenditure of labor, then rent, according to Ricardo, cannot enter as an integral part of its price. Rent is the result of high prices, and what the landowner receives in this way, he receives at the expense of the whole society. It all boils down to one class benefiting at the expense of another.

Finishing the review of Ricardo's theory of rent, with certain reservations, we can say that it was a special case of the theory of marginal values, which are the basis of modern microeconomic analysis.

In the field of wage theory, Ricardo consistently pursues Smith's idea that its size should be regulated by free market competition and should not be controlled by government legislation. The demand for labor, like the demand for every other commodity, necessarily regulates the production of men, and wages will not fall below that level at which the race of laborers would become extinct after the first generation. Developing the views of A. Smith, Ricardo believed that wages come down to the cost of subsistence of the worker and his family, however, unlike Smith, he believed that wages are kept within the strict limits of the subsistence level due to the so-called natural law of population, on which We will take a closer look at the economic views of T. Malthus. This law was later called the “iron law” of wages.

According to Ricardo's views, labor has a natural and market value. The natural price of labor is that necessary for workers to have the means to procreate without increasing or decreasing their numbers (a kind of equilibrium price that ensures a stationary level of population). The natural price depends on manners and customs. If the price of labor falls below the natural price, the condition of the workers deteriorates considerably and "becomes most deplorable." Only after deprivations, by depriving them of those comforts which habit makes absolutely necessary, have reduced their number, will the market price rise to natural. It should be noted that within the framework of the premises of classical political economy, unemployment in a market economy is impossible, because the excess population is dying out. This is the essence of the Ricardian "iron" law of wages. As for the market rate of wages, Ricardo, following Smith, admits that in a progressive society (in a society where capital will gradually and constantly increase) it can be higher than natural for an indefinite time.

D. Ricardo developed A. Smith's theory of foreign trade, supplementing it with the theory of “comparative costs of production” (also called the theory of “comparative advantage”). Unlike A. Smith, who attached decisive importance to the magnitude of absolute costs in explaining the patterns of development of world trade, D. Ricardo believed that absolute costs are not necessarily a prerequisite for international exchange.

National states, according to D. Ricardo, receive economic benefits through the production and export of goods that cost them relatively less, and the import of goods that are produced abroad relatively cheaper than within the country. He explains this principle using the example of the trade in cloth and wine between Portugal and England. It is assumed that trade is carried out on an equivalent basis. Even if the costs of producing cloth in England are slightly higher than in Portugal, and wine is much higher, then the foreign trade exchange of cloth and wine between these countries is still mutually beneficial (based on A. Smith’s principle of absolute costs, such trade does not make sense for Portugal, because , that it is not beneficial for her). Let us assume that the cost of producing the same amount of wine in Portugal is 100 conventional units (for example, pounds sterling), and in England - 3000. At the same time, the cost of producing the same amount of cloth in Portugal is 300 units, and in England - 350. Then Portugal, having exported this amount of wine to England, receives an effect of 2900 (3000 - 100) units and will be able to purchase a significantly larger amount of cloth for this amount than if it produced it itself. At the same time, England’s benefit lies in the fact that by selling cloth to Portugal, it will buy a significantly larger amount of wine for this cloth than if it produced it itself.

Countries, specializing in the production of goods in which they have a relative advantage, can produce them in much larger quantities and of better quality in order to export these goods to other countries, while at the same time they are able to import those goods that are not produced domestically. countries and import goods whose domestic production costs are extremely high.

Specialization based on the principle of comparative advantage and based on it trade between countries increases the total volume of world production of goods. Participation in international trade and the international division of labor enables each country to meet its needs more efficiently and at lower cost.

A. Smith and D. Ricardo are considered the founders of classical political economy, having a common point of view on the basic economic categories and problems of society (the essence of the nation’s wealth, the sources of its increase, the role of capital accumulation in this process, the concept of productive labor and a number of others). It is all the more interesting to consider how optimistic and pessimistic worldviews coexist within the same direction. The representative of the first is A. Smith with his belief in natural harmony, the representative of the second is D. Ricardo. The difference between these worldviews is most clearly manifested in their views on the problem of capital accumulation and the prospects for economic growth. Finding complete unity with Smith that the source of a nation's wealth is the accumulation of capital, Ricardo nevertheless admits that the accumulation of capital can lead to the impoverishment of the entire nation. A paradoxical statement that requires proof. What are Ricardo's arguments?

The starting point of Smith's and Ricardo's reasoning is the same - an increase in the size of capital accumulation increases the demand for labor, thereby leading to an increase in the wages of workers. But if in Smith the growth of wages primarily increases diligence, then, according to the views of Ricardo, high wages encourage workers to multiply, as a result of which the supply of labor increases and wages again fall to the "natural" price, determined by the subsistence minimum. But what is the connection between the wage-setting mechanism and the problem of accumulation? The most immediate. An increase in wages and the resulting increase in the birth rate increases the demand for agricultural products, mainly for bread. Consequently, its price rises and it becomes expedient to involve land of inferior quality, where production costs are higher, into circulation. Thus, with the accumulation of capital and the growth of wealth, the required additional amount of food is obtained with the expenditure of more and more labor. This leads to an increase in rent from better quality land. And since rent, according to Ricardo, is a deduction from the value of the product created in society, it can increase only by reducing the other parts into which value breaks down: profit and wages. Consequently, as a result of the growth of rent, which is a consequence of the growth of population, profit has a natural tendency to fall, which cannot but be an obstacle to the accumulation of capital.

The position that labor is the only source of value, and the latter is divided into wages, profit and rent, where a change in each of the parts is possible only at the expense of the other, inevitably leads Ricardo to a pessimistic conclusion about the antagonism of economic interests in a society of different classes. Nevertheless, from the standpoint of Ricardo, the state should not intervene either in production, or in exchange, or in distribution. State policy as a whole should be based on economic principles, and the main way of interaction between the state and the population is reduced to taxation. But taxes should not be too high, because if the state “swings” at a part of the capital, then the result of this is the poverty of the majority of the population, because the only source of growth in the wealth of the nation is precisely accumulation. According to Ricardo, "the best tax is a smaller tax."

Of interest is Ricardo's argument in defense of taxation as opposed to borrowing as a way of financing the conduct of war. The classic argument against public debt is fully developed: public debt leads to capital flight, and deficit financing reduces private savings. Thus, the burden of debt lies not so much in the annual payment of interest, but in the waste of resources.

Classical political economy, represented by Smith and Ricardo, was the dominant trend in economic thought in the first half of the nineteenth century, which did not exclude criticism of its individual provisions by various economists. Therefore, it seems interesting to trace the evolution of the classical school, considering the views of the most famous representatives of economic science of that period.

Lecture 4

1. Economic views of J.B. Say

The emergence of political economy as a science is associated with the name of A. Smith, who was the first to study the laws governing the production and distribution of material goods. But the name of A. Smith is also associated with the majority of economic schools, which consider him their founder, despite the fundamental differences between them. This is explained by the fact that Smith peacefully coexist different approaches to determining value, wages, profit and a number of other issues, and each direction takes those ideas of Smith that correspond to their worldview.

J.B. Say also considered himself a follower of A. Smith, who went down in the history of economic thought as the author of the theory of three factors of production and the law, which, with the light hand of J. Keynes, was called “Say’s law.”

J. B. Say (1767-1832) is a representative of French economic thought and a supporter of the economic ideas of A. Smith. Like Smith, he was a consistent defender of the principles of economic liberalism, demanding a “cheap state” and reducing the economic functions of the latter to a minimum. Say published his views in his work “A Treatise of Political Economy, or a Simple Statement of the Mode in which Wealth is Formed, Distributed, and Consumed,” which was published in 1803.

Sharing Smith's ideological position, Say completely departed from those elements of the labor theory of value that are so clearly heard in A. Smith. In Say's interpretation, value was not determined by labor costs, but was made dependent on a number of factors: the usefulness of the product, the costs of its production, supply and demand. Cost (in Say's theory - the value, author's note) is always directly dependent on the quantity demanded, and inversely on the quantity offered, and the price, thus, is the result of the mutual influence of supply and demand. Under the influence of competition among sellers, prices are lowered to the level of production costs, and production costs are made up of payments for productive services, that is, wages, profits and rent. Say placed particular emphasis on the utility of a product, since, in his opinion, it is this that is created during the production process, and it is this that “gives” value to objects. Meanwhile, A. Smith already showed that exchange value cannot be directly related to utility, since the most useful items often have the lowest cost, and such vital items as air and water do not have it at all. It is no coincidence that Say disagrees with the opinion of the “father of political economy” on the issue of productive and unproductive labor. He defines production as human activity aimed at creating utility, where utility can be embodied in material and intangible forms. Therefore, even the services of the state are, according to Say, also the production of utility, and the labor used to create them should rightly be called productive. As we see, by emphasizing the utility of a commodity as a substance of value, Say largely erases the boundaries between productive and unproductive labor.

After defining value by utility, Say gives an analysis of the problem of income generation. The starting point of his reasoning was the recognition that three factors of production are involved in production: labor, capital, land. Each of these factors provides a specific service in creating value. According to the three independent sources of value, Say distinguishes three main incomes: wages (payment for the service of labor), interest (payment for the service of capital), rent (payment for the service of land). Say was the first to clearly express the idea of ​​the equal participation of factors of production (labor, capital and land) in creating the value of a product. And here, on the side of Say, there was evidence itself, since for any production, a combination of natural resources, means of production and labor power is necessary. Indeed, the national income or gross national product can be regarded as the mass of use-values, utilities produced per year (in Say's terms). The change in income and product, expressed in constant prices, reflects the increase in the physical volume of production, i.e., the increase in wealth and well-being. And with such an interpretation, the question of the share of the national income (or product) attributable to each of the factors involved in production, and the share of the increase in these quantities, given by the increase in each of these factors, is quite justified. There is no doubt that the study of these functional dependencies is of great importance for increasing the efficiency of the national economy. However, Say could not explain the mechanism for determining the proportion of the created product that falls on each factor of production. The first such attempt was made at the end of the nineteenth century by the American economist J. Clark.

Interesting in Say's work is the interpretation of profit. Already in Say's time it was known that profit is divided into loan interest, which is appropriated by the capitalist as the owner of capital, and entrepreneurial income, which is appropriated by the capitalist as the head of the enterprise. For Say, entrepreneurial income is not just a kind of wages that a hired manager could receive, but a reward for a particularly important social function - the rational combination of all factors of production.

Already at the beginning of the nineteenth century, in connection with the industrial revolution, the question of the negative impact on the position of workers of the introduction of new equipment was being discussed, since it became obvious that the replacement of labor by machines increased unemployment.

Say also laid the foundations of the "compensation theory" in his work, arguing that machines only at first displace workers, and subsequently cause an increase in employment and even bring them the greatest benefit, cheapening the production of consumer goods.

But the most widely known idea is Say's, which entered the history of economic thought as "Say's law". The essence of this law is that general crises of overproduction in a market economy are impossible. And the argument is as follows: the value of the goods created is the total income, which, in turn, is used to buy goods of the corresponding value. In other words, aggregate demand will always be equal to aggregate supply, and the disproportions between supply and demand can only be partial (concerning one or more goods) and temporary, and are due to the fact that social labor is incorrectly distributed by type of production: something is produced in excess, something is in short supply. Any overproduction is limited, since at the other extreme there must always be a shortage.

The content of "Say's law" is the assumption that the prices of goods in a market economy have absolute flexibility and instantaneous response to changes in economic conditions. They themselves are able to correct the imbalances that may arise in the production of goods. By the way, even in the twentieth century, representatives of the neoclassical trend actually take positions that, by and large, go back to Say, believing that through the flexibility of prices, wages, and other elements, the economy can automatically avoid serious crises.

A special feature of “Say’s law” is that it is understood that goods are produced directly to satisfy people’s needs and are exchanged with a completely passive role of money in this exchange. This view goes back to A. Smith and is characteristic of all representatives of the classical and neoclassical movements, where money is considered as a “veil” thrown over the system of real market relations. No one holds money as such and no one strives to possess it. If we accept the assumption of the passive role of money in exchange, “Say’s law” will be absolutely true - it is impossible to imagine a general crisis of overproduction in a barter-type economy, where there cannot be such a thing as an excess of supply over demand for all goods. But in a monetary economy, a general excess supply of goods is theoretically possible and this will mean an excess supply of goods in relation to monetary demand. This situation arises when money is not only a means of circulation, but also a means of storing value, which occurs in a real monetary economy. Then, due to various motives (including precautionary motives and speculative motives), people prefer to save part of their income, and part of the created product (the value of which, according to Smith’s dogma, consists of the sum of income: wages, profit and rent) does not find its buyers.

Very soon, a discussion unfolded around "Say's law", which has not been fully completed to date, being the subject of discussion between representatives of the neoclassical and Keynesian trends.

2. Economic views of T. Malthus

In considering the economic views of Ricardo, we mentioned the influence that the views of Malthus had on him. In fairness, it should be noted that the views of the latter to some extent determined the prevailing theory of wages during the nineteenth century as the theory of a subsistence minimum. Therefore, let us briefly dwell on the economic views of T. Malthus.

Not being an economist by training, T. Malthus (1766-1834) entered the history of economic thought as a man of one idea, one law, namely as the author of the “law of population.” In 1798, a small edition of a book entitled “An Essay on the Law of Population in Connection with the Future Improvement of Society” was published in London, where the author argued that the population was growing in geometric progression, and the means of subsistence (which meant agricultural products) only in arithmetic progression. Essentially, in this work, Malthus formulated his theory of population, which can be reduced to the following provisions:

▪ a person’s biological ability to reproduce exceeds his ability to increase food resources;

▪ this ability to reproduce itself is limited by available food resources.

Malthus argued that the population tends to increase faster than the means of subsistence. And he cited the following figures as evidence: every 25 years the population can double, and if this trend continues, then “in two centuries, the population would relate to the means of subsistence as 256 to 9, in three centuries as 4096 to 13, and after two thousand years, this ratio would be infinite and incalculable. And although it soon became clear that Malthus's proof of this theory was not entirely correct, since the figures were taken characterizing the population growth rate in North America, where the population grew more due to immigration than due to natural factors, the book was a huge success and for went through five reprints for a short time. But what does this statement have to do with economic theory? Most directly, since the theory of Malthus, which established the rigid dependence of population growth on the food resources of society, helped to substantiate the theory of wages determined by the subsistence level. The main and constant cause of poverty, according to Malthus, depends little or nothing on the form of government or on the uneven distribution of property: it is due to "natural laws and human passions", the avarice of nature and the excessively rapid reproduction of the human race. Having reduced the cause of poverty to a simple ratio of the rate of population growth to the rate of growth of life's goods, Malthus's theory also served as a justification for the corresponding economic policy. Malthus argued that wages will always be determined by the subsistence minimum (the minimum amount of funds to maintain a physical existence). In his opinion, if wages, due to the growth in demand for labor, exceed the subsistence level, "immoderate propensity to reproduce" will lead to population growth, labor supply will increase and wages will return to their original level. In other words, the miserable standard of living of workers is determined not by social conditions, but by natural, biological laws. Perhaps it is this idea that explains the incredible popularity of Malthus's work. Naturally, within the framework of his conception, Malthus could not offer the workers anything other than moral, ethical curbing to improve their situation. Believing that any conscious attempt to improve living conditions would be “swept away by the irresistible mass of mankind,” Malthus opposed the “Poor Laws” and raising wages, and here his argument completely coincides with that of D. Ricardo. The Poor Laws, according to these economists, made abstention superfluous and encouraged the imprudent by offering them a share of the income of the prudent and industrious, since relief was provided by taxes on the latter. In addition, population growth driven by aid to the poor would increase the price of agricultural products, lowering the level of real wages for workers.

Malthus was convinced that an increase in the means of subsistence would immediately provoke a reaction in the form of an increase in the birth rate and population. In reality, not only is this trend not absolute, but at a certain stage in the development of society, it clearly gives way to the opposite. The question of automatic birth control other than "fear of hunger" was discussed as early as the beginning of the nineteenth century. The English economist Senior emphasized that the desire to maintain one's standard of living, the hope of moving to a higher social status - these are just as strong motives for behavior as the desire to procreate.

The focus of the Malthusian theory of population was the problem of limited land resources. One of the main premises of this theory was the statement about the impossibility of increasing the means of subsistence (which meant food) at the same pace that is characteristic of population growth. Why? Yes, because, firstly, the resources of the Earth are limited, and secondly, additional investments of labor and capital in the land will ensure a smaller and smaller increase in production, since with the growth of the population, lands of poorer quality are involved in cultivation, giving less and less return. This theory was called the theory of "decreasing soil fertility", which was the prototype of the theory of "decreasing marginal productivity". The followers of Malthus, in proving this theory, went to the point of absurdity, arguing that if there were no diminishing fertility, the entire world's wheat crop could be harvested in a flower pot.

What cannot be reproached with Malthus is inconsistency, and his view of the prospects for economic growth is fully derived from the "law of population". Proceeding from the fact that wages are determined by the subsistence level, Malthus substantiated the thesis of secular stagnation, of the permanence of crises of overproduction. In his opinion, aggregate demand will always be insufficient to purchase the entire mass of commodities at prices that cover costs. Since workers receive less than the value of their output, "the purchasing power of the working classes alone cannot provide incentives for the full utilization of capital." And this difference cannot be covered by the demand presented by the capitalists, since they, by virtue of the ethics prevailing in their circles, doomed themselves to frugality in order to save part of their income by depriving themselves of their usual comforts and pleasures. This view was later called the "doctrine of underconsumption". Consequently, (according to Malthus), to ensure reproduction, a certain amount of expenditure from profit and rent on luxury goods and services of an unproductive nature is necessary, which can somehow alleviate the problem of overproduction. This additional unproductive consumption can only be provided by classes that do not belong to the capitalists and workers, primarily the landowners. It should not be surprising that Malthus's policy advice was to reduce the rate of accumulation and encourage unproductive consumption by the landlords. And his defense of high import duties on grain (in the "Corn Laws" controversy), which would ensure high land rents, is quite in harmony with the main conclusions of his theory. To reduce the accumulation of capital, Malthus proposed to increase taxation. Discussing the problems of organizing public works as a temporary measure to reduce unemployment, Malthus writes that "the trend towards a decrease in the volume of productive capital cannot be an objection to public works that require the attraction of significant sums through taxes, since to a certain extent this is exactly what is needed" .

Despite all the incorrectness of the premises of Malthus’s theory of overproduction (unlimited population growth and the law of diminishing soil fertility), his merit lies in the fact that he acutely raised the question of the problems of selling the created product, a question that remained beyond the attention of both A. Smith and D. Ricardo.

3. Economic views of S. Sismondi

The works of the Swiss economist and historian S. Sismondi (1773-1842) played a significant role in the history of economic thought, if only because he was the first to scientifically criticize the economic system of capitalism and opposed some of the ideas expressed by representatives of classical political economy. Unlike the latter, in political economy he saw not the science of wealth and ways to increase it, but the science of improving the social mechanism in the interests of human happiness. Sismondi considered political economy a moral science that deals with human nature, and not with economic relations; it will lead to the goal only when the feelings, needs and passions of people are taken into account. Of course, this interpretation of the subject of political economy was influenced by Smith’s work “The Theory of Moral Sentiments.” Increasing the production of goods, according to Sismondi, is not an end in itself, and is not itself an indicator of wealth if in the process of its distribution the majority receives pitiful crumbs. And here we can also see the influence of A. Smith, who writes that “no society can doubtless prosper and be happy if the greatest part of its members are poor and unhappy.” Thus, in Sismondi we see the development of the moral aspects of economics, which was started by A. Smith.

But it is not only in this that the unity of the views of Sismondi and Smith is manifested. Sismondi is a supporter of the labor theory of value, according to which the value of a product is determined by the labor costs for its production. It is quite natural that he considers profit to be the income of the capitalist, which is a deduction from the product of the worker's labor. Sismondi speaks directly about the robbery of the worker under capitalism, emphasizing the exploitative nature of profit and believing that wages should be equal to the entire value of the product of the worker's labor. But why does the worker receive only a small fraction of the value of the product he has created? Sismondi did not look for wage regulators in the "natural" laws of nature, as Ricardo and Malthus did, but he nevertheless accepted the position prevailing in economic literature that the wages of workers tend to a living wage. Sismondi sees the reason for this situation in specific capitalist relations, in the striving of the capitalists to "squeeze" as much profit as possible out of their workers. The possibility of reducing wages to a minimum in Sismondi is associated with the process of displacement of labor by machines, that is, with the growth of unemployment, which forces workers to hire for lower wages. This shows that while denying the Malthusian law of population, Sismondi did not deny the existence of a connection between population growth and wages. It is no coincidence that Sismondi proposed limiting population growth to the limits of family income.

But still, the problem of markets and the sale of the created product comes to the fore in Sismondi's economic views. In contrast to classical political economy, which accepted the thesis of the automatic adjustment of aggregate demand to aggregate supply and the impossibility of a general crisis of overproduction, Sismondi put forward the thesis of the constancy of crises of overproduction in a capitalist economy. Reducing the value of the social product to income, Sismondi states that in order to sell the entire product produced, it is necessary that production fully correspond to the income of society. And then he concludes that if production exceeds the amount of society's income, then the product will not be sold. Let us note that Sismondi's cost of the created product does not include the cost of the spent means of production. What follows is a familiar line of reasoning. The wages of the workers tend towards the subsistence level, due to the pressure of unemployment caused by the introduction of technology. This process leads to a reduction in aggregate demand, since, in the words of Sismondi, "machines do not know any needs and therefore do not show any demand." The demand of the capitalists does not expand the home market either; they accumulate a part of the income destined for consumption. In other words, the ability of the economy to produce more and more goods is running up against insufficient demand from the main productive classes. In this regard, already in 1819, Sismondi, in his work “New Principles of Political Economy,” expressed the idea, absurd for representatives of classical political economy, that “peoples... They can go bankrupt not only because they spend too much, but also because they spend too little.” After all, according to the views of both Smith and Ricardo, it is thrift and accumulation that are the key to the wealth of the nation. As we have already noted, the paradox lies in the fact that Sismondi’s idea of ​​the permanent crises of overproduction under capitalism follows from the premise of classical political economy - the position of A. Smith that the annual product of a nation is the sum of profits, wages and rents spent on consumer goods. Following Smith, Sismondi ignores the fact that the annual product also includes the means of production, and with the growth of capital accumulation, the needs of the economy in the means of production create a special market, to a certain extent independent of the market for consumer goods. Moreover, during periods of economic recovery, the growth rate of productive consumption exceeds the growth rate of personal consumption.

And in conclusion of the consideration of this issue, it should be said that the view of the cause of crises as a result of “underconsumption” exists to this day, although the causes of underconsumption are considered from slightly different positions. Regarding other aspects of Sismondi's economic views, it should be noted that he rejected A. Smith's fundamental thesis about the beneficence of self-interest and competition. For Sismondi, competition has disastrous economic and social consequences: impoverishment of the bulk of the population, economic crises. Sismondi believed that it was wage labor and competition that undermined the basis of equality in economic systems and led to the destruction of the balance of production and consumption, since under conditions of competition production increases without specific consumers. The situation is aggravated by unequal distribution. According to Sismondi, there must be a limit to the expansion of production, which must be commensurate with social reasons.

The negative consequence of free competition, according to Sismondi, is that it changes the type of population, leading to overpopulation. If earlier population growth "was commensurate with income growth and was regulated to a certain extent (for example, an artisan did not marry until the end of his apprenticeship), now (in the era of the industrial revolution - author's note) the position of the worker changes depending on the demand for labor, but the worker's family cannot change - this is how a surplus population arises. It is not surprising that Sismondi advocates a legislative restriction of free competition, which leads, in his opinion, to the opposition of the interests of society and individual commodity producers. goods were sold and not a single commodity producer suffered, and individual producers, from his point of view, should be eliminated by the state.Sismondi's state intervention is associated primarily with the regulation of economic growth rates (all the troubles from the too rapid development of capitalism), control over the distribution of "surplus value and limiting competition. Sismondi considered measures to limit competition to be the encouragement of small capital, the participation of workers in profits, and the legislative restriction of new technology. He also entrusted the state with the implementation of a program of social reforms, in particular the introduction of social security for workers at the expense of entrepreneurs, restrictions on the working day, and the establishment of a minimum wage. This allows us to consider Sismondi as one of the first reformers, whose ideas were largely realized only in the twentieth century.

4. Economic views of J. Mill

If the name of A. Smith is associated with the formation of political economy as a science, then the name of J. Mill is associated with the publication of the treatise “Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy” (1848), which was a kind of guide for those who were interested in the problems of political savings. Mill himself writes in the preface to his work that his task is to write an updated version of The Wealth of Nations, taking into account the increased level of economic knowledge and the most advanced ideas of our time.

J.S. Mill (1806-1873), English philosopher and economist, son of another English economist - James Mill, who was a close friend of D. Ricardo and the influence of the latter is very noticeable in the work of J.S. Mill.

In accordance with the traditions of classical political economy, the main sections of "Fundamentals of Political Economy" are devoted to production, distribution, exchange, the progress of capitalism and the role of the state in the economy. Following Ricardo, who believed that the main task of political economy is to determine the laws that govern the distribution of product between classes, Mill also gives the analysis of these laws a central place. However, and this is where his fundamental difference from A. Smith and D. Ricardo lies, Mill shares the laws of production and distribution, believing that the latter are governed by the laws and customs of a given society and are the result of human decisions. It was this premise of J. Mill that was the basis of his idea about the possibility of reforming distribution relations on the basis of private capitalist property. In this regard, he paid much attention to the problems of developing the state social security system and taxation problems. It was Mill who formulated the theory of equality of sacrifice, in which he substantiated the principle of progressive taxation. Mill considered the most suitable objects of progressive taxation to be inheritance, which is property that was not acquired by labor, and the “unearned increase” of rents, which are a consequence of the rise in the price of land.

In his reasoning, Mill consciously or unconsciously assumes that distribution does not interact in any way with price processes, being a product of historical accident. Indeed, the problems of pricing are considered by Mill after analyzing the problems of distribution, where by the cost (value) of a product he understands its purchasing power in relation to other goods. In fact, Mill comes to the view that the exchange value (and price) of a commodity is established at the point where supply and demand are equalized. Mill tries to reconcile this position with the ideas of Classical political economy, where “natural prices” are determined by production costs by citing the fact that this statement is true for a situation with a perfectly elastic supply. Mill's ideas about the functional connections between market price, demand and supply later resulted in the study of the category of "price elasticity" by A. Marshall.

If Mill breaks with classical political economy in his interpretation of the nature of value, then in matters relating to the concept of productive labor, the factors of capital accumulation, the theory of wages, the theory of money, the theory of rent, he remains entirely within the framework of the ideas of this economic school, although many of them are interpreted Mill were further developed. This applies not least to the concept of productive labor. Mill agrees with the classics that productive labor is labor that creates wealth. Wealth primarily includes tools, machines and the qualifications of the labor force, what we call today material and human capital. Consequently, according to Mill, the labor spent on improving the quality of the labor force is productive, leading to an increase in the wealth of the nation. Such an extended interpretation of productive labor was developed in the views of representatives of the neoclassical direction, in particular, A. Marshall. Shares Mill and view on the role of money in the economy, emphasizing that the growth of the money supply in circulation can not have any other consequence than inflation.

But the identity of Mill's and Ricardo's views is most clearly seen in the latter's defense of the theory of rent and in Mill's views on the prospects for economic growth. Following Ricardo and Say, Mill believed that a crisis-free development of production is possible under capitalism. However, following the logic of Ricardo, in which the growth of population will inevitably lead to an increase in prices for agricultural products, an increase in rent and a decrease in profits, Mill also believed that the fall in the rate of profit would ultimately lead to economic stagnation. The onset of this state can be delayed by factors that counteract the decrease in the rate of profit, to which he attributed technical progress (especially in agriculture) and the export of capital to other countries. Like Ricardo, Mill saw the possibility of economic progress in terms of the confrontation between technological progress and the diminishing returns of agriculture.

In analyzing wages, Mill proceeds from the fact that the size of the latter depends mainly on the demand for labor and its supply, or, what is the same, on the ratio between population and capital. Taking the aggregate demand for labor as completely inelastic, Mill naturally adopts the position of the "working fund theory", first expressed by the English economist McCulloch (1789-1864). The theory proceeds from the premise that society always has a very rigid and virtually stable fund of subsistence, which capitalists save (save) in order to support their workers. The premise of the "working fund theory" is to view the economy as one big firm that must pay workers for the services they provide as they are performed before they are turned into consumer goods. In other words, such a "firm" must have ready-made consumer goods in stock, bought by workers for wages. Taking the view that the main article of consumption of workers is bread, which is the result of a year's harvest, supporters of the working fund theory believed that it should be stored as a fund until the next harvest. And wages, according to the "working fund theory", are determined simply by dividing this fund by the number of workers. Naturally, under this assumption, an increase in the supply of labor (as a result of population growth) cannot lead to any other result than a decrease in wages. This is reminiscent of the Malthusian "iron law of wages", and it is no coincidence that in Mill both Malthusian population theory and the working fund theory become decisive arguments in favor of limiting the size of the family. It is interesting to note that the theory of the "working fund", which could not withstand any criticism as a theory of the formation of wages, played a very important role in the theories of capital, where it made it possible to define capital as advances to workers to maintain their existence (in the original interpretation - from sowing to harvest). ). Later, in the theories of capital, in particular in Böhm-Bawerk, it is considered from the point of view of the time interval between production and consumption.

In accordance with his task (to write a work taking into account the increased level of economic knowledge), Mill could not ignore the theory of interest of the English economist N. Senior (1790-1864), expressed by him in the work “Fundamentals of Political Economy” (1836). The senior views interest as a reward for the capitalist's "sacrifice." The sacrifice lies in the fact that the capitalist refrains from consuming current income from property, turning it into means of production. Developing this position, Mill argues that labor does not have the right to the full product, since the “supply price of abstinence” in society is a positive value. Profit (as compensation for "abstinence") is measured, according to Mill, by the current rate of interest on the most advantageous security, and the latter is determined by the comparative value that is attributed to the present and the future in a given society. Here Mill clearly sounds the motive of time preference, which was later developed by representatives of the Austrian school.

LECTURE 5. MARXIST POLITICAL ECONOMY

1. Economic views of K. Marx

One of the most interesting trends in economic thought of the nineteenth century is Marxism, which can be considered as a unique development of classical political economy in that part where the foundations of the labor theory of value are considered. The founder of this doctrine is K. Marx (1818-1883), a German economist and philosopher. Taking as the starting point of his research the statements of Smith and Ricardo that the value of all goods is based on the amount of labor spent on their production, Marx created a fairly coherent theory describing the laws of the functioning and development of the capitalist economic system. He showed how from simple commodity production, the goal of which is consumption and where money is only an intermediary in exchange, capitalist production flows quite logically, where the goal is to increase money and make profit. If we recall Aristotle, then the first type of economy corresponds to the concept of “economy”, and the second - to the concept of “chrematistics”. Why does chrematistics inevitably grow out of economics? Marx begins his study of this process with an investigation of the nature of commodity production. Like representatives of classical political economy, Marx distinguishes between two aspects of a commodity: use value and exchange value. The first refers to the ability of a thing to satisfy any human need, regardless of whether it is caused by “stomach or imagination”; the second refers to the ability of a thing to be exchanged in certain proportions for another product. But what makes goods comparable and comparable? Following Ricardo, Marx argues that the proportions of exchange are based on labor costs, which determine the value of the product. But it is quite obvious that a homogeneous product is produced by different groups of commodity producers and each of them spends a different amount of time on the production of a unit of goods. However, the proportion of exchange of this product for others on the market will be the same. The costs of which group of commodity producers will determine the proportions of exchange? Marx answers that the value of a commodity will be determined by socially necessary labor costs or the costs of that group of commodity producers that produces the commodity at the average level of skill and intensity of labor for a given society. In other words, the costs of the group that produces the vast majority of products. To illustrate this point, the following example can be given. Suppose there are three groups of commodity producers who produce a certain product at different costs:

Group 1 - the cost of producing a unit of goods - 4 hours;

group 2 - the cost of producing a unit of goods - 6 hours;

Group 3 - the cost of producing a unit of goods - 10 hours.

Let us assume that the group producing the vast majority of products is the second group of commodity producers, whose costs are equal to 6 hours, and it is their costs that will determine the proportions of exchange of this product for other goods. What will happen to the first and second groups of commodity producers? The first will receive in exchange more than they spent, that is, they will get rich, the second will receive less, that is, they will go bankrupt. Next, we need to turn to the logic of A. Smith, to his concept of self-interest as the main engine of economic development and the condition for the prosperity of a nation. The natural desire to receive additional income will push commodity producers of the second and third groups to reduce labor costs for the production of goods, that is, to increase labor productivity. How? Better organization of labor, introduction of new processing methods, etc. Let's assume that this was successful. But what is the result? The overwhelming majority of production will be produced at a cost equal to 4 hours, and it is they who will determine the proportions of exchange. This means nothing more than a reduction in price of this product relative to others. What better illustration could there be of Smith's point about the beneficence of self-interest? After all, it is he who forces people to improve production and contributes to the development of the productive forces of society. But this is only one side of the coin. The downside is the stratification of commodity producers. In our example, the third group of commodity producers, whose costs exceed socially necessary ones, go bankrupt. Critics of the capitalist mode of production, in particular S. Sismondi, drew attention to this process. However, it should be noted that this is an inevitable price to pay for technological progress. It was Marx who was the first to clearly formulate this position.

Having examined the nature of the commodity and formulated the law of value, Marx then moves on to examine the nature of money. This problem interested many economists, in particular Aristotle, who believed that money is a product of agreement between people. The same position was held by A. Smith, who wrote that money is a technical instrument that facilitates exchange and for this purpose different goods were selected and used in succession. Marx’s view of the nature of money is that money is a commodity that spontaneously stood out from the entire mass of goods and began to play the role of a universal equivalent, an expression of the value of all other goods. At the same time, he also answered the question of why money has such power over people, why in all centuries “people died for metal.” To explain, Marx introduces the concept of abstract labor as a form of expression of social labor, but due to the sufficient complexity of these categories, we will try to understand the logic of Marx’s reasoning without resorting to such complex constructions. The starting premise is that in conditions of private property and isolation of commodity producers, each individual producer works for an unknown market, deciding for himself what to produce, in what quantities, by what means. He certainly expects, hopes, but is never sure that his products will be needed by society. It is the moment of purchase that will be for him the moment of recognition that his work and product have received public recognition by society in the person of the buyer. But how does this statement help explain the power of money?

Money (the commodity which serves as an equivalent for expressing the value of all commodities) is the only commodity for which it is not necessary to prove its necessity, for it is the universal means of payment and purchase, and therefore everyone strives for its possession. In the course of the development of commodity production, many commodities "claimed" for the role of money, but as a result, this role was assigned to precious metals. It should be emphasized that money cannot exist outside a certain system of economic relations, namely the relations of commodity exchange.

Money is the end product of the development of simple commodity production and at the same time the first form of existence of capital. As already mentioned, its initial form is trading and usurious capital. Capital, according to Marx, is not just money, it is money that brings additional money, it is "a value that brings surplus value." But is the capacity of capital to produce income really as natural as the capacity of a pear tree to produce pears?

Both Smith and Ricardo believed (albeit the first with certain reservations) that the only source of value of a commodity is labor. But then it is logical to assume that the source of profit or self-expansion of capital is the appropriation of part of the worker’s labor and it remains to recognize that under the conditions of a capitalist economy the worker receives a value that is less than what he produces with his labor. Only two conclusions can follow from this: either the basic law of commodity production (equivalence of exchange) is violated, or other factors of production take part in the creation of value along with labor (ultimately A. Smith took this position). Marx tried to solve this problem in the following way. In his opinion, the commodity is not labor, as Smith and Ricardo believed, but labor power (the ability to work). Like any other product, labor has cost and use value (utility). The first is determined by the labor costs necessary for the reproduction of labor power, that is, the cost of a certain set of goods and services necessary for the life of a worker. But not only. The worker is mortal, and in order to maintain the level of at least simple reproduction, it is necessary that the cost of labor power include the cost of the means of subsistence of the worker’s family (wife and two children). In other words, the value of labor power is determined by the value of the means of subsistence necessary to “produce, develop, maintain and perpetuate labor power.” Note that the category of the value of labor power in Marx is synonymous with wages in Smith and Ricardo, but unlike them, in Marx this category is associated with the labor theory of value and explains the possibility of the simultaneous existence of the equivalence of exchange and exploitation. In the production process, the worker creates a value greater than the value of his labor power, which comes down to the cost of the means of subsistence (this is precisely the use value of the commodity labor power, its usefulness for the capitalist). This is possible because the value of labor power is determined by the amount of labor necessary for its preservation and reproduction, and the use of labor power is limited only by the working capacity and physical strength of the worker. That is, even under conditions of equivalent exchange (the worker receives wages equal to the value of his labor power), the existence of profit and rent is natural, which, nevertheless, are nothing more than the appropriation of the worker’s unpaid labor, essentially exploitative income. Hence, it is quite logical to assert that capital is the accumulated unpaid labor of hired workers.

Marx pays much attention to the principles of distribution of the results of unpaid labor of workers (what he calls surplus value) between different classes of capitalists, and to the analysis of specific forms of surplus value: profit, interest, rent. At the same time, he constantly emphasizes that rent, interest and industrial profit are only different names for different parts of the surplus value of a commodity, or the unpaid labor embodied in it, and they are all equally drawn from this source, and from this source alone. Neither rent nor interest is generated by land and capital as such. Developing the theory of rent of D. Ricardo, Marx proves that rent exists even on lands of the worst quality (this rent was called absolute rent by Marx).

It is interesting for Marx to resolve a contradiction that Ricardo could not resolve, namely: to explain why the rate of return on capital is determined not by the amount of labor involved (which would be absolutely logical in the framework of the labor theory of value), but by the amount of capital. Marx described the mechanism for the formation of average profit, showing that in the real processes of capitalist production there is a redistribution of the surplus value created by all wage workers among the capitalists in proportion to the size of their capital. The logic of Marx's reasoning can be shown using his own example, where three industries are taken with the same amount of capital, but with a different technical (organic - in Marx's terminology) structure:

where К - the amount of capital in cash;

V - wage fund (according to Marx's terminology "variable capital");

С - all other elements of capital (according to Marx's terminology "constant capital");

М - the amount of surplus value;

W - the value of the cost;

Р - rate of return.

Marx makes the assumption that the value of labor power is the same in all three industries, as is the rate of exploitation, which is 100%. In this case, according to the labor theory of value, the value (and the price, considered as a monetary expression of value) of the output of the first branch will be 130 units, the second - 120 units, the third - 110 units. And then the rate of profit, calculated as the ratio of surplus value to capital, will be 30% in the first branch, 20% in the second, and 10% in the third. It is not difficult to assume that such "injustice" will not suit the capitalists of the second and third industries and there will be a flight of capital to the first industry (we consider the case of a free market, when there are no obstacles to this process). As a result of this process, an excess of capital in the first branch, leading to an increase in the production of this branch, in accordance with the laws of supply and demand, will lower prices and reduce profits. In the third branch, the reverse process will occur: as a result of the flight of capital, the quantity of output will decrease, prices will rise, and profits will increase. The process will continue until an equal profit on equal capitals is reached. In our case, it will be 20%. This assumes that goods will be sold not at cost but at a price (from Marx it was called the price of production), which will ensure such a profit, that is, at a price equal to the sum of production costs and average profit. In our case, 120 units. But what is the price equal to the cost of production and the average profit? Nothing but the "natural price" in Ricardo's theory. Was it worth then so much time to devote to consideration of the mechanism of its formation? However, one should not forget that Marx's task was not only to show the mechanism for the formation of average profit, but also to prove that the sale of goods at the "price of production" does not reject the law of value (the exchange of goods takes place in accordance with the costs of socially necessary labor), but only modifies it. What is the modification? In the fact, according to Marx, that although the prices of individual commodities deviate from the value, but on the scale of the entire national economy, the sum of the prices of commodities is equal to the sum of their values ​​(in our example, this value is equal to 360 units). Thus, in the process of competition, there is only a redistribution of the surplus value created by all wage workers among the capitalists in proportion to the size of their capitals (if such a comparison is appropriate, then the loot is divided in proportion to the strength of the weapons). And an equal rate of profit on capitals of equal size is by no means proof that capital participates in the process of creating (increasing) value, leaving in force the position that the only source of value for commodities is labor.

The logic of Marx's reasoning leads him to the conclusion that the rate of profit on capital decreases with the development of capitalism. The desire to increase profits forces the entrepreneur to reduce costs (in this case, a situation of perfect competition is taken, when the company does not have the opportunity to influence the price level), and the main factor in reducing costs is the increase in labor productivity due to the introduction of new equipment and technology. As a consequence, the technical structure of capital increases (in modern terms, the capital-labor ratio), which leads, other things being equal, to a decrease in the total mass of surplus value and a decrease in the rate of profit within the entire national economy. In essence, the mechanism described by Marx is somewhat reminiscent of the mechanism of the “invisible hand” of A. Smith. However, for Smith, selfish interest, the desire for profit leads to an increase in social wealth, and for Marx, the desire for profit ultimately destroys this profit, which in Marx’s theory is another evidence of the limitations of the capitalist mode of production.

From the development of labor-saving technologies, Marx also derives a mechanism that does not allow the price of the commodity "labor power" to rise in the long run above its value, determined by the cost of the means of subsistence. It is the existence of a chronic army of unemployed due to the displacement of labor by machines that provides an effective mechanism for restraining wages.

It is interesting to note that for Marx, as for Smith, the process of capital accumulation does not depend on external conditions (the amount of profit, the rate of interest on loans), but is an automatic process. In other words, the desire for accumulation, for the relentless pursuit of profit is in the blood of the capitalist. Shares Marx and the concept of representatives of classical political economy of productive and unproductive labor. Like Smith, Marx considers only labor employed in the sphere of material production to be productive, while he considers the income of unproductive persons as the result of a process of redistribution of the national income created exclusively in the sphere of material production.

But where the difference between Marx's views and the representatives of classical political economy manifests itself rather sharply is in the question of the possibility of general crises of overproduction. As you remember, both Smith and Ricardo denied the possibility of such crises. For Marx, the economic crises of overproduction act as an element of the cyclical development of the capitalist economy and a consequence of the violation of the conditions of macroeconomic equilibrium. It should be said that it was Marx who was the first in the history of economic thought (if we do not take into account the attempt of the physiocrats) to formulate the conditions for macroeconomic equilibrium, the conditions for the realization of the total social product in value and in-kind form under conditions of simple and expanded reproduction. Marx saw the cause of economic crises of overproduction in the fact that the expansion of production does not automatically generate a proportional increase in effective demand. However, he denied the permanence of this condition and disagreed with the doctrine of permanent underconsumption associated with low wages of workers, noting that it was in the periods immediately preceding the crisis that wages were highest. Rather, according to Marx, the real wages of workers, embodied in the means of subsistence, do not increase as rapidly as the output per person, and this is the immediate cause of crises.

Marx is also interested in describing the mechanism for overcoming economic crises on the basis of a massive renewal of capital. Briefly describing this mechanism, it boils down to the following. The economic crisis of overproduction manifests itself, among other things, in overstocking, which results in lower prices. In an effort to adapt to low prices, the capitalist seeks to reduce costs by introducing new high-performance equipment. There is a demand for this equipment and the latest technologies, which entails an increase in demand for a workforce of appropriate qualifications; the latter, receiving wages, in turn demand consumer goods. Employment of the second, third, etc. orders arises. This process is very similar to the mechanism of the multiplier, described in detail by J. Keynes.

These, as well as a number of other ideas, Marx outlined in his famous work “Capital”, which he wrote over the course of 40 years, and only the first volume was published during the author’s lifetime (1864), the remaining volumes were edited by Marx’s friend and comrade-in-arms F. Engels .

2. Social and philosophical views of K. Marx

It must be said that the interest in Marxism is due not only to the purely economic aspects of his theory. As you know, Marx was not only an economist, but also a philosopher. He created a system that covered all social sciences and there is a certain consistency between all aspects of Marxism. Therefore, it would be wrong not to dwell at least briefly on those socio-philosophical views of Marx that are most directly related to his economic theory.

Marx set his goal not just to study the laws governing the production, distribution and exchange of material goods, but to discover the laws of development of socio-economic formations, in a broader sense - the laws of the development of human society. In contrast to the representatives of classical political economy, who considered the capitalist mode of production as eternal and unchanging, Marx pointed to its transitory nature and it was from these positions that he studied it in his works, in particular, in Capital.

As already mentioned, capital, according to Marx, is nothing more than the accumulated unpaid labor of workers, the result of the appropriation of surplus value by capitalists. But it was not the moral condemnation of the injustice of capitalism, which was so characteristic of representatives of utopian socialism from T. More (1478-1535) to R. Owen (1771-1858), that led Marx to the conclusion about the necessity and inevitability of replacing capitalism with another social system. Considering contradictions to be the source of movement and development of any system, Marx tries to find the source of development and change of socio-economic formations. And this source, in his opinion, is the contradiction between the productive forces of society and production (economic) relations. Capitalism, according to Marx’s ideas, will exhaust itself only when existing economic relations, the core of which are property relations, cannot make it possible to fully utilize the productive forces of society. As evidence that capitalism was already entering the final stage of its development, Marx pointed to periodically recurring economic crises. Marx outlined the historical trend in the development of capitalism in one of the chapters of the first volume of Capital, where in a condensed form he gave the process of development of the capitalist system: from enterprises based on small private property to monopolistic enterprises with a high degree of concentration of social production and capital, which require , according to Marx's concept of social management and control. And only then must private property be transformed and workers united on the basis of joint management, ownership and use of the means of production. The implementation of the latter means a transition to another socio-economic system, a system based on public ownership of the means of production.

As we see, Marx’s prospects for the development of the capitalist system are not connected with his labor theory of value, however, it is the latter, due to its social attractiveness, that Marxism owes for the spread of its socio-economic ideas. Arguing that capital is the accumulated unpaid labor of hired workers, Marx provided an ideological basis for the spontaneous protest of the proletariat. The essence of the protest is to restore justice, which would consist in the worker receiving the full product of his labor. In particular, the idea of ​​a worker’s right to an unreduced product of labor formed the basis of the program developed by German Social Democrats, whose ideologist was F. Lassalle (1825-1864). However, this demand was utopian from the very beginning: in no society can workers receive the full product for their personal consumption, since then there would be no funds left for accumulation, public needs, maintenance of the administrative apparatus, etc. And the only question is who appropriates part of the product created by the worker - the state or private individuals.

Marx was the last of the major economists to adhere to the labor theory of value. The rejection of this theory by subsequent generations of economists was not least due to the conclusions that directly followed from this theory.

Moreover, the problem of the distribution of the created product, which was the key problem of classical political economy, also fades into the background precisely because of its acuteness. And the central problem for political economy from the last third of the nineteenth century for several decades has been the study of the behavior of an isolated subject in the process of making economic decisions.

LECTURE 6. AUSTRIAN ECONOMIC SCHOOL

1. The theory of marginal utility as a theory of pricing

One of the main postulates of classical political economy was the position that the cost and price of goods are based on labor costs (or, in another version, production costs). But at the same time, the idea, dating back to Aristotle, continued to live that the exchange value and price of a product is determined by the intensity of the desires of the persons entering into the exchange, the “finest hour” of which dates back to the period of the 70-80s of the nineteenth century. This period went down in the history of economic thought under the name “marginalist revolution.” The term "marginalist revolution" is used when talking about the independent discovery in the 70s of the nineteenth century by K. Menger (Austrian), S. Jevons (English) and L. Walras (Swiss) of the principle of diminishing marginal utility. The essence of this principle or law is well known to all of you: the utility that each subsequent unit of a given product brings (this is what is called marginal utility, and the term itself was fixed and remained in science forever thanks to F. Wieser - author's note) is less than the utility of the previous unit of the product. The analysis of the marginal increments of utility of goods meant the transition in economic science to the analysis of marginal values, the analysis of differential equations and derivatives. But if only a new research method had appeared, it would hardly be possible to rightfully talk about a revolution that had taken place. What is much more significant is that the subject of research itself has changed.

Since the time of A. Smith, the main directions of research in economic science have been the issues of ensuring the growth of social wealth and the analysis of the role of various factors of production in this process. We can rightfully say that classical political economy studied economic processes at the macro level, paying special attention to the problems of economic growth, that is, economic dynamics. The marginalist revolution marked the transition of economic research from the macroeconomic level to the microeconomic level. The central issues of economic science have become the study of the behavior of economic entities (consumers and firms) in conditions of limited resources. Economics for the first time became a science that studies the relationship between given goals and given limited means. The essence of economic science has become the search for conditions under which production services are distributed with optimal results between competing goals. These are questions of economic efficiency, and it is the marginal analysis that serves this principle. It should be added that the economic model, which is the subject of marginal analysis, is static, where there is no room for problems of economic growth.

But we are primarily interested in the connection of the new approaches that the marginal revolution proclaimed with the concept of pricing. This question has been developed most fully by the representatives of the "Austrian school", and we shall turn to an analysis of their views. As we know, since the time of Aristotle, economists have distinguished two sides in a commodity: use value (or utility) and exchange value (the ability of a commodity to be exchanged for another commodity in certain proportions). The founders of political economy (Smith and Ricardo) used labor as the basis that determines the proportions of exchange (the prices of goods). Utility, considered as the objective ability of a thing to satisfy any human needs, was presented only as a condition for the implementation of the exchange.

Representatives of the “Austrian school” not only introduced the concept of subjective utility (value) into economics, but also put it forward as the basis for pricing. To better understand the logic of their reasoning, it is necessary to clarify the difference between objective and subjective utility. The first represents the ability (in principle!) to serve human well-being. Subjective utility or value represents the significance of a given thing for the well-being (life enjoyment) of a given person. Therefore, there may be a situation where a thing has utility, but does not have value. For the formation of value, it is necessary that rarity be combined with utility - rarity is not absolute, but only relative, that is, in comparison with the size of the existing need for things of a given kind. And this means that goods have value if they are not enough to satisfy the corresponding needs, otherwise material goods have no value. The first of the representatives of the “Austrian school” to develop this position was K. Menger (1840-1921), professor of political economy at the University of Vienna. He defended the view that price analysis should be reduced to an analysis of individual assessments. Trying to resolve A. Smith's paradox about water and diamond (namely, to explain why diamond is so expensive and water is cheap, without resorting to the labor theory of value), Menger formulated the principle of diminishing utility. According to this principle, the cost (value) of any good is determined by the least utility that the last unit of the supply has. At the same time, when determining the value of material goods, one should take as a basis not the scale of types of needs, but the scale of the specific needs of this particular person. To illustrate this point, it is appropriate to give a table, which is called the “Menger table”. In this table, vertical rows marked with Roman numerals indicate different types of needs and their importance in descending order: I - represents the most important type of need, for example, for food; V is a type of need of medium importance, for example, the need for alcoholic beverages, X is the least important type of need. The numbers within each vertical row (Arabic numerals) illustrate the decreasing urgency of a given need as it becomes saturated in descending order from 10 to 11.

It can be seen from the table that a specific need of a more important type may be lower than individual specific needs of a less important type. For example, the eighth unit of the first type of needs will be of less value or less significance for the well-being of the subject than the first unit of the seventh type of needs. The decrease in the value of goods as their number increased, the representatives of the Austrian school associated with a "deeply rooted property of human nature", when the same kind of sensations, repeating incessantly, begin to give us less and less pleasure, and finally, this pleasure turns even into its opposite - into trouble and disgust. Thus, in the theory of value of the Austrian school, it can also represent a negative value. Here we see the formulation of the law of diminishing marginal utility. But how does this provision relate to the concept of pricing? In the most direct way. The value (price) of a thing is measured by the value of the marginal utility of this thing, the utility of the last unit of the stock of the good that satisfies the least important need. To illustrate, it is appropriate to give an example of Robinson, who has five sacks of grain in stock, of which the first is needed in order not to die of hunger, the second is for maintaining health, the third is for fattening poultry, the fourth is for preparing alcoholic beverages, the fifth - for the maintenance of a parrot. What determines the value of one (any) bag of grain? According to the views of the representatives of the Austrian school, the usefulness of the last bag that satisfies the least urgent need. This marginal unit (utility) determines the actual value of the previous units. Marginal utility, in turn, depends on the amount of goods and intensity of consumption of the individual. Thus, the value depends on the degree of utility and degree of rarity. The first defines the highest point to which marginal utility can rise in a pinch; the second is to what point marginal utility actually rises in a particular case. In other words, the height of marginal utility is determined by two factors: subjective (needs) and objective (number of goods), which, in the framework of the reasoning of the Austrian school, remains given once and for all.

However, all the arguments about subjective value cannot explain to us the mechanism of market pricing, where, despite all the diversity of subjective assessments, there is a single price for a product. An attempt to resolve this contradiction was made by the most prominent representative of the Austrian school, E. Böhm-Bawerk (1851-1919), by introducing the concept of objective value, by which he means exchange proportions (prices) that are formed during competition in the market. Böhm-Bawerk's pricing process is most easily explained using his now textbook example of the horse market. So, in the market, buyers and sellers face each other, having subjective assessments of how useful the horse is to him.

Buyers' ratings are the maximum prices they could pay for a horse, and sellers' ratings are the minimum prices they would be willing to receive for their horses. At the same time, Böhm-Bawerk introduces another condition: transactions must be profitable for both buyers and sellers. Therefore, none of them will buy (or sell) a horse at a price equal to his own assessment. In other words, no one will exchange utility for equal utility. How, under these conditions, will the price of a horse be determined?

Suppose, following Böhm-Bawerk, that the auction will begin with the announcement of its price by buyers - 130 florins. This price is beneficial to all buyers. But she obviously does not suit the sellers: only the first two are ready to sell horses at a given price. There is an imbalance between supply and demand, so there is competition between buyers to increase the Price, which will inevitably lead to the elimination of individual buyers from the market and the return of sellers. As a result of this process, suppose the price settles at just over 200 florins, leaving the market with six buyers and five sellers. The circle has narrowed, but demand is still greater than supply. The price rises further and at the price of 210 florins the sixth buyer will leave the market. Demand equals supply. But sellers, in a natural desire to get as much profit as possible, increase the price by holding the horses. The price rises, but as soon as it exceeds 215 florins, a sixth seller enters the market and the equilibrium is again disturbed. So the price is known. It settled in the range from 210 to 215 florins inclusive. At this price, the demand for horses and their supply are balanced. Consequently, according to Böhm-Bawerk, the market price will fluctuate between the maximum and minimum prices as a result of a collision in the markets of subjective assessments of sellers and buyers. At the same time, the level of the market price cannot be higher than the estimate of the first excluded seller (upper price limit) and lower than the estimate of the first excluded buyer (lower price limit), since otherwise the achieved equilibrium is violated.

This pricing scheme is interesting already because it completely ignores not only the role of labor, but it even lacks the concept of "production costs". The only figure in the economic system is the consumer. (As a consumer in this scheme, the seller is also considered, who, at a market price less than his subjective assessment, will himself demand for his products. In our example, he will lead his horse out of the market).

The first thing that attracts attention in the theory of value of the Austrian school is the absolute inelasticity of supply. The theory is based on the assumption that the stock of goods is a fixed value. Indeed, under these conditions, the value of a particular commodity (good) depends solely on demand, which varies depending on the marginal utility of these goods. This means that the principle of marginal utility, developed by representatives of the Austrian school, is applicable to the analysis of individual consumption in a subsistence, isolated economy (the so-called Robinsonade principle). And even if we take the Böhm-Bawerk model of a market economy (an example of a horse market), then it does not work in relation to the seller, who is placed in the real conditions of developed commodity production. The seller, the owner of the commodity and its producer, can be guided by the principle of marginal utility in determining the price, selling only excess goods on the market. Therefore, the seller must conduct subsistence farming. However, in a developed market economy, mass production for the market becomes typical, and within the economy the products produced by it are not consumed at all, and the complete absence of utility-based assessments of goods on the part of the households producing them becomes typical.

And secondly, the very mechanism of the equation of marginal utility in the process of exchange occurs under the assumption of the available price and the given incomes of the consumer. This means that the subjective assessments themselves are determined by the level of price and the amount of income, and outside the price system there is no quantitative definition of utility. Both critics and followers of this theory drew attention to such obvious shortcomings of the theory of marginal utility as a theory that claims to explain the process of formation of value (cost).

When considering the theory of marginal utility, it would be unfair to pass over in silence a man who formulated the law of marginal utility much earlier than representatives of the Austrian school, but whose ideas went unnoticed. It was the German economist G. Gossen, who in 1854 published the work “Development of the laws of social exchange and the resulting rules of human activity,” where he tried to formulate the laws of rational consumption by an individual of a limited amount of goods, which later became known as Gossen’s first and second laws. The essence of Gossen's first law: the amount of satisfaction from each additional unit of a given good in one continuous act of consumption steadily decreases and is equal to zero when saturated. This is nothing more than the law of diminishing marginal utility. According to Gossen, every pleasure is a mathematically determined quantity, decreasing as the pleasure continues. This assumption allowed him to assume that there are very specific moments when a person must interrupt one pleasure and move on to another. The formulation of the rule on the basis of which these points are determined is called Gossen’s second law in economics. The essence of Gossen's second law: maximum satisfaction of needs with a limited number of available goods is achieved when the consumption of each good stops at the point where the intensity of pleasure (utility) is leveled out and becomes the same for everyone. In other words, in order to obtain maximum utility from the consumption of a given set of goods over a certain period of time, it is necessary to consume them in such quantities that the marginal utility of all consumed goods would be equal to the same value. Various pleasures, according to this law, must be interrupted at such moments in time that as a result the last, infinitesimal particles of all pleasures are equal. One version of the formulation of this law is as follows: “In order to achieve maximum pleasure in life, a person must distribute his time and energy in achieving various types of pleasures in such a way that the value of the ultimate atom of each pleasure received is equal to the fatigue that he experienced spending your energy at the last moment.” Considering the conditions of a monetary economy and denoting marginal utility as MU, and the price of a product as P, the essence of Gossen’s second law can be expressed by the following equation:

This law can be interpreted as the law of equal marginal utilities per monetary unit of income. The consumption of each commodity continues until the marginal utility per unit of income (say, a ruble) spent on it becomes exactly equal to the marginal utility per ruble spent on any other commodity. And although Gossen's theory of consumption does not seem to be a very successful abstraction, Gossen's laws formed the basis of microeconomic theory for the next century, and the utility maximization methodology proposed by him entered economics as a classic decision-making logic.

2. Theory of production costs

According to the ideas of the Austrian school, the only factor determining the proportions of the exchange of goods, and, accordingly, the price, is their marginal utility. This led to the logical conclusion that productive (capital) goods have no value, since they do not directly satisfy human needs, that is, they do not have direct utility. But it is quite obvious that in a real economy, productive goods have value and their prices form the cost of production. How is the problem of production costs solved within the framework of the ideas of the Austrian school?

In economics, the theory of production costs, like the theory of value, exists in two versions: the theory of objective and subjective costs. Recognition of the objective nature of costs is characteristic of the classical school, where the prices of production factors were derived from the so-called natural rates of remuneration, and their levels were determined by individual theories. Land rent was defined as the differential surplus over and above the marginal cost of cultivating the land, wages as the long-term cost of the worker's livelihood, and profit as the residual. Within the framework of the classical school, the reality of production costs was not questioned. But it is no coincidence that the Austrian School is called a subjective psychological school. She announced that real costs are nothing more than an ancient delusion, and one of the representatives of the Austrian school, F. Wieser (1851-1926), developed a subjective theory of costs. The starting premises of this theory are two provisions.

The first provision states that productive goods are future, potential goods, their value is derivative and depends on the value of the final product that brings immediate satisfaction. Consequently, it is not the costs of production that give value to products, but, on the contrary, the costs of production acquire value from their products, just as the moon shines by the reflected light of the sun (in the figurative expression of Böhm-Bawerk). It turned out, according to the views of the representatives of the Austrian school, that consumer goods themselves give value to those production resources or factors that are involved in their production. Goods of the first order (consumer goods - author's note) convey value to the goods of higher orders that are needed so that those very first-priority goods can be born. This idea is the famous "theory of imputation" of the Austrian school. The second proposition boils down to the assertion that supply is the reverse side of demand - the demand of those who possess the goods. At sufficiently low prices, producers themselves will show demand for their products. In our example with the horse market, if the market price is below the value of the horse's usefulness by a particular seller, he will take it away from the market, since he estimates its usefulness in his household higher. It follows that supply is driven not by real costs, but by the costs of abandoning other uses, including use by the producer himself. In other words, costs are nothing more than the necessary payment for diverting resources from other use cases; as prices offered for the services of factors used for its production by other competing producers. We can rightfully consider Wieser to be the author of the "opportunity cost concept", which presented both demand and supply as dependent on utility, reducing all costs to the forfeiture of utility. In this theory, costs are nothing more than a form in which an individual is informed of the "desirability" of the possession of a thing by some other person.

But what is the mechanism of formation of the value of productive goods? Having singled out the smallest marginal utility from the sum of consumer goods that are created by a certain production good, Wieser called it the marginal product. Using this concept, Wieser formulated the law: the marginal utility of the marginal product determines the price of the productive good that went into its production, and the corresponding part of the production costs, which determine the marginal utilities of other, non-marginal consumer products produced from the specified good (the so-called Wieser's law). A rather heavy construction, which required the introduction of such a concept as "marginal utility of the marginal consumer good." But the difficulties did not end there. After all, in fact, the totality of productive goods (labor, capital, land) is involved in the creation of consumer goods. Representatives of the Austrian school were faced with the need to resolve a rather difficult question: what part of the value of consumer goods should be attributed (imputed) to this or that productive good. And although their theory is not complete, the approach to the problem seems to be quite definite.

It is recognized that in order to obtain “economic benefit” the joint action of several material goods is required, and if one of them is missing, the goal cannot be fully achieved. Menger called such material goods Complementary (mutually complementary). The total value of a given group of material goods is determined by the magnitude of the marginal benefit that all these material goods can bring when used together. If, for example, three material goods: A, B and C form a complementary group, and if the marginal benefit that these material goods can bring when used together is 100 units, then the value of all three material goods together will also be equal to 100. However, In real life, a situation is common when individual members of a complementary group retain the ability to bring a certain benefit outside of sharing. Let us assume, taking our example, that good A, taken separately, can provide marginal benefit - 10, B - 20, C - 30 units. Therefore, the total marginal benefit in the case of separate use will be 50 units. The question arises: to which factor should we attribute the “surplus” of marginal utility that arises when goods are shared? Representatives of the Austrian school, in particular Böhm-Bawerk, believe that this surplus of utility should fall on the share of the goods that are most difficult to replace. Böhm-Bawerk confirms the correctness of his hypothesis by citing the fact that it is in practical life that production costs, which are expenses on replaceable production goods (hired labor, raw materials, equipment), are subtracted from the total amount of income. Net income is attributed to members of the complementary group that cannot be replaced (land, factories, entrepreneurial abilities). This position is a peculiar combination of J.B. Say's concept of the three factors of production with the theory of marginal utility. But even if we accept this position, the question remains open about the mechanism for clearly quantifying the share of each factor in the price of the product. Representatives of the Austrian school have no answer to this question.

Concluding the question about the theory of costs of the "Austrian school", it should be said that for all its imperfections, many provisions have become part of modern economic theory. In particular, this is the provision that the value of the means of production is of a derivative nature, which has entered the modern course as a provision on the derivative nature of the demand for factors of production, depending on the demand for final products, and, of course, the concept of opportunity costs.

3. Böhm-Bawerk's theory of interest

Since any economic theory is quite logical and complete, one should not be surprised that the concept of opportunity costs is also present in the theory of capital and interest, developed by one of the most prominent representatives of the Austrian school Böhm-Bawerk. He considers this problem in Capital and Profit (1879).

The theory of interest as a subjective category is present in its rudimentary form both in the above-mentioned English economist Senior, who considers interest as a payment for the “abstinence” of the capitalist, and in J. S. Mill. But this theory acquired harmony and completeness precisely from Böhm-Bawerk, who explained interest using the principle of “diminishing marginal utility” and the concept of opportunity costs, common to the Austrian school. Böhm-Bawerk's theory of interest is sometimes called the "psychological theory of interest."

What is the source of interest? Interest, according to Böhm-Bawerk, arises from the abandonment of current income in favor of the future. There are always people in society who are willing to pay for the pleasure of having money today. The opportunity to have an income today, and not in the future, receives its assessment, which is the rate of interest. But why are people willing to pay for the possession of goods today? The reason for this, according to Böhm-Bawerk, is rooted in people's underestimation of the future, resulting from an underdeveloped imagination, the transience of life and uncertainty about the future. As a result, there is an excess demand for consumer credit, which leads to a positive rate of interest. Thus, the origin of interest is associated by Böhm-Bawerk with the factor of time. But it is not only the consumer who values ​​current goods above future ones, but also the owner of money capital.

The reason is that the latter presupposes an increase in the future of this good, and consequently, a decrease in its marginal utility in the future compared to the present. By the way, this explains why in a dynamically developing economy (which implies an increase in the income of the population), the rate of interest will always be positive. People maximize utility throughout their lives, and then, in the face of rising income, an increase in current consumption will provide more utility than an increase in consumption in the future. Thus, with Böhm-Bawerk, the whole problem is reduced to the price of time. Here we see an unexpected similarity with the views of F. Aquinas, who considered interest as a payment for the time provided by the lender to the borrower.

However, time, like the "waiting" of the capitalist, cannot in itself be a source of value, just as our sitting under it cannot be the source of the ripening of the fruit of a tree. At best, this can be seen as a condition, but by no means as a cause. To admit that the source of all forms of income, including interest, is the unpaid labor of workers, as Marx did, Böhm-Bawerk cannot, and therefore offers a rather original solution to the problem. According to his logic, "labor is the boon of the future", since it creates a product after a certain time. Consequently, the worker, in Böhm-Bawerk's theory, appears as the owner of the "future good", and the entrepreneur who hires the worker gives him the "present good" in the form of wages. Such is the process of exchange of goods between workers and employers. The benefits created by labor after the expiration of time, due to the lower valuation of future benefits compared to the present, will exceed in value the amount of remuneration paid for labor. This excess will be the percentage or profit. According to Böhm-Bawerk, the voluntary nature of the exchange reflects the equivalence and fairness of the relationship between the employer and the worker.

As we can see, in Böhm-Bawerk all capital is presented in the form of means of subsistence advanced by the workers, and he considers the capital market as a market of advances in which today's income is exchanged for the future. The rate of interest expresses the conditions under which these alternatives are available to individuals. Thus, the rate of interest is determined by the exchange of labor for consumer goods. Workers underestimate the future, because they cannot wait long for the fruits of their labor, and therefore the results of the net productivity of capital are appropriated by its owner.

It should be noted that Böhm-Bawerk could not give a clear answer to the question of who should determine the difference in the value of present goods and future goods. It was necessary to find some kind of objective evaluation factor, since the subjective evaluations of neither the worker nor the capitalist were suitable for this role. Therefore, Böhm-Bawerk includes in the theory of interest the idea of ​​indirect ("roundabout" - in his terminology, author's note) methods of conducting production, meaning by them the lengthening of the period of production based on the use of capital-intensive processes. This elongation is justified by the known number of production links of an intermediate nature, which takes place before the creation of the good. If, for example, Robinson Crusoe, argues Böhm-Bawerk, uses part of the time for the manufacture of tools to the detriment of collecting the necessary food, then his supply of consumer goods will decrease. However, in the future, more advanced tools of labor will allow Robinson to significantly increase the supply of goods compared to the present. This expresses the net productivity or productivity of capital. This means that the role of capital in production lies in the fact that it makes it possible to use more productive "roundabout" methods of production, which, however, also require large expenditures of time. Böhm-Bawerk put forward the position that the value of interest is determined by the lengthening of the periods of production of individual goods as a result of the development of indirect methods of production. Thus, the value of interest is determined by the net productivity of capital, that is, its ability to bring a certain excess of product in excess of the cost of its application, where the interest just measures the additional increase and serves as an indicator of the net productivity of capital. At the same time, the technical superiority of today's goods over future goods lies, according to Böhm-Bawerk, in the fact that today's goods invested in roundabout production will make it possible to obtain more product in the future than the same amount of goods invested in direct production in the future. It must be said that this is a weak point of his theory, since the investment itself is limited by the time during which we are willing to wait before we begin to receive a return. And although in Böhm-Bawerk's theory interest acts both as a reward for waiting and as an indicator of the net productivity of capital, in the end everything again comes down to a positive norm of time preference. The ideas of the Austrian school became widespread and, as we shall see later, became an integral part of many economic theories. However, the obvious "one-sidedness" of the theory of marginal utility, which claims to explain all economic processes, predetermined the growth of the influence of the English and American economic schools, to the consideration of the views of whose representatives we will turn.

LECTURE 7. ANGLO-AMERICAN ECONOMIC SCHOOL

1. The theory of marginal productivity of J. Clark

In the theory of production costs of the Austrian school, within the framework of the concept of opportunity costs, the value of productive goods was equated to the value of the goods sacrificed to them, which bring immediate satisfaction. However, the question remained open as to what part of their value should be attributed to one or another factor of production. A similar problem arises if we adhere to the concept of not subjective, but objective costs in the version given by the French economist J. B. Say. Let me remind you that Say’s view is that all factors of production (labor, capital, land) participate equally in the process of creating value and receive their share of the created product. But even here the question remains unresolved: how the share of this factor in the cost of the created product is determined. An answer to this question was given only at the end of the nineteenth century by the American economist J.B. Clark (1847-1938) in his work “The Distribution of Wealth” (1899). Taking Say's theory of "three factors of production" as a basis, Clark also relied on the works of D. Ricardo and T. Malthus in his main postulates. He extended the law of “diminishing soil fertility” they formulated to all other factors of production, formulating in general terms the law of “diminishing marginal productivity.” The law states that in conditions where, although one factor of production remains unchanged, an additional increase in other factors gives a smaller and smaller increase in production. In other words, the marginal product of a variable factor is constantly decreasing.

In determining the size of the contribution of a factor of production to the created product, and, accordingly, the share of remuneration of each factor, Clark borrowed the principle that Ricardo applied in his theory of land rent. It was here that Ricardo first used the principle of marginal increments to illustrate that a fixed factor (in this case, land) gets a residual profit determined by the difference between the average and marginal product of a variable factor.

Using the foregoing propositions, Clarke attempted to determine precisely the proportions that could be attributed to the specific productivity of labor and capital. Why did Clark focus on these factors of production? This will become clear if we quote from his work. “The right of society to exist in its present form,” writes Clark, “is disputed. The accusation weighing on society is that it exploits labor. If this accusation were proven, then every honest person would have to become a socialist. It is the duty of every economist to test this accusation." And Clark does create a version of the theory where the exploitation of labor by capital is called into question.

In Clark's theory, each factor of production is characterized by a specific productivity and generates income, and each owner receives his share of the income, which is created by the factor belonging to him.

Based on the law of diminishing marginal productivity, Clark concludes that with the same amount of capital, each additional worker produces less output than the previously accepted one. The productivity of the last worker is called the marginal productivity of labor. According to Clark, only the product that is created by the marginal worker can be attributed to labor and considered the product of labor, while the rest of the output, that is, the difference between the "product of industry" and the "product of labor" is a product of capital.

Fundamental to Clarke's theory is the assertion that marginal product in monetary form determines the fair, natural level of income paid to each factor of production. The natural, fair wage rate of the workers in our example will be the price of the marginal product produced by the last worker, that is, the price of eight units of output. If we accept Clarke's assumption that wages are determined by the marginal productivity of labor, that is, the marginal productivity of the last worker, then it is easy to explain the extremely low wages in developing countries, because in conditions of an excess supply of labor in relation to the total capital of society, the marginal product of the last unit of social labor will tend to the minimum. However, Clark extends the statement about the reward of a factor in accordance with the value of its marginal product to other factors of production. In particular, in his theory, the value of interest as a product of capital is determined by the unit of capital that gives the smallest increase in production. Ceteris paribus, under conditions of diminishing marginal productivity, the greater the value of the total capital of the company, the lower the interest rate. Thus both the capitalist and the worker are victims of "natural laws", namely the law of diminishing marginal productivity. According to Clarke, if there are no barriers to competition, wages, interest, and rent will be the prices of factors of production that are equal in magnitude to their marginal product, or their marginal productivity. It is interesting to note that in Clark's model of pricing for factors of production, for the first time after the classics of political economy, the process of production and distribution have a single basis - the marginal product of factors.

Since its publication, Clarke's theory has been criticized on several fronts. First, the postulate of a fair distribution of income based on the marginal productivity of production factors is questioned. Let me remind you that Clark himself considered the theory of marginal productivity as a mechanism that provides each production factor with an income that meets the requirements not only of "efficiency", but also of "fairness". Of course, it must be borne in mind that Clark developed this theory in relation to the conditions of perfect competition, perfect foresight, and absolute mobility of factors of production. But even under these conditions, the results of market mechanisms can hardly be considered fair. If a factor is relatively scarce, it will result in a high price for it, and there is no reason to believe that this efficiency-driven price will meet our notions of fairness. Secondly, the theory of marginal productivity can hardly be called a theory of distribution, since a true theory of distribution should tell us about the distribution of income in society. The theory of marginal productivity is more of a theory of the pricing of factors of production. But even here it is not a pricing theory in the full sense of the word, since it does not affect the supply in the respective markets at all. To get out of this difficulty, it is necessary to accept the assumption of perfect inelasticity, the predetermined volumes of factors of production.

In connection with the foregoing, we must conclude that the theory of marginal productivity is nothing more than a theory of the formation of demand prices for factors of production. This is precisely the modern status of the theory of marginal productivity, and it is in this form that it entered the theory of the behavior of the firm. We already know that a perfectly competitive firm maximizes profit by equating marginal cost with price. Profit maximization implies cost minimization, and the latter is tantamount to rewarding the factors of production in accordance with their marginal productivity. If a perfectly competitive firm follows the weighted margin rule, it will hire just enough labor to equalize the monetary marginal product of labor at the established wage rate. As you can see, in the modern interpretation, Clarke's theory no longer claims to justify the fairness of the distribution of the created product, but is considered as a model of the pattern of income generation under conditions of production optimization and reflecting the movement of prices for production factors in the real conditions of a market economy.

As for the applicability of the theory of marginal productivity at the macroeconomic level, it must be said that models of production functions were subsequently created on the basis of this theory. The most famous is the Cobb-Douglas function, named after the American economist Douglas and the mathematician Cobb, developed by them in 1928 based on the ratio of the dynamics of the physical volume of the gross product, the amount of capital and the number of man-hours worked by workers and employees of the US manufacturing industry. This function has the following form:

where К - the amount of capital (used means of production);

L - the amount of labor;

a - power exponents, which show how many percent the gross product will increase if the amount of capital and labor are increased by 1%, respectively, each time leaving the amount of the other factor fixed;

А - coefficient of proportionality; it can also be interpreted as a value that takes into account all the qualitative factors of production that are not expressed in quantities of capital and labor.

As a result of calculations (for the period under review), the function took the form:

in other words, a 1% increase in labor input expands output three times as much as a 1% increase in capital. Subsequently, the coefficients "a" and "b" began to be interpreted as natural, fair indicators of the distribution of national income.

2. Economic views of A. Marshall

A. Marshall (1842-1924), Englishman, founder of the Cambridge school in political economy, whose name is associated with the formation of the neoclassical trend in economic theory. In 1890, he published the work “Principles of Political Economy,” which formed the basis of economic education until the 40s of the twentieth century. The long-lasting and powerful impact of A. Marshall's work is partly associated with the compromise unification in his theory of views of both representatives of classical political economy in the person of Smith and Ricardo, and representatives of the marginalist movement, in particular, the “Austrian school”. Paying tribute to classical political economy, Marshall recognizes that the subject of economics is wealth. But if Smith and Ricardo analyzed the nature of a nation’s wealth and the sources of its increase, Marshall is interested in wealth and money primarily because, in his opinion, they serve as the only suitable means for measuring the motives of human activity. He writes that “... the most stable incentive for economic activity is the desire to receive payment for it. It can then be spent on selfish or altruistic, noble or base purposes, and here the versatility of human nature is manifested. However, the incentive is a certain amount of money and therefore the main motives of economic activity can be indirectly measured in money." Thus, in Marshall we see a transition from the study of macroeconomic problems to microeconomics, to the study of the motivations of human behavior, which constitutes one of the essential aspects of the “marginalist revolution.”

Polemicizing with the classics who believed that the wealth of a nation is created only in the sphere of material production and hence their recommendations to reduce the sphere of unproductive labor (the service sector), Marshall puts forward the thesis that a person cannot create material objects as such - he creates utility. Rehabilitating unproductive labor, Marshall insists that there is no difference between productive and unproductive labor, between the work of a trader and a carpenter - the trader moves matter so that it is fit for use, the carpenter does the same. Thus both produce utilities.

It is not difficult to assume that the basis of Marshall's theoretical constructions is the law of saturable needs or the law of diminishing marginal utility. He formulates it as follows: "The total utility for a person (the totality of the pleasure or other benefit brought) increases with each increment of the good, but not at the same rate as this stock increases." This law formed the basis of his concept of pricing, perhaps the most famous part of Marshall's economic teachings. But the position that the price of a commodity is determined solely by its marginal utility has already been formulated by representatives of the "Austrian school". What is the novelty of Marshall's approach?

Marshall developed a theory of price in which he tried to reconcile the pricing concept of the classical and Austrian schools. As you know, in classical political economy there was a proposition about the natural and market price of a commodity, where the latter was explained by a temporary deviation from the natural price of a commodity under the influence of various random circumstances. The natural price, on the other hand, was determined by the costs of production and varied along with the natural rate of each of its constituent parts. According to the representatives of classical political economy, the natural price, as it were, was the central price to which the prices of all commodities constantly gravitate, and this price was determined in the long run by production costs.

Marshall also developed the theory of price, which was a symbiosis of production costs, marginal utility, supply and demand. It was Marshall who introduced the concepts of "demand price" and "supply price" into economic theory. "The price of demand", according to Marshall, is determined by the utility of the product, while he considers the utility itself as the maximum price that the buyer is willing to pay for the product. In other words, the demand function for a commodity depends on marginal utility, and the demand price is nothing but the monetary value of desire. As we can see, in contrast to the "Austrian school", Marshall connects the category of marginal utility only with the demand function. Developing the problem of demand, Marshall introduced the concept of "elasticity of demand". Under the elasticity of demand, he understands the functional dependence of demand on price changes. Marshall defines "elasticity" as the ratio between a change in the stock of goods available and a change in price. The demand for a good is elastic if it changes more than the price of the good. If the change in demand for a good occurs to a lesser extent than the change in price, demand will be inelastic. Analyzing various degrees of elasticity, Marshall introduces the concept of high elasticity, low elasticity, unit elasticity, indicating that the elasticity is large for high prices and disappears at the level of full saturation. It should be noted that the concept of "elasticity" later began to be used not only in the development of problems of price and demand, but also in the analysis of the relationship between price and supply of goods, interest and supply of capital, wages and labor supply, as well as in analyzing the effectiveness of the firm's pricing policy.

In the analysis of the "offer price" Marshall takes the position that the latter is determined solely by costs. However, unlike classical political economy, Marshall's costs are determined not by real costs, but by the amount of suffering that is caused by labor and abstention from the unproductive consumption of capital. This position is rooted in the views of the English economist Senior, whom we have already discussed above. Based on it, Marshall notes that both the worker and the entrepreneur make sacrifices in the production process. The victim on the part of the worker is the subjective negative emotions associated with labor efforts; the victim of the employer is the delayed pleasures of personal consumption or the need to wait for them. The emphasis on the psychological justification of production costs will become more understandable if we consider that this statement sounds in opposition to Marx, who considered the unpaid labor of workers to be the source of profit and interest. Marshall makes no secret of this when he writes that any attempt to defend the premise that interest is unpaid labor silently implies that the services rendered by capital are a free good. And if we assume that the commodity is only the product of labor, and not labor and waiting, then we will inevitably come to the logical conclusion that interest and remuneration for waiting have no justification.

From the above reasoning, Marshall concludes that the offer price must provide compensation for all negative sensations: wages - compensation for fatigue, interest - compensation for waiting, entrepreneurial income - payment for risk. This is the essence of Marshall's methodological approach to costing. With this approach, although the curve of increasing supply prices is determined by rising costs, the latter represent the subjective experiences of producers. At the same time, considering the mechanism of cost dynamics at the firm level, Marshall makes them dependent on changes in production volumes. He considers three possible models of cost dynamics. The first model considers industries where marginal cost (respectively, the supply price) does not depend on the volume of output. In these industries, the law of constant returns or the law of constant productivity operates. The second model considers industries in which the marginal cost of producing a unit of output decreases with an increase in output. This is the law of increasing returns or the law of increasing productivity. And, finally, the third model considers industries where, as they expand, there is an increase in marginal costs and, accordingly, supply prices. In this case, the law of diminishing returns or diminishing productivity applies. In the second and third versions, Marshall connects the bid price of firms with the volume of production and determines the marginal cost of production. Thus, the theory of price includes not only the psychological concept of production costs, but also a much more important in practical terms the provision on the dependence of the supply price on production volumes.

Having given a theoretical analysis of the "demand price" and "supply price", Marshall comes to the definition of the equilibrium price, which is the intersection point of the supply and demand curves (demand dynamics is determined by diminishing marginal utility, and supply dynamics is determined by increasing production costs). Within the framework of the Marshallian analysis, the question of what is the ultimate basis of prices - utility or costs - is removed. Both factors are equally important, and the argument about this is analogous, in Marshall's words, to the argument about "whether a piece of paper cuts the upper or lower blade of the scissors." However, if we introduce a time factor into the analysis of the equilibrium price (and Marshall was the first to do this) and analyze the situation of instantaneous, short-term and long-term equilibrium, then the impact of supply and demand on the equilibrium price will not be the same. Marshall analyzed these situations in detail, coming to the conclusion that in conditions of instantaneous equilibrium, the price is exclusively influenced by demand, in conditions of long-term equilibrium, the price is regulated by costs. In other words, the shorter the period under consideration, the more the influence of demand on the price should be taken into account in the analysis, and the longer this period, the greater the impact on the price of costs.

Analyzing the situation of instantaneous and short-term equilibrium, Marshall concludes that under these conditions, demand receives priority, because supply is more inertial and does not keep pace with the fluctuations of the first. This is understandable, since changing supply takes time to build additional production capacity. In this time period, an increase in demand leads to an increase in prices. Under these conditions, the entrepreneur receives temporary additional income (quasi-rent, as defined by Marshall), which is the difference between the new, higher price of the product and production costs. However, it is temporary, since the high additional income attracts new producers, as a result of which the supply increases, the price falls, and in the long run the quasi-rent disappears.

It should be noted that the “Principles of Political Economy” analyzes spontaneous price regulation in conditions of free competition. At the same time, during the period Marshall was writing his work, production monopolies were rapidly developing, and he, naturally, could not ignore the problem of monopoly and its impact on pricing processes. In this matter, Marshall relied on the theoretical heritage of the French economist A. Cournot (1801-1877), who back in 1838, in his work “A Study of the Mathematical Principles of Wealth,” explored the problem of setting prices under monopoly conditions. Cournot, using a mathematical model, examined pricing for the case when one firm concentrates the production and supply of a product and showed that such a firm sets a price significantly higher than that which, under the same production conditions, would be established in the presence of competitors. Cournot explained the excess of the monopoly price over the competitive one by the fact that the increase in the first price meets only a single limitation in the form of demand, while the increase in the second price has another limitation in the form of the price policy of competitors.

Marshall also allows that the monopoly will limit the volume of production of a good, looking for such a volume at a price level that will provide it with the maximum discrepancy between gross receipts and gross costs. The monopolist will lose all his monopoly income if he produces such a large quantity that his supply price equals his demand price; the amount that will provide the maximum monopoly income is always much less than this. However, Marshall considers monopoly as a special case against the general background of unlimited competition, in which pricing patterns remain dominant. In other words, Marshall's theory is a theory of prices under competitive conditions.

When talking about other aspects of Marshall's theory of pricing, it is important to mention the “consumer rent” that Marshall introduced into his theory of demand. This rent represents the excess of the total utility of the goods purchased over the amount of money actually paid for them, that is, the difference between what buyers are willing to pay and the actual price of the goods. Marshall defined this kind of consumer surplus as "...the surplus over and above the price actually paid by the consumer, which he would rather pay than be left without the thing." Marshall gives the following example: a box of matches costs 1 pence, but it is so expensive for a smoker that he is willing to pay much more for the pleasure of smoking immediately. The difference between what a smoker is willing to pay for matches and the penny he actually pays is, according to Marshall, the gain or “consumer rent.”

Marshall formulates not only the law of diminishing marginal utility, but also the law of diminishing marginal productivity, considering it as a theory of demand for factors of production, in particular arguing that wages tend to be equal to the net product of labor. At the same time, paying tribute to classical political economy, he writes that at the same time, wages tend to be in a close, albeit very complex relationship with the costs of reproduction, training and maintenance of productive workers. As for the supply of labor, here Marshall shares the concept of W. Jevons (1835-1882), who is considered the founder of the English version of the theory of marginal utility. Let me remind you that the essence of Jevons' concept is that human effort has a positive value, and work will be offered as long as a person feels an excess of satisfaction over dissatisfaction. It is the hardships of labor, according to both Jevons and Marshall, that control the supply of productive effort. It is interesting to note that Marshall extends Gossen's second law to the production process, where he views the distribution of investments among alternative possibilities as an illustration of the equality of the ratios of marginal utilities to prices.

In general, Marshall's work made a significant contribution not only to the development of the theory of equilibrium price, but also to the study of the theory of interest, profit and rent. In particular, Marshall attributes profit to the fourth factor of production - the organization, and includes it in the normal supply price, in contrast to quasi-rent. In the theory of interest, he considers it from the side of supply and demand of capital, where the rate of interest on the side of the supply of capital depends on the preference of present goods over the future, and on the side of the demand for capital - on its productivity.

LECTURE 8. HISTORICAL SCHOOL AND INSTITUTIONALISM

1. The contribution of the historical school to the development of economic theory

Representatives of both classical and neoclassical (the founder of which A. Marshall is considered) directions of economic science were characterized by the idea of ​​​​the dominance of universal economic laws that act independently of the will and consciousness of people. This resulted in their confidence in the universality of models of economic behavior and the undesirability of government intervention in the economy. This approach was opposed by representatives of the German historical school, which can be divided into “old” and “young”. They viewed political economy not as a science about the general laws of development, but as a science about the national economy, believing that the theory of the classical school was cosmopolitan and abstract. The ideologist of the “old” historical school, which was formed in the 40s of the nineteenth century, is F. List (1789-1846). In his main work, “The National System of Political Economy” (1841), List argues that the economies of individual countries develop according to their own laws and therefore each country is characterized by its own “national political economy,” the task of which is to determine the most favorable conditions for the development of the productive forces of the nation . Thus, List actually crossed out political economy, replacing it with economic policy. Essentially, he takes a step back in comparison with classical political economy, defining the subject of political economy in the spirit of the mercantilists, who precisely considered political economy as the science of the prosperity of the national economy. But not only this shows the similarity of the views of F. List and the mercantilists.

Like them, List justified the need for a policy of protectionism and emphasized the decisive role of the state in the development of the economy, in protecting the national market, putting forward the so-called principle of "industrial education of the nation." Criticizing the principle of unlimited freedom in international trade, List insisted on the need to develop industries that at the moment could not withstand competition with foreign countries. List proposed to consider the loss of values ​​as a result of such a policy as a payment for the industrial education of the nation and, completely in the spirit of the mercantilists, recommended using such instruments of protectionist policy as high customs duties on imported goods to protect domestic production.

Other representatives of the old historical school, in particular W. Roscher (1817-1894) and K. Knies (1821-1898), following List, rejected the idea of ​​unchangeable, “natural” laws of economics and essentially led to the replacement of economic theory with economic history, which would be engaged in collecting and describing economic facts. Roscher never tired of repeating that political economy is the science of social economy. And from his point of view, to study it you need to know seven aspects of social life - language, religion, art, nationality, law, state and economy. As for the motives of action of an economic subject, it is based, according to Roscher, not only on egoism, but also on the desire for justice, its orientation towards morals and customs.

Representatives of the “young” historical school, which formed in Germany in the 80s of the nineteenth century, continued the traditions of the “old” historical school in denying the role of scientific abstractions and in their tendency to simply collect factual material. As a challenge to the classical school, one can regard the statement of one of the representatives of this school, L. Brentano (1844-1931), that “an accurate description of even the most modest phenomena of economic life has incomparably greater scientific value than the most ingenious deductions from egoism.” Criticizing the position of representatives of the classical movement on the issue of removing all restrictions on freedom of economic activity, they rightly noted that there are no purely economic processes; they are always regulated by customs or law. And if, according to classical political economy, competition is a mechanism for ensuring justice, then according to the views of representatives of the historical school, it is in law and morals that the highest judgment of justice is realized. And the state exists precisely in order to harmonize the forms of economy with ethical ideas about justice, that is, to carry out the task that was previously solved by the church. But even if we assume the absence of government intervention, then, according to representatives of the historical school, free enterprise is always limited by moral frameworks: honesty, commitment, loyalty to one’s word, etc. Therefore, the figure of an “economic man” (a competent egoist striving exclusively for his own benefit) , which has been included in economic theory since the time of A. Smith, was a meaningless abstraction for representatives of the historical school. They not only opposed scientific abstractions, but also opposed mathematical research in economics, believing that the reaction of the human psyche was too complex a problem for differential calculus. Being consistent in refusing to know universal objective laws, elevating national characteristics (national character, national soul, national destiny) to an absolute principle, representatives of the historical school considered it necessary to include in economics such disciplines as history, ethics, law, psychology and even ethnography .

Criticizing the concept of "economic man", representatives of the German historical school noted that in their behavior a person is guided not by considerations of rationality, but by habits and traditions. This applies primarily to the labor market (for example, the son of a shoemaker will almost certainly become a shoemaker) as well as the principle of establishing payments, in particular rent. Last but not least, moral norms also influence human behavior, according to representatives of this school.

Without introducing anything new into “pure” economic theory, representatives of the historical school did a lot in the field of specific economic disciplines, the study of individual aspects of economic life based on the widespread use of historical and statistical material. With good reason we can say that the works of representatives of the “young” historical era laid the foundation for such a scientific direction as economic sociology, in which economic processes were considered from somewhat unusual positions. In this regard, the views of E. Durkheim (1858-1917) on the reasons for the division of labor are of interest. As you remember, for A. Smith, the reasons for the division of labor were the inherent tendency to exchange and selfishness, understood as the desire for one’s own benefit; and the consequence of the division of labor was an increase in its productivity and an increase in the wealth of the nation. Durkheim highlights the social function of the division of labor, which he sees in the creation of solidarity in society. In his opinion, the division of labor exists because it helps preserve society in conditions of increasing population density. As is known, in a limited territory, homogeneous objects are always in a state of conflict; in relation to human society, this means that the sameness of people and social groups will inevitably give rise to tension and aggression. But where there is differentiation of activity, it is possible to restore general order without restricting freedom. Thus, according to Durkheim, the division of labor exists because it helps to preserve society in conditions of differentiation of activities and increasing solidarity.

Not only economic processes but also economic categories were analyzed from the point of view of sociology. In particular, Simmel (1858-1918) considers money as a social phenomenon in his work “The Philosophy of Money”, analyzing the influence of money culture on changes in human psychology. Simmel notes that money culture creates extravagance (prestigious consumption - in the terms of T. Veblen), gives rise to cynicism and makes human existence characterless and work indifferent, since the latter has meaning only if it brings income.

As already noted, representatives of the historical school are characterized by the attitude that “man belongs to the world of culture.” It is no coincidence that for a prominent representative of the “young” historical school, W. Sombart (1863-1941), the task of economic analysis is to find the spirit of the economic era, something rooted in the social foundations, morals and customs of a given people. He argued that the capitalist economic system arose from the depths of the Western European soul - from the spirit of restlessness and entrepreneurship, combined with a thirst for profit.

M. Weber (1864-1920), who can equally justifiably be considered a representative of the historical school and institutionalism, dedicated his most famous work “The Protestant Ethic and the Spirit of Capitalism” to this problem. Capitalism, according to Weber, is not just the desire for profit, it is the rational curbing of the thirst for profit, it is professional work to make a profit based on peaceful exchange, it is economic accounting when comparing costs and results. The spirit of capitalism presupposes a system of thinking and behavior characterized by a rational and systematic desire to obtain legitimate profit within the framework of one's profession. But why was this system possible? Why did this type of person arise and why do changes occur in human character? Weber believes that capitalism owes its existence to the Protestant ethic, for which the highest qualities are hard work, modesty, honesty, charity and which stem from the religious teachings of Luther and Calvin, the teachings of the Reformation era.

According to Luther's teachings, a person fulfills his duty to God in worldly life; his professional calling is the command of the Lord. Thus, worldly activity is seen as the fulfillment of religious duty, in contrast to early Christianity, which initially acted as a religion hostile to economic life. The basis of Calvin's religious teaching is the dogma of election to salvation. According to this teaching, a person who has come into this world already bears the mark of being chosen or cursed, and a person cannot change anything through his actions. But he can see the divine sign: economic success is a sign of God's mercy, and failure is a sign of rejection. The moral of Calvin's teaching is to focus the believer's energy on increasing and accumulating wealth for the glory of God. Both Calvinism and Lutheranism form new human qualities: frugality and the desire to accumulate (remember A. Smith’s thesis that the one who accumulates is the benefactor of the nation), asceticism, and an overwhelming sense of duty.

M. Weber's contribution was that he explored the relationship between religious ideas and the economic organization of society, confirming the thesis of the historical school that the functioning of ideas is an essential basis for economic growth. However, in modern capitalism we do not grasp this connection. Weber responds to this as follows. When capitalism has become the dominant system, the system itself selects those who satisfy the conditions of its existence. It selects those who know how to adapt and survive based on economic variables such as profits, prices, wages. It is not surprising, therefore, that the thirst for profit has supplanted the concept of professional duty, and economic activity, instead of a thin shell of religious life, has become, as Weber put it, a shell through which nothing spiritual can break through.

As we can see, among the representatives of the historical school, religion, cultural and ethical norms act not as an external framework for economic activity, but as essential elements that determine the economic behavior of a person. As for the field of economic policy, representatives of the historical school were supporters of a tough policy of protectionism, which unites them with the mercantilists.

2. Institutionalism. Economic views of T. Veblen

Many elements from the "historical school" were adopted by such a direction of economic thought as institutionalism. Institutionalism is a trend in economic thought based on the postulate that social customs regulate economic activity. A distinctive feature of the representatives of institutionalism is that in the interpretation of socio-economic phenomena they proceed from the determining role not of the individual (as in the political economy of the classical direction), but of group psychology. There is a clear connection here with the historical school, which demanded that economic analysis be placed on a broader sociological and historical basis, emphasizing that the national economy belongs to the world of culture.

The emergence of institutionalism is associated with the name of the American economist T. Veblen (1857-1929), who placed not the “rational” but the “living” person at the center of his research and tried to determine what dictates his behavior in the market. As is known, the economic theories of the nineteenth century, especially the marginalist trend in science, in their constructions explicitly or implicitly proceeded from the premise of the existence of “economic man,” whose appearance in economic analysis is associated with the name of A. Smith. This is a person with independent preferences, striving to maximize his own benefit and knowing very precisely what this benefit is. In other words, economic man is a rational egoist. Veblen questioned two fundamental tenets of the classical school:

▪ provision on consumer sovereignty;

▪ provision on the rationality of his behavior.

Veblen proved that in a market economy, consumers are subjected to all sorts of social and psychological pressures to make unreasonable decisions. It was thanks to Veblen that the notion of "prestigious or conspicuous consumption", known as the "Veblen effect", entered economic theory. Prestigious consumption is based on the existence of the so-called "leisure class", located at the top of the social pyramid. The feature indicating belonging to this class is a large property. It is she who brings honor and respect. The characteristics of the class of large owners are conspicuous idleness ("not labor" - as the highest moral value) and conspicuous consumption, closely associated with monetary culture, where the object receives an aesthetic assessment not for its qualities, but for its price. In other words, goods begin to be valued not for their useful properties, but for how much their possession distinguishes a person from others (the effect of envious comparison). The more extravagant a person becomes, the higher his prestige rises. It is no coincidence that at present there is such a thing as "representation costs". The highest honors are given to those who, through control of property, extract more wealth from production without engaging in useful labor. And if conspicuous consumption is a confirmation of social significance and success, then this forces middle-class and poor consumers to imitate the behavior of the rich. From this, Veblen concludes that the market economy is characterized not by efficiency and expediency, but by conspicuous waste, envious comparison, a deliberate decrease in productivity.

The category of "envious comparison" plays an extremely important role in Veblen's system. With this category, Veblen not only explains people's propensity for prestigious consumption, but also the desire for capital accumulation: the owner of a smaller fortune is envious of the larger capitalist and strives to catch up with him; when the desired level is reached, there is a desire to overtake others, etc. As for prestigious consumption, according to Veblen, it leads to the misuse of productive energy and, ultimately, to the loss of real income for society. It is no coincidence that the target of Veblen's criticism in his most famous work, The Theory of the Leisure Class (1899), is artificial psychology and the false idea of ​​expediency. Veblen cannot recognize the thesis, which is implicitly present in classical political economy with its dominance of rational human behavior, about the justification of any demand. The classics "forget," Veblen believes, that demand is a manifestation of the economic system and, as such, is both the result and the cause of economic action. All the evils of the economic system lie in the nature of the demand (prostitution, child labor, corruption). Consequently, ethics cannot but be an integral part of economic theory. Veblen's thoughts about the driving motives of human behavior can be considered as a challenge to classical political economy. Not profit maximization, but the instinct of mastery (the desire for creativity originally inherent in a person), the instinct of idle curiosity (the continuation of the instinct of the game as a form of knowing the world) and parental feeling (caring for one's neighbor) form the face of the economy as a whole. Obviously, the rejection of the position of the classical school, that a person seeks to obtain the maximum benefit for himself, subordinating his actions to the "arithmetic of benefit." Veblen believes that man is not a machine for calculating the sensations of pleasure and pain, and his behavior cannot be reduced to economic models based on the principles of utilitarianism and hedonism. Veblen, and after him other representatives of institutionalism, believed that a theory that gives a satisfactory interpretation of human economic behavior should also include non-economic factors and explain behavior in its social aspect. From this followed an important requirement for institutionalists to apply the data of social psychology to economic theory. It must be said that Veblen can rightfully be attributed to the founders of such a science as economic sociology.

Veblen's view of the main contradiction of capitalism, which he considered as a contradiction between "business" and "industry", is also interesting. Under the industry, Veblen understood the sphere of material production based on machine technology, under business - the sphere of circulation (exchange speculation, trade, credit). The industry, according to the views of Veblen, is represented by functioning entrepreneurs, managers and other engineering and technical personnel, workers. All of them are interested in the development and improvement of production and therefore are the bearers of progress. Representatives of business are focused exclusively on profit and production as such does not bother them.

In Veblen's theory, capitalism (in his terminology - "money economy") goes through two stages of development: the stage of domination of the entrepreneur, during which power and property belong to the entrepreneur, and the stage of domination of the financier, who does not take a direct part in production. The dominance of the latter is based on absentee property, represented by shares, bonds and other securities (fictitious capital), which bring huge speculative profits. As a result, the securities market expands exorbitantly, and the growth in the size of "absentee property", which is the basis for the existence of the "leisure class" (financial oligarchy), is many times greater than the increase in the value of the tangible assets of corporations. As a result, the contradiction between "business" and "industry" is aggravated, since the financial oligarchy receives an increasing part of its income through operations with fictitious capital, and not through the growth of production, increasing its efficiency. Veblen constantly emphasized that the development of industry leads to the need for transformations and predicted the establishment in the future of the power of the technical intelligentsia - "technocracy" (persons going to power based on a deep knowledge of modern technology). In Veblen's interpretation, the main goal of "technocracy" is the best work of industry, and not profit, as for a businessman who, moreover, does not perform production functions and is engaged only in financial activities, thereby becoming an extra link in the economic organization. Veblen's future scenario assumes a strike of technicians, which will immediately lead to "paralysis of the old order" and force businessmen to give up leadership positions in production, from power. Veblen argues that it is enough for a small number of engineers (up to one percent of their total number) to unite for the "idle class" to voluntarily relinquish power. In a society run by a technocracy, production will function to meet needs, there will be an efficient distribution of natural resources, a fair distribution, etc.

These ideas of Veblen were picked up and developed by the American economist and sociologist J. Galbraith. His most famous book is The New Industrial Society (1961). At the center of Galbraith's concept is the concept of "technostructure". This refers to the social stratum, including scientists, designers, specialists in technology, management, finance, that is, in all specialties that are required for the normal operation of a large corporation that produces tens or hundreds of types of products. Galbraith argues that the goal of the technostructure is not to make a profit, but to keep economic growth going, which alone ensures wage growth and stability. However, the interests of economic growth, the necessary condition of which is the growth of consumption, leads to further pressure on consumers from producers (through advertising and other forms of pressure, which Veblen wrote about, calling into question the postulate of consumer sovereignty in a market economy). Galbraith notes that the apparatus of suggestion and persuasion associated with the sale of goods has grown enormously. In terms of the resources that are spent on this activity and the abilities that are used in it, it increasingly competes with the process of production of goods. As a result, there is a hypertrophied growth of individual needs, and social needs, to which Galbraith attributed investment in human capital by expanding the education system, are declining. The goals of the technostructure come into conflict with the interests of society. This contradiction lies not only in the intensification of consumer psychosis, but also in the fact that the result of the dominance of the technostructure is the squandering of natural resources, inflation and unemployment. These negative processes are, according to Galbraith, the result of the conciliatory policy of the technostructure, which wants to live in peace with all sectors of society. One of the consequences of such a policy is the growth of wages, outpacing the growth of labor productivity, thereby opening the way for inflation. Based on the analysis of the "harmful" aspects of the domination of technocracy, Galbraith comes to the conclusion about the need for social control over the economy by the state, which would include state regulation of social needs, state planning of the main national economic proportions, and a number of other areas. By the way, the idea of ​​the need for social control over the economy by the state is characteristic of all representatives of institutionalism.

Concluding the acquaintance with the ideas of institutionalism, it should be noted that in economic theory this direction is rather not constructive, but critical. The main contribution to the theory of economic thought lies in the fact that representatives of institutionalism questioned the central postulates of classical political economy: the rationality of the individual's behavior, the automatic achievement of the optimal state of the economic system, the identity of private-proprietary interest to the public good. Noting the shortcomings of the functioning of the capitalist system (conspicuous consumption, the elimination of competition, the restriction of the release of goods), they insisted on the need for regulatory measures on the part of the state. They also insisted that the object of study in economic theory should not be a rational, but a real person, often acting irrationally under the influence of fear, poorly conscious aspirations and pressure from society. As noted, the behavior of people is affected by the motives of conspicuous consumption, envious comparison, the instinct of imitation, the law of social status, and other innate and acquired inclinations. Therefore, representatives of institutionalism are supporters of an interdisciplinary approach, and insist on the inclusion in economic analysis of such disciplines as psychology, anthropology, biology, law, and a number of others. Institutionalism as a current of economic thought is rather vague, there is no economic model, no clear premises that are so characteristic of classical political economy; in constructive terms, he did little, but his critical charge influenced the further development of economic theory, influencing the views of twentieth-century economists, in particular, such an outstanding economist as J. Schumpeter.

LECTURE 9. THEORIES OF GENERAL EQUILIBRIUM AND ECONOMIC DEVELOPMENT

1. L. Walras. Creation of a general economic equilibrium model

According to some researchers in the field of the history of economic thought, L. Walras (1834-1910) is the greatest economist of the nineteenth century. He earned such recognition for developing a system of general market equilibrium, which was called the closed model of economic equilibrium, set out in his main work “Elements of Pure Political Economy” (1874).

Walras made an attempt to create a closed mathematical model of general economic equilibrium based on the principle of subjective utility and the premise that all economic actors of production are divided into two groups: owners of productive services (land, labor and capital) and entrepreneurs. Walras expressed the economic links between them through a system of interrelated equations, but for simplicity of presentation, we can illustrate the course of his reasoning with the help of a diagram.

Households are understood as owners of production factors (labor, capital, land) under enterprises - buyers of production factors and at the same time producers of goods and services. As we can see, according to Walras, the owners of productive services are at the same time sellers.

of these services and buyers of consumer goods, and entrepreneurs - buyers of productive services and sellers of consumer products. Thus, production and consumption are connected through two interacting markets: markets for productive services (or factors of production) and consumer products.

The supply of productive services and the demand for products are linked as follows: the supply of productive services is considered as a function of market prices for these services, and the demand for products is considered as a function of the prices of productive services (since they determine the income of the owners of production factors) and the prices of these products.

Of course, the markets for factors of production and products are interconnected, but how does it follow that they are in a state of equilibrium? To answer this question, let's trace the movement of resources and products in kind and in cash. Let's start with households. The owners of the factors of production sell them in the resource market, earning income, which is nothing but the prices of the factors of production. With the income they receive, they go to the product market, exchanging them for the necessary goods and services. Let us pay attention to the fact that in the Walrasian scheme, households spend their income in full, that is, the amount of income received is equal to the amount of consumer spending, which is why there is no accumulation. Enterprises, in turn, are also connected with the market of resources and products. However, what is income for households (prices of production factors), for enterprises are costs, that is, payments to owners of production factors that they cover from the gross proceeds from sales of goods and services in the product market. The circle is closed. In the Walrasian model, the prices of factors of production are equal to the costs of enterprises, which are equal to the gross receipts of enterprises, and the latter, in turn, are equal to consumer spending by households. In other words, the equilibrium state of the markets means that the demand and supply of productive services are equal, there is a constant stable price in the market for products, and the selling price of products is equal to the costs, which are the prices of production factors.

The Walrasian model, although logically complete, is too abstract in nature, as it excludes many important elements of real economic life.

In addition to the lack of accumulation, oversimplifications include:

▪ static model (assumes that the stock and range of products remain unchanged, as well as production methods and consumer preferences are unchanged);

▪ the assumption of the existence of perfect competition and ideal awareness of production subjects.

In other words, the problems of economic growth, innovation, changes in consumer tastes, and economic cycles remained outside the scope of the Walras model. Walras's merit lies more in posing the problem than in solving it. It gave impetus to economic thought to search for models of dynamic equilibrium and economic growth. We find the development of Walras's ideas in the works of the American economist V. Leontiev, whose algebraic theory of analysis of the input-output model in the forties of the twentieth century made it possible to numerically solve large systems of equations, called “balance equations”. However, the first economist who studied the issues of dynamic development within the framework of neoclassical theory was J. Schumpeter.

2. Economic views of J. Schumpeter

So far, we have considered various economic schools, although this division is rather arbitrary. But even such a conditional division does not fit the figure of J. Schumpeter, who stands apart in the history of economic thought, combining in his theory both elements of institutionalism and premises of the neoclassical direction of economic science. J. Schumpeter (1883-1950), economist and sociologist, was born in Austria, where he gained fame as a theorist with the release of one of his most famous works, The Theory of Economic Development (1912). Since 1932, Schumpeter lived and worked in the United States, being a professor at Harvard University, where he published no less famous works "Business Cycles" (1939) and "Capitalism, Socialism and Democracy" (1942).

Already in the work "The Theory of Economic Development" Schumpeter, in contrast to Walras, who studied the conditions of static equilibrium, develops a theory of economic development, placing in the center of analysis those internal factors that cause the economic development of the system. The very word "development" is already a novelty for neoclassical theory, since, as is known, it tended to consider static problems. Two fundamental ideas were placed in the center of her attention: the best use of available resources and equilibrium (partial - in Marshall, general - in Walras). And Schumpeter first, completely in the spirit of neoclassical theory, begins his analysis with a static model, where all parameters of production, exchange, distribution and consumption remain unchanged. Everything seems to move in a circle. Schumpeter calls this state the economic cycle.

Considering the Walrasian model, we noted that with such an equilibrium, all incomes are equal to costs and the value of any product of production is equal to the value of the factors of production used, where the formation of values ​​obeys the law of opportunity costs. There is no entrepreneurial profit (the excess of price over payment for factors of production acquired on the side is the cost of lost opportunities for the direct organizer of production). This is a pure neoclassical model. Schumpeter adds that it lacks not only profit, but also interest, because (since we have a process of unchanging economic circulation) there is no reason to distinguish between present and future income.

But Schumpeter's contribution to economic theory lies precisely in the fact that he explores those factors that "blow up" the equilibrium of the market system from the inside. These internal factors are new production combinations, which determine the dynamic changes in the economy. Schumpeter identifies several types of fundamentally new combinations of factors of production:

▪ creation of a new product;

▪ use of new production technology;

▪ use of a new production organization;

▪ opening new markets and sources of raw materials.

New combinations of factors of production are called "innovations". It should be emphasized that in Schumpeter's terminology "innovation" is not synonymous with the word "invention". Entrepreneurial activity is associated with the use of existing funds, and not with the creation of new ones. The possibilities for a new use of funds are in abundance in themselves, they can be known. But, as Schumpeter suggests, these are "dead" possibilities. The entrepreneur, on the other hand, implements them allotment, overcoming technological and financial difficulties and opens up new ways of making a profit, which should be considered as an excess over the income that was established in the process of circulation. And it is the entrepreneur, a person whose function is to implement a new combination of factors of production, that is given a particularly important role in Schumpeter's concept of economic development. It should be emphasized that entrepreneurship, according to Schumpeter, is a special gift, a property of the human character, in no way dependent on class, social belonging. This type of character is distinguished by the following features:

▪ self-reliance;

▪ risk preference;

▪ the value of one's own independence;

▪ focus on one’s own opinion;

▪ the need to achieve success, despite the fact that the intrinsic value of money for him is small;

▪ and as a key quality of an entrepreneur - the desire for innovation.

The entrepreneur is the main subject of economic development. It is thanks to his activity that technical progress is carried out, an excess of value is created, the stationary situation is "hacked" and the economy receives an incentive for development. It is interesting to see how, in the theory of entrepreneurship, Schumpeter reconciles the concept of a rational ("economic") and a real ("irrational") person, the object of study of institutional economists. Considering the motives of economic activity in a static state, Schumpeter singles out the motive for satisfying needs on the basis of rational behavior (maximizing utility or benefit). Considering the dynamic model, Schumpeter believes that the motives of entrepreneurial activity are irrational, because the main motives are the self-development of the individual, success, the joy of creativity. An entrepreneur is driven by a thirst for activity and the will to win. It is curious to note that the entrepreneur, according to Schumpeter, is not burdened with an excess of intelligence, and in this case this is a positive quality. It is the relative limitation of his outlook that does not give him the opportunity to compare many different options for achieving the goal and indulge in long hesitation. The identification of irrational motives in the behavior of an entrepreneur led to the recognition that the theory of entrepreneurship is precisely the area where economic science and psychology found a common language, which contributed to the emergence of such a science as "economic psychology".

Capitalist production, according to Schumpeter, cannot exist without constant revolutionary changes in the technique and technology of production, the development of new markets, and the reorganization of market structures. Such constant innovations carried out in the production process are the main source of profit that does not exist in a situation of simple reproduction (or, in Schumpeter's words, economic circulation). Profit takes place only when the economy is in constant motion, in the process of dynamic development.

In connection with the development of a dynamic model of economic development, Schumpeter introduced the concepts of "effective competition" and "effective monopoly", linking them to the process of innovation and the function of entrepreneurship. Innovation, according to Schumpeter, is the core of a new type of competition, much more effective than price competition. Innovations make it possible to change not only technology and products, but also affect the structure of demand, the conditions for the formation of costs and prices. And competition, stimulated by the desire for profit at the expense of advantages in production costs and the quality of the product itself, Schumpeter called "effective competition." In Schumpeter's concept, a new type of monopoly is also associated with innovation, which differs from those forms of monopoly that are based on special rights and privileges, ownership of limited resources or scarce goods. Monopoly, which is a consequence of innovation, Schumpeter called effective, since it is formed in conditions of active competition, and, in his opinion, is incompatible with stagnation and exploitation through the price mechanism. The monopoly profit received by the innovator is an incentive and reward for innovation. At the same time, it is a transient phenomenon for a particular company, as it disappears under the influence of the same mechanism of competition to which the monopoly owes its existence, that is, as a result of specific innovations. Thus, in Schumpeter's theory, "effective monopoly" is a natural element of economic development.

An important role in the study of internal factors of economic growth, Schumpeter gave credit, considering it as the most important condition for using existing factors to create new production combinations. In order for innovative entrepreneurs to be able to get their hands on the means of production, they must use bank credit. Banks "create" money for innovators, and this begins the redistribution of the flow of resources, that is, social capital. Thus, banks, according to Schumpeter, are a special phenomenon of development, which, speaking on behalf of the national economy, issue the authority to implement new production combinations. They act as necessary mediators between the desire to innovate and the ability to do so. The payment for the provision of such opportunities is the percentage, which is the price paid for the acquisition of new productive forces. According to Schumpeter, it is development in the true sense of the word (and not circulation) that in principle needs credit. But back to the entrepreneur. Having received a loan, he goes to the market for factors of production, where, according to our assumption, there is a complete balance of supply and demand and disrupts it. He needs additional resources and offers a higher price for them. The system of equilibrium prices is disturbed, the direction of resource flows changes, and hence the flow of consumer goods. The whole rhythm of the circulation breaks down, the whole system of prices, costs and incomes. At the same time, someone goes bankrupt, but the bulk of entrepreneurs follow the innovator - and such a "disturbance" of the system occurs constantly. It is this that is the usual state, and not the equilibrium circuit. And that is why entrepreneurial profit constantly exists and for these reasons capitalism does not stand still, but is constantly developing.

Schumpeter is aware that the increase in money in circulation due to the credit provided by banks causes a general increase in prices, primarily for production resources, including wages. But, according to Schumpeter, this is not just inflation, as it is considered in quantity theory. As a result of this initial inflation, the course of the economic cycle is disrupted: enterprises that operate traditionally fail (because under the new conditions income does not cover expenses), innovative entrepreneurs, on the contrary, make a profit. There is not just an increase in prices, but also a parallel change in the economic structure, a transition to a new round of the development spiral. Thus, a bank loan turns out to be closely connected with the phenomenon of economic development, and money performs the function of not just a means of circulation and a measure of values, but plays the role of a catalyst for economic growth, including through profit and interest.

Schumpeter connects the cyclical form of economic development with innovative activity. He devotes his work "Business Cycles" (1939) to the study of this problem. Having identified and established a connection between three types of cycles (long, classical and short), Schumpeter deduces the existence of economic cycles from the periods of inventions. The latter are carried out in jerks, when one invention "pulls" a bunch of innovations along with it. As Schumpeter writes, every innovation sets off a wave of imitations going out in all directions. Many of these waves diverge simultaneously, they overlap each other, and such a movement (when all waves are summed) cannot be smooth and uniform. It gives rise to periods of general upswing, which may be followed by periods of general decline. This is the essence of Schumpeter's approach to the analysis of business cycles. He saw the cause of economic crises in the panic associated with the termination of the economic boom, highlighting the psychological motive as central in explaining this economic phenomenon.

Schumpeter was not only an economist, but also a sociologist who was interested in the prospects for the development of capitalism. Let me remind you that the driving force behind Schumpeter's development is an entrepreneur, an innovator. That is why Schumpeter saw the basis for the existence of capitalism in a classical private enterprise system based on small and medium-sized property. With the accumulation of wealth, its institutionalization, the emergence of corporations, the depersonalization of innovative activity occurs, the culture and nature of thinking change. The main figures in the business world are managers who manage large corporations. But the manager has completely different traits than the entrepreneur, and instead of the desire for innovation, risk and independence, we see caution, the desire for promotion and power, for the consistency of decision-making at all levels. And this is not accidental, since the hierarchical (bureaucratic) structure of a large corporation generates both relatively weak incentives for activities that are inadequate to entrepreneurs' risk incentives, and a certain loss of responsibility for doing business. And the very behavior of the "man of the organization", which implies loyalty, obedience, reliability, has nothing to do with the behavior of an entrepreneur. The figure of the entrepreneur disappears, and the possibility of economic development also disappears. Moreover, the exit from the stage of the entrepreneur also means the quick death of the bourgeoisie, since the interest is paid out of his profits.

In addition, the disappearance of the figure of the entrepreneur will lead to the destruction of the social base of capitalism, the basis of which is the individual owner. But the main reason for the imminent, according to Schumpeter, the death of capitalism lies not in the sphere of the economy, but in the sphere of the cultural superstructure, since a hostile attitude towards entrepreneurs is formed in society from other social groups. Schumpeter lays the blame for this on radical intellectuals with their exorbitant ambition. He notes that one of the characteristic features of the civilization of late capitalism is the growing availability of education, including higher education. The number of highly educated people is growing, but there is no adequate growth of jobs corresponding to their claims. And then a large army of intellectuals begins to look for the reasons for their unsatisfactory position in the shortcomings of the existing social system, realizing itself in its fierce criticism. Thus, according to Schumpeter, an environment unsuitable for entrepreneurship is being formed and it will disappear, and along with its disappearance, social and social progress will stop. The paradoxical conclusion suggests itself that capitalism will wither away under the burden of its own successes - high rates of economic development, leading to the dominance of "big business" and the availability of education.

But let us return again to the economic aspects of Schumpeter's views and consider in more detail his concept of profit and entrepreneurship against the backdrop of the evolution of profit theories.

3. The evolution of profit and entrepreneurship theories

In the modern interpretation, net profit is considered as the balance after payments by the owner of all factors of production (interest, rent, wages), including the costs of lost opportunities or the so-called implicit costs. Under perfect competition, the total product is reduced to payments to factors of production, that is, under these conditions, economic (net) profit does not exist. However, this view of profit did not always exist, and its evolution was closely related to the evolution of views on entrepreneurship.

The concept of an entrepreneur performing a function completely different from the functions of a capitalist and manager was formalized in the mid-eighteenth century by the French economist R. Cantimon. He showed that the discrepancy between market demand and supply creates opportunities to buy low and sell high. And Cantillon called people who use the opportunity to make a profit under these conditions entrepreneurs, that is, individuals who want to buy at a known price and sell at an unknown price. Moreover, he noted that these activities do not necessarily require production activities and do not necessarily consume the entrepreneur's personal funds. According to Cantillon, entrepreneurial profit is a matter of foresight and the willingness to take risks, and entrepreneurship itself is a special kind of economic function, consisting in bringing supply in accordance with demand in various product markets. This idea of ​​Cantillon was further developed in the works of the American economist F. Knight. As for the representatives of classical political economy, neither Smith nor Ricardo identified the functions of the entrepreneur, apparently believing that the processes of production and investment are more or less automatic, not requiring decisions regarding risk assessments and any kind of foresight.

Nor did they make a clear distinction between profit and interest.

So, in considering the concepts of entrepreneurship, one should immediately move from Cantillon to J.B. Say, who, on the one hand, distinguished between the provision of capital to an enterprise, and on the other hand, the numerous functions of supervision, management, control and evaluation. The reward for the first function is interest, and profit acts as a reward for the rational combination of all factors of production. Say drew attention to the creative nature of this function in contrast to the routine, everyday operations of production management, actually distinguishing between the functions of an entrepreneur and a simple manager. The "marginalist revolution" solved the problem, since under conditions of perfect competition and static equilibrium, total product is exactly reduced to factor payments in accordance with the principle of marginal productivity. And what the classics called profit is now called interest.

It is no coincidence that therefore the interest in the theory of profit coincides with the interest in the analysis of dynamic models. And Schumpeter's contribution to profit theory is undeniable. Profit in his dynamic model of economic development acts as a reward for entrepreneurial activity, for the discovery and implementation of new combinations of factors of production, for the embodiment of previously unknown, new market opportunities in the form of new goods, services, technologies, etc. According to Schumpeter, entrepreneurial profit is temporary , short-lived character and disappears as soon as the innovative form of production turns into a traditional, repetitive activity. The entrepreneur himself, as we have already noted, is a special social type with the ability to realize diverse market opportunities.

As an integral part of the modern theory of profit, there is a view on the nature of profit expressed by the American economist F. Knight (1885-1972) in his famous book “Risk, Uncertainty, Profit” (1921), where he considers profit as income for bearing the burden of uncertainty. At the same time, Knight makes a clear distinction between the concepts of “risk” and “uncertainty”. In his opinion, a significant part of the risks in the economic process is calculable, is the object of insurance and therefore becomes an item of production costs, deducted from profit. Profit, according to Knight, arises from genuine uncertainty and represents the unexpected difference between expected and actual sales receipts as a result of guessing the price. Therefore, profit can be either positive or negative. Uncertainty generates a discrepancy between actual and expected income and the quantitative expression of this discrepancy is profit (loss). As a consequence, profits will disappear in a stationary economy, where all future events can be predicted.

In addition to profit theories:

a) as a temporary income received from technical innovations (I. Schumpeter);

b) as a result of the uncertain nature of future events (F. Knight);

There is another aspect of profit:

c) profit as income generated by the existence of monopolies.

Profit can exist if at least one of these conditions is present. Under conditions of perfect competition, which exists under static conditions with complete certainty of prospects, lowering prices to the level of production costs eliminates any additional profit over and above the sum of wages, interest and rent, which is formed under the influence of competition.

An overwhelming amount of economic research in the last third of the nineteenth and early twentieth centuries was devoted to the analysis of static equilibrium and the problems of the optimal allocation of resources in conditions of perfect competition. However, the strengthening of monopolistic tendencies in the economy made it necessary to pay attention to the problem of pricing and distribution of resources under the domination of monopolies.

LECTURE 10. THE THEORIES OF MONOPOLY AND MONOPOLY PRICING

1. Analysis of the process of monopolization of the economy by representatives of the historical school and Marxism

Representatives of the German historical school were the first to pay attention to the process of strengthening the monopolization of the economy in the last third of the nineteenth century, and this is not accidental, since it was they who in their studies focused on describing individual economic processes and collecting factual material. They called this stage in the development of capitalism imperialism by analogy with the process of formation of the empires of the past - Roman, Persian, etc. Since the seizure of colonies became the most striking manifestation of imperialism, at first it was considered as a purely political phenomenon. It is curious that J. Schumpeter did not agree with this interpretation, arguing in his book "Sociology of Imperialism" that capitalism and aggression are incompatible, since commodity relations form a type of person who strives to solve problems peacefully; in other words, to obtain the necessary benefits through a fair deal, and not through violence. According to Schumpeter, imperialist policy cannot be deduced from the economic relations of capitalism, but one must appeal to the irrationality of man, to the habits, customs, psychology inherited from feudalism. Here Schumpeter acts as a representative of the institutional direction.

Many studies by representatives of the German Social Democratic movement were devoted to the analysis of imperialism; the most famous is the work of R. Hilferding (1877-1941) “Financial Capital” (1910), in which he made one of the first attempts to give a scientific explanation of the new phenomena of capitalism. Hilferding accepts the position of both the classical school and Marxism that the desire for the highest possible profit has the objective result of a tendency to establish an equal average rate of profit for capital of equal size. This result is achieved by the competition of capital over areas of application, the constant influx of capital into areas where the rate of profit is above average and the constant outflow from areas where it is below average. However, Hilferding draws attention to the fact that these constant “ebbs and flows” encounter obstacles that increase with the level of capitalist development, which, first of all, should include the colossal increase in fixed capital. On this basis, industrial monopolies arise. Tendencies towards monopolization of industry are stimulated, according to Hilferding, by the interest of banking capital, which strives for the absolute elimination of competition between those enterprises in which it takes part. This is how financial capital arises, which, as Hilferding puts it, “... wants not freedom, but domination. It does not see the point in the independence of the individual capitalist and demands restrictions on the latter. It is disgusted by the anarchy of competition and strives for organization... It "needs a politically strong state. It needs a state that can intervene everywhere in the world in order to turn the whole world into the sphere of application of its financial capital." Here Hilferding acts as a follower of Marxism, but later he becomes a supporter of the theory of “organized capitalism”, which considers the beneficial role of industrial and banking monopolies as factors in streamlining production and eliminating crises of overproduction. According to the later views of R. Hilferding, the dominance of large banks over industry and the concentration of financial power makes it possible to plan production and opens up the possibility of crisis-free development.

Considerable attention to the consideration of the phenomenon of imperialism was given in Marxist economic literature. The most famous is the work of V. I. Ulyanov (Lenin) (1870-1924) “Imperialism, as the highest stage of capitalism” (1916), which is largely based on materials from the work of R. Hilferding. Using the position of Marxism that the basis for the development of society (both the base and the superstructure) is the development of productive forces, Lenin showed that the basis for the process of monopolization was a series of major discoveries in the last third of the nineteenth century, which led to a change in the structure of the national economy. The basis of the economy was heavy industry, in which the concentration of production and capital was incomparably higher than in light industry. Production is concentrated on several large enterprises and the possibility of an agreement arises between them, first of all, an agreement to maintain a high price level. It is no coincidence that the first form of monopoly that arose on the basis of concentration of production is the “ring” - an agreement between legally and actually independent companies on a uniform price level for their products. The process of concentration is also underway in the banking sector, also accompanied by the emergence of banking monopolies. Further development of the process of monopolization in the national economy leads to the formation of financial capital and financial oligarchy. The latter strives for world economic dominance and the result of this is the struggle for the economic (the most important means is the export of capital) and political division of the world. In other words, the changes that occurred in the economic and political sphere and to which representatives of the historical school were the first to draw attention. Lenin withdraws from the process of monopolization of the economy. And he views the monopoly itself as a result of the concentration of production, which allows companies to receive monopoly-high profits by maintaining monopoly-high prices. However, Lenin does not even hint at the mechanism for forming monopoly prices. And this is natural, since he was interested in a completely different problem - the analysis of monopolies through the prism of the possibilities of implementing a social revolution in one particular country.

To understand the mechanism of formation of monopoly prices, we need to turn not to Marxism, but to the neoclassical direction in economic theory. To be fair, it should be noted that a deep analysis of pricing processes under conditions of monopolization of the economy dates back to a fairly late period - the thirties of the twentieth century. This can be understood if we remember that models of economic functioning within the classical, and even more so neoclassical, trends were built on the assumption of perfect competition, free flow of capital, full awareness of all participants in the economic process, etc. Of course, it has never been denied that There is a monopoly in economics, but in most cases the monopoly was explained by non-economic factors. It was assumed that it arises only on a natural or legal basis. The first is the result of non-reproducible conditions of production, the second is the result of the “granting of privileges.” This interpretation is typical of A. Smith, who writes that “... A monopoly granted to an individual or a trading company has the same effect as a secret in trade or manufacturing. And monopolists, maintaining a constant shortage of products on the market.. . sell their goods much more than the natural price." Smith views the monopoly price as the highest price that can be obtained, as opposed to the natural price (or free market price), which is the lowest price that can be accepted. Here we see the interpretation of the monopoly price as the demand price, and the interpretation of the natural price as the supply price.

The study of pricing processes in conditions of monopolization of the economy was initiated by two works, published almost simultaneously, “The Theory of Monopolistic Competition” (1933) by E. Chamberlin and “The Economic Theory of Imperfect Competition” (1933) by J. Robinson.

2. The theory of monopolistic competition by E. Chamberlain

The contribution of the American economist E. Chamberlin (1899-1967) lies, among other things, in the fact that he was the first to introduce the concept of “monopolistic competition” into economic theory. This was a challenge to traditional economics, according to which competition and monopoly are mutually exclusive concepts, and which proposed to explain individual prices either in terms of competition or in terms of monopoly. According to Chamberlin's view, most economic situations are phenomena that include both competition and monopoly. The Chamberlinian model assumes a market structure that combines elements of competition (a large number of firms, their independence from each other, free access to the market) with elements of monopoly (buyers give a clear preference to a number of products for which they are willing to pay a premium price). But how is such a structure formed? Based on the concept of “economic man,” it is logical to assume that an entrepreneur, in his quest for maximum profit, seeks to seize control over the supply of goods, which will allow him to dictate the price on the market. Therefore, he strives to create a product that is at least somewhat different from the competitor’s product. Each company, having achieved some differentiation of its product, becomes a monopolist in its sales market. A monopoly on product differentiation arises (E. Chamberlin's term - author's note), which presupposes a situation where, by producing a certain product that is different from the products of other companies, the company has partial market power. This means that increasing the price of its products will not necessarily lead to the loss of all customers (which would be true, at least theoretically, in conditions of perfect competition, complete homogeneity of the product, and, as a consequence, infinite price elasticity of demand).

At the same time, product differentiation, according to Chamberlin, is interpreted quite broadly - it includes not only the various properties of the product, but all the conditions of sale and services accompanying the sale, as well as spatial location. As Chamberlin himself writes, “...Differentiation can be based on certain features of the product itself, such as special patented properties - brand names, brand names, unique packaging... or such as individual characteristics related to quality, shape, color or style. Differentiation may also exist with respect to the conditions attending the sale of goods. In retail trade (to confine ourselves to just one example), these conditions include such factors as the convenience of the seller's location, the general atmosphere or general style of his establishment, his manner of doing business, his reputation as an honest businessman, courtesy, business skill and all the personal ties that bind his clients either to himself or to those who work for him.For these and all other intangible factors vary from seller to seller , then the “product” appears different in each case, because buyers take these things into account to a greater or lesser extent, and we can say that they buy them on a par with the product itself. If we keep in mind the two indicated aspects of differentiation, then it becomes obvious that all products are essentially different from each other - at least slightly different - and that in a wide area of ​​\u200b\u200beconomic activity differentiation plays an important role." If monopoly is interpreted in this way, then it is necessary to recognize , that it exists in the entire system of market prices. In other words, where the product is differentiated, the seller is both a competitor and a monopolist. The limits of the power of this group of monopolists are limited, since control over the supply of goods is partial: due to the existence of substitute goods (substitutes) and possible high price elasticity of demand. Monopolism due to product differentiation means that commercial success depends not only on the price and consumer qualities of the product, but also on whether the seller is able to put himself in a privileged position in the market. In other words, under monopoly conditions by product differentiation, monopoly profit can arise where, with certain protection from the invasion of competitors, the existing demand for a certain product can be created and increased.

And Chamberlin poses the problem of demand in a new way. Unlike the neoclassical model, where the volume of demand and its elasticity act as something initially given, in the Chamberlin model they act as parameters that the monopolist can influence through the formation of our tastes and preferences. Here the thesis is confirmed that practically all our needs are social, that is, they are generated by public opinion. In this regard, Chamberlin concluded that prices are not a decisive instrument of competition, since in creating demand the main emphasis is on advertising, product quality, and customer service. This means that under conditions of monopolistic competition, the price elasticity of demand decreases as the quality elasticity of demand increases.

A new approach characterizes Chamberlin in matters of price and value. If in the neoclassical model there was no question of regulating the price of a given product, since the prices were set from outside, and regulating the volume of the product at a given price, then the Chamberlin model implies the search for the optimal volume of production and, accordingly, the price level that provides the company with maximum profit. Chamberlin assumes that under conditions of monopolistic competition, a firm maximizes profits at a volume of production less than that which would provide the highest technological efficiency. In other words, on the scale of the whole society, the transition to a state of monopolistic competition leads to the fact that consumers pay more for goods, the output of goods is less than potentially possible, and as a result, there is an underutilization of production capacities and unemployment. Is it then possible to say that monopoly entrepreneurs are responsible for the given state of the economy? Chamberlin answers this question generally in the negative, believing that monopolists are liable only if the differentiation of their product is artificial and does not lead to a real change in quality. However, in general, the process of product differentiation is generated by the diversity of public tastes and the desire for monopoly is explained by the tendency to differentiation of demand, where differences in tastes, desires and incomes of buyers themselves indicate a need for diversity.

Explaining the situation that arises under a monopoly on product differentiation, when a firm produces less than its potential output, Chamberlin points out that in order to sell additional products, the firm will either have to lower the price or increase sales promotion costs. It is no accident, therefore, that Chamberlin introduces the concept of "sales costs" into his theory of price, which he considers as the costs of adapting demand to the product, in contrast to the traditional costs of production, which he considers as the costs of adapting the product to demand. Chamberlin himself defines the differences between these types of costs as follows: "Production costs include all costs necessary to create a product (or service), deliver it to the consumer and hand him this product in a condition suitable for satisfying needs. Marketing costs include themselves all costs that have the purpose of creating a market or demand for a product. Costs of the first type create utilities that serve to satisfy requests; costs of the latter type create and change the requests themselves. In his opinion, with an increase in output, production costs are reduced, but the costs of selling additional products increase. This became the rationale for the assertion that there is no excess profit in the conditions of a monopoly on product differentiation, since. in the long run, according to Chamberlin, the price only covers the full costs (total costs of production and marketing).

Summing up, we can say that, according to Chamberlin's views, the market of any single producer in conditions of monopolistic competition is determined and limited by three main factors: the price of the product, the characteristics of the product itself, and the marketing costs. Noting that a differentiated product has a high price (which is a consequence of supply restrictions), he considers it an inevitable price for differentiated consumption. In Chamberlin's theory, monopoly and competition are interrelated phenomena, monopoly is present in the entire system of market pricing. Let me remind you that the conditions that give rise to a monopoly, according to Chamberlin, are: patent rights, the reputation of the company, the irreproducible features of the enterprise, the natural limitation of supply. As we can see, outside of Chamberlin's analysis remains a monopoly that arose on the basis of a high level of concentration of industries and capital. This type of monopoly became the subject of analysis by the English economist J. Robinson.

3. The theory of imperfect competition J. Robinson

J. Robinson (1903-1983), English economist, representative of the Cambridge school in political economy. Like Chamberlin, J. Robinson, in his most famous work, "The Economic Theory of Imperfect Competition" (1933), explored the same problems: shifts in the mechanism of market competition, problems of market monopolization, and the mechanism of monopolistic pricing. Robinson also considered product differentiation, that is, such changes that cannot be fully compensated by substitute goods, to be the decisive condition for the monopoly possession of a product. However, product differentiation is not, according to Robinson, the only condition for monopoly. She devoted considerable attention in her research to the issue of the behavior of large companies, embodying a high level of concentration of production. For Robinson, monopoly is not only a phenomenon of the market, but also of concentrated production. She associated the concentration of production with the firm's economies of scale, since the share of fixed costs per unit of output decreases with an increase in production volumes. Comparing the behavior of companies in conditions of perfect and imperfect competition, J. Robinson showed that large companies are able to maintain a higher price than they could have in conditions of perfect competition. Graphical analysis of these situations is reproduced in textbooks on the course "Microeconomics" in topics that consider the behavior of a firm in conditions of perfect competition, imperfect competition and pure monopoly.

Special attention to J. Robinson paid attention to such a characteristic feature of the market behavior of large companies as price maneuvering. The key issue in her research was the study of the possibilities of using price as a tool for influencing demand and regulating sales. It is J. Robinson introduced the concept of "price discrimination" into economic theory, which meant market segmentation by a monopoly based on taking into account different price elasticity of demand for different categories of consumers, price maneuvering for different groups, in different geographical markets. She drew attention to the problems of pricing policy formation, which was completely absent in conditions of perfect competition. J. Robinson showed that the monopolist is able to divide the market of his product into separate segments and assign a special price for each of them, so that the total profit is maximized. However, the question arises - why does not the monopolist set the same high price in all markets? It turns out that this is impractical, because in conditions of imperfect competition, different groups of buyers have different price elasticity of demand, and if a high price is set everywhere, demand can drop sharply. Therefore, in order to maximize profits, it is advisable to act differently: when releasing a new "differentiated" product, first set a very high price, serving the wealthiest part of the buyers (a market with low price elasticity of demand, the so-called "strong market"), then lower the price, attracting less affluent buyers and continue to do so until markets with high price elasticity of demand ("weak markets") are covered. This "cream skimming" tactic is based on price discrimination based on income groups. But spatial discrimination is also possible, as, for example, when setting monopoly high prices in the domestic market and dumping prices in foreign trade. Be that as it may, the "golden rule" of the policy of price discrimination is that the highest price is set where the elasticity of demand is the least, and the lowest - where the elasticity of demand is the highest. Comparing a simple monopoly and a monopoly practicing a plurality of prices, J. Robinson showed that in the latter case, the firm achieves both an increase in output and an increase in gross income. Analyzing the behavior of monopolies, J. Robinson attempts to assess the desirability of price discrimination from the point of view of society as a whole. In her opinion, on the one hand, a monopoly that uses price discrimination (compared to a simple monopoly that does not practice such behavior) increases the volume of output. On the other hand, price discrimination, while maintaining monopoly high prices, leads to an incorrect distribution of resources and to their general underutilization. In addition, the monopolization of production, according to J.

A negative attitude towards monopolization is also manifested in the teachings of J. Robinson on monopsony. J. Robinson analyzes the consequences of monopsony using the labor market as an example, when a large firm (monopsonist) acquires the labor services of unorganized workers. In this case, the monopsonist company imposes on the workers terms of the transaction, under which real wages may be lower than the marginal product of the worker's labor. According to J. Robinson, this would mean the exploitation of labor. Robinson cited minimum wage legislation and trade union policies as anti-exploitation factors.

As a result of his research, J. Robinson comes to the conclusion that the possibility of price maneuvering undermines the basic postulates of the classical theory: the independence of the pricing process, the identification of the balance of supply and demand with the optimal use of resources and the optimization of social welfare. This is its fundamental difference from Chamberlin, who believed that it was the mechanism of monopolistic competition that best served the interests of economic well-being.

LECTURE 11. WELFARE ECONOMIC THEORIES

1. The evolution of views on welfare issues

Humanity, like the individual, has always sought to achieve prosperity. Already in the ideas of early utopian socialism, the destruction of private property, egalitarian distribution and the complete regulation of public life were considered as a condition for achieving universal happiness. According to the representatives of this doctrine, a person is unhappy because he is envious of a more fortunate neighbor. And there is only one way to destroy envy - to make everyone the same.

The ideologists of capitalist production with their philosophy of selfishness and individualism (see the views of A. Smith - author's note) in the theory of welfare focused on production, viewing welfare as a synonym for wealth, where wealth was understood as products of material production. Within the framework of these ideas, the basis and source of well-being is the accumulation of national capital, and the indicator of the level of well-being is the growth in the amount of goods per capita or the net income of the nation, which functionally depends on the resources of capital, land and labor. Consequently, the factors of economic growth, the most important of which were the accumulation of capital and the division of labor, automatically became factors in the growth of well-being. The classics unanimously considered the system of “natural freedom” to be a prerequisite for the growth of national wealth.

The origins of modern theories of welfare should be sought in utilitarianism - an ethical theory that recognizes the usefulness of an action as a criterion of its morality. The founder of this theory was the English philosopher I. Bentham (1748-1832), who believed that philosophy has no more worthy occupation than supporting the economy of everyday life. Bentham proclaimed well-being as the goal of every human action. Consequently, according to Bentham, the only universal social science should be “eudaimonics” - the science of achieving well-being. Bentham proposed to measure well-being itself by subtracting the amount of suffering from the amount of pleasure for a given period of time. In his theory, he proceeds from the fact that every person is able to perform those arithmetic operations that are needed to obtain maximum happiness. It should be noted that in Bentham's concept man is exclusively a consumer; the sphere of production interests him very little. Moreover, it is aimed at immediate consumption - future pleasures, according to the “arithmetic of happiness,” are included in consideration with less weight than present ones. This person (Bentham's universal consumer) is well recognized; it is he who becomes the central figure of marginal analysis. And the same G. Gossen, who was the first to formulate the law of diminishing marginal utility (see Gossen's laws - author's note) took from traditional economic science the philosophy of utilitarianism with its principles of reasonable egoism, subjective comparison of benefits and sacrifices, pleasure and suffering. He even proposed renaming political economy Genusslehre, that is, the doctrine of satisfaction (or pleasure), where maximizing pleasure (utility) becomes the most important principle of social management.

In Bentham, as in the marginalists, we see the reduction of all motives of human behavior to the achievement of pleasure; They view wealth as a special case of pleasure. And this is the first difference between the views of Bentham and Smith. Another difference is that Bentham did not trust the coordination of individual aspirations for well-being to the market and competition, considering this the prerogative of legislation, where the ideal set of laws should be built on the principle of “maximum happiness for all.” It is worth noting that Bentham’s views influenced not only representatives of the marginalist trend in economic science, but also Sismondi, who believed that the science of management should set as its goal the happiness of people united in society. In his words, “...it seeks means to secure for men the highest welfare consistent with their nature.”

2. A look at the economic theory of welfare by V. Pareto. "Pareto optimum"

Until now, our focus has been on the behavior of economic entities (consumers and firms), the study of the conditions for optimizing their behavior, which boils down to maximizing utility. This predetermined our interest in the problems of formation of prices for factors of production, which are also the income of the owners of these factors, and prices for the products of firms. However, the question remains open: does optimizing the behavior of individuals mean maximizing social welfare as a whole? The answer to this question, among other things, will help answer the question of whether the existence of monopolies prevents the achievement of this state. I. Bentham proclaimed as the sole goal of any government “to ensure the greatest happiness to the greatest number of people.” But how? A fundamentally different answer to this question is given by the authors of the two most famous theories of economic well-being - the Italian economist V. Pareto and the English economist A. Pigou.

According to his economic views, V. Pareto (1848-1923) can be classified as a representative of the Lausanne School of Economics. Like Walras, Pareto considered political economy to be a kind of mechanics that reveals the processes of economic interactions based on the theory of equilibrium. In his opinion, this science should explore the mechanism that establishes a balance between the needs of people and the limited means of satisfying them. V. Pareto made a significant contribution to the development of the theory of consumer behavior, introducing ordinal ones instead of the quantitative concept of subjective utility, which meant a transition from the cardinalist to the ordinalist version of the theory of marginal utility. Further, instead of comparing the ordinal utility of individual goods, Pareto proposed a comparison of their sets, where equally preferable sets were described by indifference curves.

According to Pareto, there is always a combination of values ​​in which the consumer does not care in what proportion he receives them, as long as the sum of these values ​​does not change and brings maximum satisfaction. These provisions of V. Pareto formed the basis of the modern theory of consumer behavior.

But Pareto is best known for his principle of optimality, which was called the "Pareto optimum", which formed the basis of the so-called new welfare economics. The Pareto optimum states that the welfare of society reaches its maximum, and the distribution of resources becomes optimal if any change in this distribution worsens the welfare of at least one subject of the economic system. In a Pareto optimal situation, it is impossible to improve the position of any participant in the economic process without simultaneously reducing the well-being of at least one of the others. This state of the market is called the Pareto-optimal state. According to the Pareto criterion (criterion for the growth of social welfare), movement towards the optimum is possible only with such a distribution of resources that increases the welfare of at least one person, without harming anyone else.

The initial premise of the Pareto theorem was the views of Bentham and other early representatives of utilitarianism among economists that the happiness (considered as pleasure or utility) of different people is comparable and additive, that is, they can be summed up in some common happiness of all. And, according to Pareto, the criterion of optimality is not the general maximization of utility, but its maximization for each individual within the limits of owning a certain initial supply of goods.

Based on the premise of the rational behavior of the individual, we assume that the firm in the production of products uses such a set of production possibilities that will provide it with the maximum discrepancy between gross revenue and costs. The consumer, in turn, acquires such a set of goods that will provide him with the maximization of utility. The equilibrium state of the system involves the optimization of objective functions (for the consumer - utility maximization, for the entrepreneur - profit maximization). This is the Pareto optimal state of the market. It means that when all market participants, each striving for their own benefit, reach a mutual balance of interests and benefits, the total satisfaction (general utility function) reaches its maximum. And this is almost what A. Smith spoke about in his famous passage about the "invisible hand" (though not in terms of utility, but in terms of wealth). Subsequently, the theorem was indeed proved that the general market equilibrium is the Pareto-optimal state of the market.

So, the essence of Pareto's views can be reduced to two statements:

▪ any competitive equilibrium is optimal (direct theorem);

▪ the optimum can be achieved by competitive equilibrium, which means that the optimum selected based on certain criteria is best achieved through the market mechanism (inverse theorem).

In other words, the state of the optimum of objective functions ensures balance in all markets. Optimization of objective functions, according to Pareto, means choosing the best alternative from all possible by all participants in the economic process. However, it should be noted that the choice of each individual depends on prices and the initial amount of goods that he has, and by varying the initial distribution of goods, we change both the equilibrium distribution and prices. It follows that the market equilibrium is the best position within the framework of an already formed distribution system and the Pareto model assumes that society is immune to inequality. This approach will become more understandable if we take into account the "Pareto law", or the law of distribution of income. Based on a study of the statistics of a number of countries in various historical epochs, Pareto found that the distribution of income above a certain value retains significant stability, and this, in his opinion, indicates an uneven distribution of natural human abilities, and not an imperfect social conditions. From this followed the extremely skeptical attitude of Pareto to the questions of the social reorganization of society.

However, it is difficult to dispute the position that the optimal, according to Pareto, is very often socially unacceptable. Therefore, even in line with the neoclassical direction of political economy, other welfare theories are being formed.

3. A. Pigou’s theory of economic welfare

According to Pareto's views, perfect competition will ensure the maximization of the utility function throughout society. However, at the beginning of the twentieth century, certain doubts arose about the truth of this position. In this regard, it is worth mentioning the views of the English economist G. Sidgwick (1838-1900), who for the first time began to consider such concepts as wealth and well-being both from the position of society and from the position of the individual, emphasizing that the same concepts have different meanings depending on whether we look at them from a social or an individual point of view. Therefore, for Sidgwick, the accumulated stock of material resources (which was synonymous with wealth among the classics) and the wealth of society, its real income, are by no means the same value. As is known, within the framework of the classical school of political economy, A. Smith’s position was an axiom that each person, pursuing his own benefit, simultaneously serves the interests of society (this is the essence of the principle of the “invisible hand” - author’s note). Sidgwick cites simple, now textbook examples of the discrepancy between private and public benefits and concludes that to effectively solve many types of production problems, government intervention in one form or another is required. According to Sidgwick, the shortcomings of the system of “natural freedom” are manifested in an even more prominent form in the distribution system and excessive income inequality. Anticipating twentieth-century economists, he writes that a more equal distribution of created wealth increases overall levels of well-being.

The work of another prominent English economist, a representative of the Cambridge school A. Pigou (1877-1959), whose book “The Economic Theory of Welfare” was published in 1924, was devoted to the problems of welfare research.

Pigou set the goal of his research to develop practical tools for ensuring well-being based on the premises of neoclassical theory: the theory of diminishing marginal utility, the subjective-psychological approach to valuing goods, and the principle of utilitarianism. It can rightly be said that Pigou completed the creation of the neoclassical theory of welfare.

At the center of Pigou's theory is the concept of a national dividend, or national income, considered as a net product of society, as a set of material goods and services bought with money. And Pigou considers this indicator not only a measure of production efficiency, but also a measure of social welfare. As we can see, Pigou's approach to the problem of well-being assumes a view from the position of the whole society, and not the individual. But, curiously, this approach is applied using concepts such as individual satisfaction function, private benefit from production, etc.

As part of his concept, Pigou drew attention to the fact that the concept of individual well-being is broader than its purely economic aspects. In addition to the maximum utility from consumption, it also includes such components as the nature of work, environmental conditions, relationships with other people, position in society, living conditions, public order and safety. In each of these aspects, a person can feel satisfied to a greater or lesser extent. Today, these characteristics are combined into the concept of “quality of life.” However, defining quality of life faces significant difficulties due to the inability to measure utility. Pigou repeatedly emphasizes that the size of the national dividend does not accurately reflect the level of general well-being, since many elements of the quality of life that do not have a monetary value are nevertheless real factors of well-being. Therefore, situations of growth in the level of general well-being are possible while the level of economic well-being remains unchanged. Nevertheless, in the general case, Pigou concludes, “...qualitative conclusions about the influence of economic factors on economic well-being are also valid in relation to general well-being.”

But for Pigou, the overall level of well-being is influenced not only by the size of the national dividend, but also by the principles of its distribution. Based on the law of diminishing marginal utility, he puts forward the thesis that the transfer of part of the income from the rich to the poor increases the amount of general welfare. On the basis of these assumptions, Pigou developed his theory of taxation and subsidies, where the main principle of taxation is the principle of the least cumulative victim, that is, the equality of the marginal victims for all members of society, which corresponds to the system of progressive taxation. It should be noted that in substantiating progressive taxation, that is, advocating the equalization of disposable income through taxes, Pigou consciously or unconsciously proceeded from the hypothesis of the sameness of individual utility functions from income. It follows from this hypothesis that a higher tax rate on high incomes means about the same loss of utility for high-income groups as a lower tax rate for low-income groups. Pigou's reasoning is based on Gossen's second law, according to which the maximum utility is achieved under the condition that the marginal utilities are equal per the last monetary unit spent, in this case, per unit of disposable income.

In the aspect of distribution problems, Pigou also considers the question of the relationship between the economic interests of society and the individual. G. drew attention to a certain conflict between private and public interests. Sidgwick. Developing his views, Pigou set the task of finding the theoretical foundations for resolving such conflicts. As already noted, for Pigou, the size of the gross national product does not accurately reflect the level of general well-being, since the state of the environment, the nature of work, and forms of leisure, etc. are real factors of well-being and therefore a change in the level of general well-being with a constant level of economic well-being is possible. In this regard, Pigou analyzes in particular detail situations where the activities of the enterprise and the consumer have so-called "external effects" that do not have a monetary measure, but, nevertheless, they really affect well-being. As a textbook example of negative "externalities" we can cite environmental pollution as a result of the industrial activities of enterprises. Pigou notes that, depending on the sign of externalities, public costs and results can be either greater or less than private ones. The key concept of Pigou's concept is precisely the divergence (gap) between the private benefits and costs resulting from the economic decisions of individuals, on the one hand, and the social benefits and costs that fall to the lot of everyone, on the other. The object of Pigou's closest attention was situations where the social costs of producing a good were greater than the private costs of its producer. As a result, private supply, subject to profit motives, turned out to be inadequate to the optimal, from the point of view of the whole society, distribution of resources among various branches of production. According to Pigou, for each good produced, it is necessary to satisfy the condition that the marginal social benefit, which reflects the amount that all people would be willing to pay for all the benefits from using an additional unit of goods, is equal to the marginal social cost, that is, the amount that people would be willing to pay for alternative use of resources. In cases where the marginal social benefit exceeds the marginal private benefit, the government must subsidize the production of the good. When the marginal social cost exceeds the marginal private cost, the government should tax the economic activities associated with additional social costs (for example, the emission of smoke from industrial activities) so that the private costs and the price of the goods then reflect these costs. As we can see, the maximization of social welfare, according to Pigue, involves not only a system of progressive taxation of income, but also the measurement of so-called "external effects" and the organization of the redistribution of funds through the mechanism of the state budget.

Interesting in Pigou's welfare theory is the conclusion that he draws from the recognition of the theory of interest developed by the representative of the Austrian school Böhm-Bawerk. As you remember, in this theory, interest is considered as a reward for waiting in the conditions of preferring current goods to future ones. Recognizing that our gift of foresight is imperfect and we estimate future blessings on a decreasing scale (except for periods of revolutionary enthusiasm), Pigou concludes that it is difficult to implement large-scale investment projects with a long payback period (including investment in education) and wastefulness in the use of natural resources. This proves that the "free market" system generates conflicts not only between private and public interests, but also conflicts within the public interest: between the benefit of the present moment and the interests of future generations. This leads to a quite logical conclusion that the state should not only ensure the maximization of social welfare through the mechanism of redistribution of income and taking into account "external effects", but also ensure the development of fundamental science, education, and implement environmental projects, protecting the "interests of the future".

But the strongest arguments in favor of strengthening the economic role of the state were put forward by J. Keynes.

LECTURE 12. ECONOMIC VIEWS OF J. KEYNS

1. Theory of effective demand

As we already know, since the 70s of the nineteenth century, the microeconomic approach has dominated economic theory. In the center of analysis is placed an economic entity (consumer or firm), which maximizes its benefits. It was assumed that economic entities operate in conditions of perfect competition, where the efficiency of the firm was identified with the efficiency of the economy as a whole. This approach implied a rational distribution of resources in the national economy and, in essence, did not allow for the possibility of a long-term imbalance in the economic system. These postulates were called into question by the English economist J. Keynes (1883-1946), whose name in economic theory is associated with a return to the analysis of macroeconomic problems. At the forefront, Keynes put the study of dependencies and proportions between the total national economic values: national income, savings, investment, aggregate demand - and saw the main task in achieving national economic proportions.

Keynes criticized Say's "law of markets", which was also shared by neoclassicists. Let me remind you that the essence of this law is that the supply automatically generates a corresponding demand. Since the goal of production, according to Say, is consumption (the producer sells his product in order to buy another, that is, each seller necessarily becomes a buyer), then in this situation the general overproduction of goods is impossible. In other words, any increase in output automatically generates an equivalent increase in expenditures and incomes, and in amounts capable of maintaining the economy in a state of full employment. This belief prevailed for many decades, and in the words of J. Galbraith, by the 30s of the twentieth century, the idea that production itself creates sufficient demand for itself was a holy truth in the field of economics.

Acceptance or non-acceptance by a person of Say's law was, in the words of the same Galbraith, a sign by which "economists differed from fools." The inconsistency of this law during the years of the "Great Depression" became obvious. In contrast to Say and the neoclassicists, who believed that the problem of demand (that is, the sale of a social product) is solved by itself, Keynes put it at the center of his research, made it the starting point of macroeconomic analysis. Keynes rightly pointed out that the classical doctrine assumes as an initial analysis an economy with the full use of factors of production, which are characterized by relative scarcity. Meanwhile, in reality (the depression of the 30s of the twentieth century), there was not so much a limitation as an overabundance of resources: mass unemployment, underutilized production capacities, idle capital.

The starting point of Keynes's theory is the belief that the dynamics of the production of national income and the level of employment are determined directly not by supply factors (the size of labor, capital, their productivity) but by the demand factors that ensure the realization of these resources. In Keynes' theory, they are called "effective demand" (the sum of consumer spending and investment). A significant part of his famous work "The General Theory of Employment of Interest and Money", published in 1936, Keynes just devoted to the analysis of the factors that determine the dynamics of personal consumption and investment.

According to Keynes, the increase in personal consumption is a stable function of income growth, the role of other factors is insignificant. With income growth, the marginal propensity to consume decreases, that is, as income grows, consumption growth slows down and this is the most important reason for the decrease in the average share of consumption during the upward phase of the economic cycle in the long run. Keynes associated this consumption dynamics with the so-called "basic psychological law" - a decrease in the share of consumption (namely, shares, the absolute size of consumption certainly grows), and, accordingly, an increase in the share of savings with income growth.

It follows from the “basic psychological law” that as income rises, the share of effective demand provided by personal consumption constantly falls and therefore the expanding volume of savings must be absorbed by the growing demand for investment. Keynes considered the size of investment to be the main factor of effective demand, and as a consequence, the growth of national income. But ensuring a normal investment size comes up against the problem of converting all savings into real investments. As for the representatives of the classical and neoclassical movements, they did not see any particular problem here, since they proceeded from the assumption that the act of saving simultaneously turns into an act of investment, that is, saving and investment are identical. Moreover, within the framework of the classical school, it was traditionally believed that a high level of savings is a condition for economic growth, since it is savings that are the source of capital accumulation. Since the time of A. Smith, the desire to save has been regarded as one of the most important virtues (among the virtues of the Protestant ethic are hard work, modesty, frugality), which should be maintained and developed. Keynes came to the conclusion that excessive savings is a factor impeding economic growth, in his figurative expression, “individual prudence threatens to turn into social madness” since excess savings is nothing more than an excess supply of goods, that is, a situation that threatens to turn into a general crisis of overproduction. Hence the logical conclusion followed that in order to maintain constant growth of national income, capital investments must increase, designed to absorb an ever-expanding volume of savings. It is the investment component of effective demand that plays a decisive role in determining the level of national income and employment.

The key equation of Keynesian theory can be considered the following equality:

GNP=C+I,

where GNP - gross national product;

С - consumer spending;

I - investments.

It would seem that there is no fundamental difference in the views of Keynes and representatives of the classical movement in economic theory. In both cases, investments are designed to absorb the amount of savings offered. But this is only at first glance. Representatives of the classical school, again since the time of A. Smith, automatically absorb savings into investments, that is, automatically achieve macroeconomic equilibrium. In the theory of J. Keynes, the level of savings is determined by the level of income, and the level of investment by completely different factors, and therefore the equality of savings and investments is more an accident than a pattern. According to Keynes, the real amount of investment depends on two quantities:

▪ expected return on investment or its marginal efficiency (return on the last invested unit of capital);

▪ interest rates.

The entrepreneur continues the investment process as long as the marginal efficiency of investment remains above the rate of interest. Thus, the existing rate of interest determines the lower limit of the profitability of future investments. The lower it is, the more lively the investment process, ceteris paribus, and vice versa. It is interesting to note that the neoclassicists believed that the rate of interest is determined by the point of intersection of the savings and investment curves (it was from this assumption that they derived the constant automatic equality of savings and investment). Keynes wrote that the interest itself determines the final amount of investment, and is not determined by them. Interest in Keynes's theory, as well as the propensity to invest, is a predominantly psychological phenomenon. The expected return on investment is very sensitive to pessimism, and the latter, according to Keynes, can cause deep economic depressions. As we can see, in Keynesian theory, investments are determined independently of the savings of economic entities.

Having shown that in a dynamically developing economy there is a tendency for savings to grow faster than investment, Keynes focused on the problem of stimulating investment. In his opinion, it is changes in the amount of desired investment expenditure that are the root cause of fluctuations in aggregate production and income and, being much less stable than consumer spending, investment plays a decisive role in the occurrence of economic downturns. Considering the increase in national income as a function of the increase in investment, Keynes turns to the multiplier mechanism. The mechanism of action of the multiplier was described in 1931, 5 years before the publication of Keynes’s work “The General Theory of Employment, Interest and Money” by the English economist R. Kahn. Kahn expressed the idea that all production costs, causing primary employment, give rise to additional purchasing power on the part of entrepreneurs and their workers, which becomes a source of new demand and secondary employment. But new expenses will make up only part of the additional income, so secondary employment will be less than primary, etc. There is a decreasing progression. In Kahn's theory, the multiplier is a coefficient showing the dependence of employment on the amount of initial investment; in turn, it depends on the share of income spent at each stage.

Unlike the employment multiplier, Keynes developed the idea of ​​the accumulation multiplier. In his theory, the accumulation multiplier is a coefficient showing how many times the increase in national income will increase as a result of initial investment. It is determined by an independent variable - the marginal propensity to consume (PSP), where M = 1 / (1 - PSP), or, what is the same, M = 1 / PSS, and the increase in national income is defined as the product of the multiplier and the increase in initial investment. If we assume that the PSP = 0,8, then newly made investments in the amount of, say, 1000 monetary units will cause an increase in national income by 5000 monetary units.

The value of the multiplier in a real economy is always greater than one, since the increase in additional investment in any industry gives rise not only to it, but also to industries related to it. And the creation of additional jobs in all these sectors will affect the increase in the effective demand of workers, and, accordingly, will create incentives for expanding the production of food and consumer goods. Thus, two interrelated problems are solved: ensuring economic growth and solving the problem of unemployment. According to Keynes, the state should provide initial investment in conditions of insufficient effective demand from consumers and the private sector of the economy, without neglecting indirect methods of stimulating investment.

2. Theory of employment and unemployment

As is known, in the neoclassical theory, employment depends on two factors: the marginal burden of labor (a factor that determines the supply of labor) and the marginal productivity of labor (a factor that determines the demand for labor). At the same time, the size of the demand for labor is determined by the marginal product produced by the last worker, the price of which is the fair price of this factor of production. From this followed the logical conclusion that the lower the real wages to which the workers agreed, the higher the level of employment in the national economy, and vice versa. Consequently, the level of employment in the hands of the workers themselves and their willingness to work for lower wages increases the growth of employment.

Keynes opposed this postulate, stating that the magnitude and change of employment do not depend on the behavior of workers. In other words, the willingness of workers to work for low wages is not a cure for unemployment. The level of employment (according to Keynes) is determined by the dynamics of effective demand - expected spending on consumption and expected capital investments. It is this, and not the supply of resources and the change in their relative prices, that determines the level of employment and national income.

According to Keynes, the fall in wages does not affect the capitalist economy directly, but through independent variables: the "marginal propensity to consume" and the "marginal efficiency of capital." It is in this statement that lies the reason why Keynes was opposed to wage cuts. In his opinion, the reduction in wages will lead not to an increase in employment, but to a redistribution of income in favor of entrepreneurs and rentiers.

And the decrease in consumer demand on the part of workers will not be compensated by an increase in demand from other groups of the population, since an increase in their income will be accompanied by a decrease in the marginal propensity to consume. It is no coincidence, therefore, that a more even distribution of income appears in Keynes as a factor in increasing the size of effective demand.

With regard to the impact of lowering wages on the growth of investment, then on this issue, Keynes does not agree with the representatives of the classical and neoclassical trends in political economy. Let me remind you that the latter believed that a decrease in wages would increase the marginal efficiency of capital, and thus a decrease in wages would be accompanied by an increase in investment. However, this statement may be valid if we consider the behavior of an individual firm. On the scale of the national economy, however, a decrease in wages will reduce the size of consumer demand, which will lead to a reduction in production and investment (since it is impossible to sell even the existing products), causing a further decrease in aggregate demand due to a decrease in wages and an increase in unemployment.

It is interesting to note that it is precisely by pushing some part of the economically active population into the ranks of the unemployed that equilibrium is restored in the system. Thus, in Keynes's theory, it is possible to achieve general equilibrium with underemployment! Neoclassical theory did not allow for such a possibility, believing that wage cuts would continue until the market absorbed the excess labor force. It is no coincidence that in neoclassical theory there were only two types of unemployment: voluntary and frictional. The first is formed in those cases when workers either do not want to work for a wage equal to the marginal product of labor, or estimate the burden of labor higher than the expected wage. The second (frictional) has as a reason the poor awareness of the workers about the supply of jobs, their unwillingness to change their qualifications, place of residence, etc. In both cases, the workers remain unemployed voluntarily, and unemployment arises due to the imperfection of the process of adapting people to changing market conditions. In other words, in the neoclassical model, the market system did not contain the possibility of long-term unemployment. Keynes refuted this thesis by proving that the possibility of long-term unemployment exists in the system itself. He, in addition to voluntary and frictional unemployment, also highlights the so-called involuntary unemployment. Keynes made a statement that even with a decrease in real wages, the employed do not quit their jobs, and the unemployed do not reduce the supply of labor. Thus, real wages depend on the demand for labor, but since it is limited, there are involuntary unemployed. In the thesis of involuntary unemployment, Keynes once again linked the volume of employment with the volume of aggregate demand.

As you can see, the classical and neoclassical theories allowed for a situation of temporary imbalance, when the supply of labor and goods is higher than the demand for them, but in their models, the solution to the problem of restoring the balance of supply and demand was to reduce prices and wages. In theoretical models, this happens instantly, but in a real economy, this takes many months, during which an increase in the unemployed and a decrease in the income of workers does not lead to any other result than a further decline in production. This gave Keynes reason to assert that monetary (nominal) wages are not involved either in the regulation of the labor market or in the process of achieving macroeconomic equilibrium. Keynes also noted that under the influence of trade unions and other social factors, money wages may not fall at all. The neoclassical model of restoring macroeconomic equilibrium in a monopolistic economy is especially far from reality, when the reduction in aggregate demand for products is not accompanied by a decrease in prices for them.

So, in Keynes's theory, a decrease in wages is a factor in reducing aggregate demand, including such a component as investment demand. Considering that in his model of economic development it is the size of effective demand that determines the level and growth rate of the gross national product, it is quite clear why Keynes advocated rigid wages and an economic policy aimed at achieving high employment in the national economy.

3. Price and inflation in the theory of J. Keynes

Since, according to Keynes's theory, the basis of economic growth is effective demand, the main element of economic policy is its stimulation. The main means is an active fiscal policy of the state, aimed at stimulating investment and maintaining a high level of consumer demand through government spending. The inevitable consequence of such a policy is a budget deficit and an increase in the money supply in the country's economy. In the classical direction, the consequence of the growth of the money supply is a proportional rise in product prices, that is, an adequate inflationary rise in prices. Keynes' main assertion on this issue boiled down to the fact that an increase in the money supply in circulation would lead to an inflationary rise in prices in the same proportion only under conditions of full employment. In conditions of part-time employment, the growth of the money supply will lead to an increase in the degree of use of resources. In other words, any increase in the money supply will be distributed between the increase in prices, the increase in money wages, and the increase in production and employment. And the farther away from the state of full employment the economy is, the more the increase in the money supply will affect the growth of production and employment, and not the growth of prices.

Budget deficits, money supply growth and inflation, according to Keynes, are quite an acceptable price for maintaining a high level of employment and a stable increase in the level of national income. However, absolute or true (in his terminology) inflation occurs only when there is an increase in effective demand at full employment. It should be noted that Keynes's work laid the foundations for cost-push inflation, that is, the rise in prices associated with an increase in money wages.

4. Economic program of J. Keynes

In Keynes' concept, economic factors are divided into independent and dependent. Among the independent factors, which he calls independent variables, he refers to: the propensity to consume, the marginal efficiency of capital and the rate of interest. They determine the size of effective demand. Dependent factors or dependent variables include: the volume of employment and national income. Keynes sees the task of state intervention in the influence on independent variables, and through their mediation - on employment and national income. In other words, the task of the state is to increase effective demand and reduce the severity of sales problems. As you remember, Keynes considered investments to be the decisive component of effective demand, giving them priority attention. His work recommends two main methods for increasing investment: fiscal and monetary policy.

The first involves active financing, lending to private entrepreneurs from the state budget. Keynes called this policy the "socialization of investment." In order to increase the amount of resources needed to increase private investment, the budget policy also provided for the organization of public procurement of goods and services. Also, to revive the economic situation, Keynes recommended an increase in government investment, which would play the role of an "ignition key" that triggers the multiplier mechanism. Since private investment in a depression is sharply reduced due to pessimistic views about the prospects for profit, the decision to stimulate investment should be taken by the state. At the same time, the main success criterion for the state budgetary stabilization policy, according to Keynes, is an increase in effective demand, even if the spending of money by the state will apparently be useless. Moreover, government spending on unproductive purposes is preferable, since it is not accompanied by an increase in the supply of goods, but nevertheless provides a multiplier effect.

Such a channel for pumping up effective demand as consumption is of a subordinate nature in Keynes’ practical recommendations. Keynes considered the main factor influencing the growth of the propensity to consume the organization of public works, as well as the consumption of civil servants, which practically coincides with the recommendations in the field of economic policy of T. Malthus. Repeatedly in his work, Keynes expressed the idea of ​​the advisability of reducing wealth inequality and redistributing part of income in favor of groups with the greatest propensity to consume. These groups include wage earners, especially those with low incomes. These recommendations should not come as a surprise, since according to Keynes’s “basic psychological law”, when income is low, the propensity to consume is higher, and therefore the effectiveness of government support for the population will be felt more strongly.

As far as monetary policy is concerned, it, according to Keynes, should consist in an all-round lowering of the interest rate. This will lower the lower limit on the efficiency of future investments and make them more attractive. Thus, the state must provide such an amount of money in circulation that would allow to lower the interest rate (the so-called cheap money policy.) Once again, I draw your attention to the fact that Keynes actually affirms the admissibility of inflation, believing that inflation is a lesser evil than unemployment. It can even be beneficial, as it lowers the preference for liquidity. However, purely monetary policy, Keynes pointed out, is insufficient in a deep recession, since it does not provide a proper restoration of confidence in the business environment. In addition, the effectiveness of monetary policy is limited by the fact that, beyond a certain threshold, the economy can find itself in the so-called "liquidity trap", in which pumping up the money supply practically does not reduce the rate of interest.

Keynes considered it necessary to reconsider the attitude to foreign economic policy. Let me remind you that for the classical school, the only possible course in foreign trade was free trade (free trade). Without denying its positive aspects, Keynes argued that if a country restricts the import of cheaper foreign goods in order to provide employment for "its" workers, even if the national industry is not efficient enough, then the country's actions should be recognized as economically feasible. How reminiscent of the arguments of the representatives of mercantilism in defense of the policy of protectionism!

Summing up the consideration of the economic views of John. Keynes, it should be noted that the essence of the "Keynesian revolution" was the rejection of a number of axioms generally accepted in the neoclassical school. These include:

▪ firstly, the thesis about the automatic establishment of supply and demand equilibrium;

▪ secondly, a view of national income as a constant value for a given economic potential of the country;

▪ thirdly, the belief about the neutral nature of money in relation to economic processes.

Keynes expressed his disagreement with all the above theses. Moreover, it was precisely the identification of the causes that determine the level of national income that was the starting point of his economic analysis. As for monetary, monetary factors, Keynes believed that they affect both changes in national income and the level of employment. Pointing out by representatives of the neoclassical that monetary factors, in particular an increase in the money supply with the aim of lowering the interest rate, have a positive effect on the economy only in the short term and ultimately lead only to an inflationary rise in prices, Keynes countered with the statement that "our life is also short-term."

Finishing the consideration of the economic views of John. Keynes, I want to once again draw attention to the fact that, unlike the representatives of the classical and neoclassical schools, who focused on the potential factors of economic growth that lie on the supply side (the quantity and quality of resources, the amount of fixed capital, technology and etc.), Keynes emphasized the factors of economic growth lying on the demand side, while destroying the idea that prevailed before him in economic science about the automatic achievement of equilibrium between aggregate demand and aggregate supply. In doing so, Keynes undermined faith in the internal restorative forces of the market mechanism and substantiated a theory that justified state intervention in economic processes.

A few representatives of the neo-liberal direction acted as successors of the traditions of classical political economy in the defense of the free market in the twentieth century.

LECTURE 13. NEOLIBERALISM

1. Economic ideas of the founder of neoliberalism L. Mises

Both the neoclassical direction in economic theory and neoliberalism are rooted in the economic views of A. Smith. It was his principle of the “invisible hand”, the belief that the realization of a person’s selfish interest in the field of economic activity will lead to public welfare and the requirement for non-interference of the state in the economy arising from this point of view that formed the basis of the concepts of representatives of neoliberalism. The essence of the theoretical provisions of economic liberalism can be reduced to the fact that liberals recognize and emphasize the existence of an obvious connection between individual freedom, private property and the level of economic efficiency of a given society. They insist that no one has the right to violate someone else's freedom, including economic freedom. These ideas are based on the political philosophy of liberalism, the credo of which is the famous principle of “laissez faire”, which can be interpreted as the right of people to do what they want, giving them the right to be themselves in economic activity and religion, culture, everyday life and thoughts. And individualism, which became the basis of European civilization, according to one of the prominent representatives of the neoliberal trend, F. Hayek, is not selfishness and narcissism, it is, first of all, respect for the personality of one’s neighbor, it is the absolute priority of the right of every person to realize himself in this world.

According to representatives of the liberal trend in political economy, it is freedom in the sphere of economic activity that is the main and necessary condition for rapid economic growth, where for a balanced development of society, in principle, the operation of the mechanism of a free market and free competition is sufficient, automatically establishing equality between supply and demand. The role of the state in the economy should be reduced to a minimum, they see the main and, in fact, the only task of state structures in creating and maintaining the conditions necessary for the favorable development of free competition, which means creating equal opportunities for everyone. Government intervention directly in economic processes is unacceptable; and if it happens, then it is done, according to representatives of both liberal and neoliberal directions, exclusively in the interests of the state apparatus.

1. Economic ideas of the founder of neoliberalism - L. Mises

At the origins of the revival of classical liberalism in the twentieth century was the famous economist and philosopher L. Mises (1881-1973), an Austrian by birth, who, however, spent a significant part of his life in the USA, where he taught a course in economic theory at New York University. Initially, the subject of Mises' economic interests were the problems of money circulation, but later his interests shifted to the sphere of analyzing the logic of individual human labor activity and considering the motives that prompt a person to work, in particular psychology, morality, and instincts. The influence of institutionalism is clearly visible in these issues.

Mises pays considerable attention to the analysis of the functioning of various economic systems, consistently considering three options for the economic structure of the modern world: a purely market economy, a "spoiled market" and a non-market economy. When analyzing the functioning of the market system, he studies the problems of evolution, the place and role of such an important institution for the market economy as private property. In his opinion, it is private property that is "a necessary requisite for civilization and material well-being", and its social function is that it contributes to the optimal use of resources and ensures the sovereignty of consumers. From the point of view of Mises, only private property can be the basis of rational economic activity, since the individualistic incentives generated by it ensure the maximum use of resources. Mises comprehensively examines the role and functions of money in a market economy, their historical evolution, the problems of inflation and the gold standard, the problem of savings and investment, interest, explores the problem of the ratio of wages and taxes. However, in this topic, we are primarily interested in Mises as a prominent representative of the neoliberal trend, a defender of the idea of ​​economic freedom.

Analyzing non-market economic systems, by which he primarily means the socialist system, Mises confirms his conclusion about the "logical and practical impossibility of socialism", denying it a rational organization of the economy. In his opinion, the establishment of a socialist system means the elimination of a rational economy. He defends this point of view in one of his most famous works, which is called "Socialism" (1936). Mises criticized, first of all, the central link in the economic system of socialism - planning. As you know, from the representatives of utopian socialism to Marx, one of the main accusations of the capitalist system was that the anarchy of production, in which the producer only learns about the need for his products in the market, leads to a senseless waste of society's resources. And planning, in their opinion, excluding the anarchy of production, will prevent the waste of the productive forces of society. Undoubtedly, the popularity of the "idea of ​​planning" is associated with an understandable desire to solve common problems as rationally as possible, so that it is possible to foresee the consequences of the actions being taken. However, Mises categorically opposed this thesis, because, in his opinion, it is under socialism, where there is no mechanism for competitive bidding for resources and where the buyer does not have to pay the value of the best alternative to their use, resources will be used inefficiently and thoughtlessly. Planned regulation of the economy excludes the possibility of market pricing principles, without which it is impossible to measure the contribution of various factors of production to the value of consumer goods. In turn, this makes efficient use of resources impossible. Under socialism, a system of arbitrary evaluations dominates, which gave Mises reason to call socialism "a system of planned chaos."

Mises also drew attention to the fact that the strengthening of the role of the state will inevitably lead to the strengthening of the role of the bureaucracy. In addition to the traditional negative consequences of bureaucratization (corruption, reduced efficiency of social production), Mises singles out such a phenomenon as the emergence of a certain type of person for whom "following the usual and outdated is the main of all virtues", and the "suffocation" of innovators, who are the only carriers of the economic progress. In this matter, his views are close to those of J. Schumpeter.

Mises repeatedly emphasized in his writings that it is the free market that corresponds to democratic principles. He writes that only in a free market the consumer is the center of the economic system, "voting" with his money income for a particular product, thereby determining the structure of social production, and only in a free market economic entities maximize their well-being with the freedom to choose alternative opportunities. Freedom of choice means respect for the taste preferences of a person and, in a broader sense, indicates respect for the human person. On the other hand, the market system also implies high rates of economic growth, providing a level of well-being that could not even be dreamed of before. In this regard, Mises cannot but be concerned about the reasons for the growing rejection of this socio-economic system among various segments of the population. The reason for this, like Schumpeter, Mises sees in unsatisfied ambition. He notes that in a society based on castes and estates, it was customary to attribute bad luck to circumstances beyond the control of a person (God, fate). In the conditions of a market economy, the position of a person is determined to a large extent not by the traditional status, but by one's own efforts. And according to the logic of things, a person should blame himself first of all for his failures. For most people, this is unacceptable and therefore they look for the reason for their own unsatisfactory position in the vices (true or imaginary) of this economic system. And this seems, according to Mises, to be the breeding ground for various collectivist and socialist doctrines.

We can find the development of Mises's ideas in his student and follower F. Hayek.

2. Economic views of F. Hayek

F. Hayek (1899-1992), Austrian economist and sociologist, one of the most original representatives of economic thought of the twentieth century, whose research interests are unusually wide - economic theory, political science, science methodology, psychology, history of ideas. The breadth of his views was manifested, not least, in a kind of argumentation of long-familiar provisions of economic theory. As a representative of the neo-liberal trend, Hayek naturally acts as a consistent supporter of the market economy, remaining true to the idea of ​​the high value of the principles of economic liberalism until the end of his life. However, he considers the market not as a human invention, and not as a mechanism for the implementation of justice and the optimal distribution of resources (he is generally opposed to goal setting and has always been an implacable opponent of the reorganization of society according to pre-designed ideal models), but as a spontaneous economic order. At the same time, Hayek very clearly distinguishes between the concepts of "market" and "economy". The latter, in his opinion, implies a social structure in which someone allocates resources in accordance with a single scale of goals. This presupposes the implementation of all economic activity according to a single plan, which unambiguously describes how public resources will be "consciously" used to achieve certain goals.

The market, according to Hayek, functions fundamentally differently. It does not guarantee the obligatory satisfaction of first the more important, according to the general opinion, needs, and then the less important ones. No one individually knows the needs and capabilities of everyone, but everyone, entering into a voluntary exchange, informs everyone about his goals and capabilities and at the same time receives information about the readiness of others to contribute to the realization of these goals. According to Hayek, the market simply connects competing goals, but does not guarantee which of these goals will be achieved in the first place. By the way, this is one of the main reasons why people object to the market.

Indeed, in the economic models of both utopian socialism and scientific communism, the existence of a common scale of priorities was assumed, which determined which of the needs were to be satisfied and which were not. But this scale of priorities, and this is its essential and irremovable shortcoming, would reflect the ideas of only the organizer of the system himself.

According to Hayek, spontaneous economic order has significant advantages. First of all, it uses the knowledge of all members of society. And the dissemination of this knowledge, much of which is embodied in prices, is the most important function of the market. According to Hayek, the price mechanism is a unique way of communication, where prices act both as evidence of a certain value of a product from the point of view of other people, and as a reward for effort. Prices act as signals that motivate individuals to make efforts. Mutual adaptation of plans occurs through prices, and therefore the price mechanism is one of the most important aspects of the market order. By observing the movement of a relatively small number of prices, the entrepreneur is able to coordinate his actions with the actions of others. By the way, the A. Marshall equilibrium price is also, to a certain extent, the result of a compromise, a compromise between buyers and sellers. And precisely because the price mechanism is a mechanism for communication between people in economic processes, administrative control over prices is categorically contraindicated. Hayek repeatedly emphasizes that this function of the price system is realized only in conditions of competition, that is, only if the individual entrepreneur must take into account the movement of prices, but cannot control it. And the more complex the economic organism turns out to be, the greater the role played by this division of knowledge between individuals, whose independent actions are coordinated thanks to an impersonal mechanism for transmitting information known as the price system. Hayek draws attention to the fact that people who have the opportunity to freely react to a situation can assess the local situation better than any centralized body, that is, use the so-called local knowledge and are thereby able to ensure the inclusion of this knowledge in the general flow of knowledge circulating in society.

But the mutual adjustment of plans is not the only achievement of the market. Although the market does not guarantee the production of goods in accordance with the scale of social priorities, it guarantees that any product will be made by people who can do it at a lower cost than others.

Hayek pays much attention to the consideration of the mechanism of competition. As is known, within the framework of the Keynesian direction, competition is considered as an imperfect and extremely wasteful mechanism for achieving a balance in the economic system, and within the framework of the neoclassical direction, as a fast and efficient way of optimal distribution of resources. The originality of Hayek's position lies in the fact that he was the first to consider competition as a "discovering procedure", as a way of discovering new products and technologies that would have remained unknown without resorting to it. It is competition that forces the entrepreneur, in search of high profits, to look for new products, to use new markets for raw materials, to look for precisely those Schumpeterian new production combinations that ensure the dynamic development of the economic system. Having the opportunity to express themselves, people find fundamentally new ways to solve emerging problems, thereby a person is able to offer society something new.

Within the framework of Hayek's concept of "individualism of development" is characterized by an emphasis on human creative aspiration, the desire for something new, the desire to find or create needs that no one satisfies or does not fully satisfy. This is how Hayek makes the connection between freedom and progress. In this Hayekian belief lies another argument against central planning. Since the production of an unknown product cannot be included in the plan, the system of directive planning therefore involves the reproduction of the existing structure of social production. Thus, competition is valuable precisely because its results are unpredictable and generally different from those for which one consciously strives. But this is also the reason for the desire to destroy competition, since although in general the consequences of competition are beneficial (see the views of A. Smith - author's note), they inevitably imply disappointment or frustration of someone's expectations.

One of the issues that has been and is still the subject of discussion is the question of whether the market ensures the observance of the principle of social justice. Economists with a socialist orientation argue in favor of planning that it makes it possible to distribute output more evenly and fairly. Hayek does not argue with this, agreeing that if we really want to distribute goods in accordance with some pre-established standards of well-being, then there is no other way out than planning the entire economic life. But the price for such achievements will be the destruction of freedom of choice - the choice will be made for us by others. And Hayek raises a very serious question: will not the price we pay for the implementation of someone's ideals of justice be such oppression and humiliation that the "free play of economic forces" could never give rise to.

According to Hayek, it is wrong to associate the principles of the implementation of social justice with the market order, which is ethically neutral. According to his views, justice should be evaluated in terms of the process of behavior itself, and not in terms of the final result. It is not surprising that justice in Hayek comes down to the universal equality of all before the law, which must be universal and specific. The demand for social justice, which Hayek regards as egalitarian justice, he explains by an indestructible desire to "squeeze" the market mechanism into the schemes of the desired distribution of income. The program of distributive (equalizing) justice and state control over the economy, according to Hayek's deep conviction, are incompatible with the "rule of law", since they are inevitably selective, that is, discriminatory.

According to both Mises and Hayek, the market performs an indispensable cognitive function in the process of social coordination, where it is a transmission device that makes it possible to effectively use information scattered among countless economic actors. It is natural, therefore, that the market is not only necessary, but it must also be uncontrollable and cannot be an instrument of state manipulation in order to achieve certain results. But the market system, in the opinion of these representatives of the neoliberal direction, does not doom the state to inaction, and a wide field of activity opens before it. First of all, this is the creation and improvement of legal norms - the "rules of the game" necessary for the effective functioning of the market system. In other words, creating conditions for the development of competition. But in addition to the conditions for the development of competition, in some cases the state is entrusted with the function of replacing it with other forms of regulation where necessary, in particular, in the provision of goods for collective use.

But Hayek was concerned not only with general questions of the philosophy of a market economy. He was awarded the Nobel Prize in Economics in 1974, among other things, for his work in the field of money, market fluctuations and analysis of the interdependence of economic and structural phenomena. On these issues, Hayek acts as an opponent of Keynes, believing that the policy of cheap money and creating jobs through the budget only aggravates economic problems. He writes quite sharply, with Keynes in mind, that “...we again succumbed to the admonition of the golden-mouthed seducer and were captivated by another inflationary soap bubble.” Hayek acknowledges that Keynesian governments did succeed in maintaining full employment through credit expansion and stimulating aggregate demand based on the Keynesian formula in which unemployment is a direct function of aggregate demand. But the price of these achievements was open inflation. In addition to the generally accepted conclusions regarding the negative consequences of inflation, Hayek draws attention to the fact that inflation generates much greater unemployment than that which was originally intended to be prevented. And he expresses disagreement with the thesis according to which inflation entails a simple redistribution of the social product, while unemployment reduces the latter, thus revealing the worst evil. According to Hayek, inflation itself becomes the cause of increasing unemployment, since it leads to disorientation of labor resources. There is nothing easier, he writes, than to temporarily provide additional jobs by occupying workers with activities that temporarily become attractive - attractive due to the additional expenses allocated for this. But the corresponding jobs will disappear as soon as inflation is stopped. As for artificially spurred economic growth, in many ways it means a waste of resources.

This topic examined the views of representatives of one of the directions of neoliberalism, continuers of the traditions of the Austrian economic school. However, the neoliberal direction was also developed in the works of economists in the USA, Great Britain and Germany. The most famous of them is W. Eucken (1891-1950), who played a significant role in the formation of the neoliberal direction in German economic thought. Eucken's economic ideal is a socially oriented free market economy, whose main principles are freedom of the individual, trade, entrepreneurship, free pricing, free competition. In other words, a developed commodity-money economy in the absence of monopolies. The role of the state comes down to monitoring compliance with ensuring that all members of society conduct their economic activities in accordance with existing rules and laws. The economic ideas of neoliberalism were recognized and further developed by representatives of monetarism and supporters of the theory of rational expectations.

LECTURE 14. MONETARISM AND THE THEORY OF RATIONAL EXPECTATIONS

1. The evolution of the quantity theory of money. Basic postulates of monetarism

From the 30s to the 70s economic theory and economic policy were dominated by the economic views of Keynesianism. However, in the seventies there was a turn to neoclassical theory, associated with a certain discrediting of Keynesianism due to the development of such processes as "stagflation", that is, the simultaneous increase in unemployment and the price level, which could not be explained within the framework of Keynes's economic theory. The modern version of the neoclassical theory is presented in the form of the theory of monetarism. The theory was called "monetarism" because its main ideas were based on the quantitative theory of money. It must be said that the quantity theory of money is one of the oldest economic doctrines, the origin of which dates back to the sixteenth century, at the time of the formation of the first economic school - the mercantilist school. The quantitative theory of money acted as a kind of reaction to the basic postulates of mercantilism, in particular, to the doctrine so characteristic of mercantilists that money speeds up trade, increasing the speed of circulation, and thereby have a beneficial effect on production.

The thesis about the positive impact of an increase in precious metals in the country was questioned by the English philosophers Locke (1632-1704) and D. Hume (1771-1776), who directly linked the amount of precious metals (means of payment) and the price level, concluding that commodity prices are a mirror reflection of the mass of precious metals available in the country. They argued that the price level on average changes in proportion to changes in the quantity of money, and inflation occurs whenever too much money meets too few goods. To be fair, it should be noted that Hume did not deny the positive impact of “creeping” inflation on economic growth.

In particular, he wrote: “... in every kingdom where money begins to flow in greater abundance than before, everything takes on a new appearance: labor and industry revive, the merchant becomes more enterprising, and even the farmer follows his plow with greater alacrity and attention." However, this industrially beneficial influx of precious metals into the country is of a short-term nature, and, ultimately, the prices of all goods will increase in the same proportion as the amount of metallic money available in the country. And the “price revolution” in Europe that occurred in the sixteenth century, as a result of which, due to the huge influx of gold and silver from America, prices quadrupled, was perceived as irrefutable evidence of a causal relationship between changes in the money supply and the price level.

Hume's ideas were adopted by representatives of the classical trend in political economy, in particular A. Smith, who considered money exclusively as a means of circulation, a technical tool that facilitates exchange and denied it any intrinsic value.

The most rigorous version of the quantity theory of money was put forward by the American economist I. Fisher (1867-1947), who, in his work “The Purchasing Power of Money” (1911), derived his famous equation, which is based on a double expression of the amount of commodity transactions:

▪ as the product of the mass of means of payment and the speed of their circulation;

▪ as the product of the price level and the number of goods sold. I. Fisher's equation has the following form:

MV=PQ,

where М - volume of means of payment;

V - the speed of their circulation;

Р - weighted average price level;

Q is the sum of all goods.

The equation of exchange consists of two parts. The right side (PQ) - "commodity" - shows the volume of goods sold on the market, the price assessment of which sets the demand for money. The left side (MV) - "money" - shows the amount of money paid for the purchase of goods in various transactions, which reflects the supply of money. Consequently, the Fisher equation characterizes the equilibrium of not only the commodity market, but also the money market. Since money is an intermediary in acts of purchase and sale, the amount of money paid will always be identical to the sum of the prices of goods and services sold, that is, this equation is an identity where the price level is directly proportional to the amount of money and the speed of their circulation and inversely proportional to the volume of trade. In an effort to prove the neutrality of factors such as V and Q, Fisher accepts the premise of the neoclassical theory that production is at the point of maximum possible volume, and the velocity of money is a constant value. These assumptions allowed Fisher to argue that in the long run, the development of the economy is determined by real factors (supply factors), and money only affects the price level.

Fisher's version of the quantity theory of money is the most common in American literature. Among European economists, the most popular version of the quantity theory of money is the Cambridge version, or the theory of cash balances, the foundations of which were developed by A. Marshall and A. Pigou. And if Fisher placed the main emphasis on the movement of money as a means of servicing commodity transactions, then the Cambridge school sought to identify patterns in the use of money as income. Her argument is based on the idea of ​​cash balances, which refers to the part of income that a person wishes to keep in cash, that is, in absolutely liquid form.

The Cambridge equation looks like this:

M = k R P,

where М - the volume of the money supply,

R - the total value of manufactured products in physical terms,

Р - the general level of prices for goods and services,

к - Marshall coefficient showing what share of nominal income business entities prefer to keep in the form of cash (cash balances)

The left side of the formula expresses the money supply, given from the outside by the existing monetary system. The right one reflects the demand for money, which is determined by the total nominal income of the members of the society, taking into account what part of this income is stored in the form of cash balances and temporarily withdrawn from circulation. Unlike the Fisher equation, the Cambridge version focuses not on the movement of the money supply, but on the savings in the cash registers of enterprises and individuals. The factors on which the demand for cash balances depends are investigated and two motives for accumulation are singled out: the formation of a fund of circulation funds and the formation of reserves to cover unforeseen needs. Particular attention in the analysis of the movement of the money supply is paid to the principles of income distribution, where the criterion is: on the one hand, the convenience of accumulated cash balances, and on the other hand, the assessment of the victims of lost profits. This "choice at the limit" was further developed in Keynes's theory. However, the conclusions that follow from the Cambridge equation do not contradict the main conclusion from the quantity theory of money: if K and R are constant, a change in the money supply will affect only price changes.

It should be emphasized that the theory of monetarism, like all variants of the quantity theory of money, will be based on the following premises:

▪ the amount of money in circulation is determined autonomously;

▪ the velocity of money circulation is strictly fixed;

▪ a change in the quantity of money has an equal and mechanical effect on the prices of all goods;

▪ the possibility of influence of the monetary sphere on the real process of reproduction is excluded.

The quantity theory of money formed the basis of the policies pursued by the central banks of Western Europe in the twenties of the twentieth century. This policy did not bring the desired results, which to a certain extent explains the turn from the neoclassical theory of money to the Keynesian theory, in which money influences primarily not prices, but employment and production volume. However, in the seventies there was again a return to neoclassical theories, one of the variants of which was “monetarism,” most directly associated with the name of the American economist M. Friedman.

2. Economic views of M. Friedman. Friedman's equation

M. Friedman (born 1912), American economist, world-famous for his book "Research in the Quantity Theory of Money" (1956)

M. Friedman is an adherent of the classical school, sharing one of its main theses - the thesis of non-intervention of the state in the economy. Moreover, unlike representatives of the neoliberal trend, who defend the market from ideological and moral positions, Friedman defends it from a utilitarian position. The argument is as follows: the market acts as a guarantor of freedom of choice, namely, freedom of choice is a condition for the efficiency and viability of the system. It is viable primarily because the free exchange on which it is based takes place only when it is beneficial to both parties. In other words, every trade either makes a profit or does not take place at all; therefore, the total benefit in the course of the exchange increases. The mechanism that ensures the realization of economic freedom and the interconnection of the actions of free individuals is the mechanism of prices.

Friedman draws attention to the fact that prices simultaneously perform three functions: informational, stimulating and distributive. The information function is related to the fact that prices, indicating changes in supply and demand, carry information about the needs for certain goods, about the shortage or excess of resources, etc. This function is extremely important for coordinating economic activity. The second function is to encourage people to use available resources in order to get the most highly valued results in the market. The third function shows what and how much this or that economic entity receives (since prices are also someone's income). All these price functions are closely interrelated, and attempts to suppress one of them negatively affect the others. Therefore, the desire of socialist governments to separate the last function from the rest and force prices to contribute to the realization of social goals, Friedman considered absurd, since, in his opinion, prices provide incentives only because they participate in the distribution of income.

If prices do not fulfill the third function, the distribution of income, then there is no reason for a person to worry about the information that the price carries, and there is no point in reacting to this information.

The efficiency of the economic system and its flexibility depends on the possibility of freedom of individual choice, so Friedman is a supporter of the free market. At the same time, he acknowledges that the "market model" should not reign supreme in society. If an individual entrepreneur is characterized by the orientation of his own efforts to increase profits, then for society as a whole it may not be indifferent to the extent to which all its members have access to a number of benefits that in this society - from the point of view of the cultural, moral , religious and other foundations - are considered absolutely necessary for human life. Such benefits (from the middle of the twentieth century) include primarily education and medical care, as well as a mechanism for the material security of citizens, regardless of the results of their specific activities. Therefore, Friedman, allowing state intervention to provide all citizens with access to these benefits, emphasizes the need to find a compromise between the elements of dictate, inevitable in any intervention, and individual freedom. Friedman accepts government intervention only in forms that least restrict human freedom, including the freedom to spend money. Hence Friedman's recommendations to provide benefits to the poor in cash, not in kind, and the introduction, instead of direct payments to low-income people (whose income does not reach the established minimum level), a system of taxes on personal income, which does not reduce the activity of people to improve their financial situation, since called the system of negative taxes. However, in general, Friedman opposes the excessive expansion of the provision of social benefits, believing that this gives rise to the so-called "institutional unemployment" and "new poverty".

However, it was not his worldview that brought Friedman world fame, but the development of a modern version of the quantity theory of money.

In spirit, it is close to the neoclassical, as it implies the flexibility of prices and wages, the volume of production tending to a maximum, and the exogenous (that is, external to the system) nature of the money supply. Friedman's task was to find a stable demand function for money at a constant rate of their circulation.

The demand function for money is close to the Cambridge version and has the following form:

M=f(Y............x),

where Y - nominal income;

х - other factors.

The money demand function proposed by Friedman is the key point of his monetary theory: knowing the parameters of this function, one can determine the degree of influence of a change in the money supply on the dynamics of prices or interest. This, however, is only possible if the function is stable. Friedman insists on this, believing that, other things being equal, the demand for money (the money supply desired by the population) is a stable share of the nominal gross national product, in contrast to the Keynesian model, where the demand for money is unstable due to the existence of speculative moments ( so-called liquidity preference motives). Another fundamental difference between Friedman's views and Keynes's is his belief that the level of the interest rate does not depend on the size of the money supply (at least in the long run). The conditions for the long-term equilibrium of the money market, where there is no place for the rate of interest, are expressed by a well-known equation, which is called the Friedman equation. The equation has the following form:

M=Y+P,

where М is the long-term average annual growth rate of the money supply,

Y - long-term average annual rate of change of real (in constant prices) total income,

Р - the price level at which the money market is in a state of short-term equilibrium.

In other words, with this equation, Friedman wanted to show that in the long run, the growth of the money supply will not affect real volumes of production, and will be expressed only in an inflationary rise in prices, which is quite consistent with the quantity theory of money, and more broadly corresponds to the ideas of the neoclassical direction of economic theory. .

Friedman considers the stability of the movement of the money supply as one of the most important conditions for the stability of the economy as a whole. He proposes to abandon attempts to use monetary levers to influence real variables (the level of unemployment and production) and defines control over nominal variables, primarily prices, as the goals of this policy. Friedman sees the achievement of this goal in following the “monetary rule,” which assumes stable and moderate growth of the money supply within the range of 3-5% per year. These recommendations are directly related to the development of the so-called “lag problem”. Already I. Fischer admitted that the consequences of the state’s monetary policy manifest themselves with a delay. Friedman showed that this delay ranged from twelve to sixteen months and this was a very alarming conclusion, because economists are believed to be able to reliably predict the state of the market no more than a year in advance. In this case, economists' recommendations regarding today's policies will be of dubious value. Therefore, Friedman proposed abandoning a flexible monetary policy, making it a rule to constantly increase the money supply in small and fairly equal (over the years) portions. When establishing the size of such increments, Friedman proposed focusing on two indicators obtained based on the processing of statistical data. This is the average annual increase in the volume of the gross national product (in physical terms) over many years and the average annual rate of change in the velocity of circulation of the money supply. Having made the necessary calculations, Friedman received his recommended growth rate of the money supply of 3-5%. It is easy to imagine that Friedman advocated limiting the excessive discretion of central monetary authorities, believing that any drastic action by the central bank could cause unpredictable consequences.

Another modern version of the classical theory is the theory of rational expectations.

3. Rational expectations theory

In spirit, the theory of rational expectations is a variant of neoclassical theories, as it fully shares its premises, in particular:

▪ rational behavior of economic entities;

▪ completeness of information when forming expectations;

▪ perfect competitiveness of all markets;

▪ instantaneous reflection of new information on supply and demand curves.

These premises of neoclassical theory are well known. What is unexpected is the conclusions drawn from these premises by the representatives of the theory of rational expectations. In their opinion (when accepting the above assumptions), the general reaction of the population to their expectations makes any discrete stabilization policy fruitless. This is well illustrated by the situation, which is interpreted so differently by representatives of the Keynesian trend and monetarism; on the situation of the state policy of cheap money. This policy, within the framework of the theory of rational expectations, will not have any result, since the population is waiting for inflation, enterprises are raising prices, creditors - interest, workers - wages, and as a result, we do not see any real increase in output and employment. Hence the conclusion that a discrete policy only increases instability in society.

For all its logic, the weaknesses of this theory attract attention, some separation from reality, because in reality people are poorly informed, prices are not flexible enough, and there is enough evidence in favor of the impact of economic policy on real gross national product.

LECTURE 15. RUSSIAN ECONOMIC THOUGHT

Until now, the history of economic thought has been considered within the limited limits of Western European economic thought. And this is not accidental, since it was the latter that had a decisive influence on the formation of modern ideas about the laws and mechanism of the functioning of the market economy system. Nevertheless, the history of the development of Russian economic thought, which is distinguished by a certain originality, is of considerable interest. Within the framework of this course, it is impossible to analyze the views of all prominent representatives of Russian economic thought, so the emphasis will be on the specifics of the latter, on what distinguishes it from Western European economic thought and on the contribution that Russian scientists made to world economic science. The specific features of the "pivotal" Russian economic thought (in relation to the main current of economic thought in the West) are as follows.

First, the spirit of social and economic reformism is inherent in most of the works of Russian economists. This is explained both by the internal conditions of the country's development and by the strong influence of Marxism on all currents of Russian economic thought since the second half of the nineteenth century.

Secondly, for the majority of Russian economists, the peasant question and the whole range of related socio-economic problems is of particular importance.

Thirdly, Russian economic thought has always attached great importance to public consciousness, ethics, the active role of politics, in other words, to non-economic factors.

We can name a number of Russian traditions and features that will help you better understand the specifics of Russian economic thought. It is well known that in Russia, in contrast to Central and Western Europe, Roman property rights, based on a well-organized base of legal codes, did not receive legal recognition.

It was there that the centuries-old culture of private property developed such a quality of the economic personality as economic individualism and economic rationalism. In Russia, for many centuries, the economy was based not on private property, but on a peculiar combination of communal use of land and the power of the state, acting as the supreme owner. This had a significant impact on the attitude towards the institution of private property, leaving a corresponding moral and ethical imprint on it. The Russian person is characterized by the conviction that "a person is above the principle of property." It is no coincidence that in the Russian mentality the idea of ​​"natural law", which is the basis of Western European civilization, was replaced by the ideals of virtue, justice and truth. This defines Russian social morality and economic behavior. And therefore the phenomenon of "repentant nobility" is a purely Russian feature.

Another Russian tradition is a penchant for utopian thinking, the desire to think not in realities, but in images of a desired future. This is also connected with the tradition of relying on "maybe", dislike for accurate calculations, strict business organization.

A characteristic feature of the Russian mentality is also the desire for catholicity (the voluntary association of people for common actions, regardless of property and estate inequality) and solidarity, which are realized in collective forms of labor and ownership of property.

As for Russian economic traditions, despite their diversity, over the centuries they have evolved around two axial lines: the traditions of statehood and the traditions of community. Centralized regulation and social guarantees are the most important forms of their manifestations. As for the traditions of small and medium-sized businesses, in pre-revolutionary Russia, as a nationwide tradition, they were just emerging. On the other hand, large-scale entrepreneurship has existed since ancient times and gravitated from the very beginning to the treasury - the princely, and then the state. Moreover, since the reign of Peter the Great, large-scale entrepreneurship has taken a clear orientation towards the military-industrial complex, and this orientation has turned into a strong national tradition over the course of three centuries.

These Russian features were reflected in the views of the first Russian economist I. T. Pososhkov (1652-1726), whose views represent a unique combination of ideas from both classical political economy and mercantilism.

As you remember, the mercantilists defended the national market, supported domestic trade and active state intervention in economic life, believing that “the policy of the ruler is the main force.” But the views of representatives of this school are heterogeneous. Spanish mercantilists advocated banning the export of gold from Spain and limiting the import of foreign goods. The French focused on the problem of ensuring a positive trade balance. Mercantilism in Russia had its own characteristics due to the fact that foreign trade played a much smaller role in the development of the economy of our country than in Western Europe. And Pososhkov was primarily interested not in issues of ensuring an active trade balance, but in issues of developing the national economy. The title of his main work, “An Inquiry into Poverty and Wealth” (1724), is very reminiscent of the title of A. Smith’s work, “An Inquiry into the Nature and Causes of the Wealth of Nations.” And this similarity is not only external. Both works examine the main problems of political economy: the essence and forms of a nation’s wealth, the mechanisms of its growth. Like A. Smith, I. T. Pososhkov saw the source of national wealth in labor, and for him both agricultural and industrial labor are equally important. He was alien to the disdain for agriculture characteristic of the mercantilists of the West. Pososhkov saw the social significance of labor in providing a “profit,” which for him actually represents the difference between price and production costs.

At the same time, Pososhkov’s mercantilism is clearly evident when characterizing trade. He believed that “every kingdom is rich in merchants” and defended its monopoly. Completely in line with mercantilist ideas, Pososhkov proposed regulating foreign trade: raising export prices, limiting the operations of foreigners to only a number of ports, prohibiting the import of luxury goods, etc. However, he was alien to the one-sidedness of the concept of “trade balance.” Unlike Western European mercantilists, Pososhkov did not identify wealth with money. Moreover, in general he condemned monetary wealth as a symbol of greed and contrary to the moral foundations of society, and this is another feature of Russian mercantilism. Like A. Smith, Pososhkov saw the wealth of nations not in money, but in material wealth acquired exclusively by labor and therefore considered it more useful to increase material wealth than money. In interpreting money, Pososhkov developed a nominalistic concept (which is again in the tradition of classical political economy), believing that its course is determined only by the royal stamp. He views money as a value created by law, a means for creating a certain legal order. True, this applies only to internal circulation, but in the sphere of foreign trade, money must certainly be full-fledged.

Considering trade and production as a single economic complex and seeing in them the source of the nation's wealth, Pososhkov advocated the all-round development of domestic trade, industry, agriculture, strengthening the economic power of Russia and its independence. Like all representatives of mercantilism, he is a supporter of strong state power. At the same time, recognizing the self-sufficient role of the state in the economy, in his essay Pososhkov says that the state cannot be considered rich if money is collected in the treasury by any means and draws a clear distinction between the wealth of the treasury and the wealth of the people. In order to increase the latter, in his opinion, good government of the country, good laws, and a proper court are necessary. He wrote about "truth" as a necessary prerequisite for the possibility of eliminating poverty and increasing wealth in the country.

In search of truth and justice, I. T. Pososhkov shows significant radicalism, condemning the poll tax (as not taking into account the difference in the economic situation of payers), the growth of quitrents and corvee, proposing to fix the duties of peasants when allocating them with land. To this are added proposals for the delimitation of peasant and landowner lands, the reduction of taxes, the establishment of equal courts for all classes, etc. Perhaps it was for these proposals that Pososhkov was arrested and imprisoned in the Peter and Paul Fortress, where he died.

A.V. Radishchev (1749-1802), a Russian humanist and thinker who created a certain system of economic views, also suffered for his views. Of course, his central idea was the need to destroy the feudal system in Russia through a peasant revolution. Radishchev believed that in a society that would be based on the dominance of ownership of small producers in the means of production and personal labor, there would be no economic and class contradictions, property equality would be established and economic and political equality of citizens would become possible. It is worth noting that the call for violence and revolution is again characteristic of many Russian radical thinkers, while Western European thinkers were characterized by an appeal to reason, justice and a call for clarification through enlightenment of the laws of “natural law” and the implementation of their norms reform method.

As for the theoretical works of A.V. Radishchev on economic issues, he considered productive labor in the country’s economy to be the source of wealth and argued that the state that “abundates in its products” grows richer. And in this he is close in views to representatives of classical political economy. At the same time, understanding the importance for Russia of the development of industrial production, he considered it necessary to pursue a policy of protectionism as a policy that protects young Russian industry from foreign competition. Radishchev believed that protectionism would provide an opportunity to develop our own industry to increase domestic consumption. The same point of view was characteristic of most economists of the late eighteenth - first half of the nineteenth centuries, united by the Free Economic Society, created in 1765. They considered labor to be the source of wealth, the increase in its productivity as a result of its division. At the same time, in their opinion, the state is obliged to provide assistance in the development of industry, agriculture, and transport. It is it that must issue loans to industry and agriculture and distribute forms of increasing labor productivity.

Radishchev's radical ideas were developed in the Decembrist program written by P. I. Pestel (1793-1826), a highly educated man who knew well the works of representatives of classical political economy. In him we find the concept of natural law, which should guide both political laws and political economy. One of the central issues is agricultural. Pestel considered agriculture as the main branch of the economy, and mainly considered labor in agricultural production to be the source of national wealth. If one of the tasks of the new social system was the elimination of poverty and misery of the masses, then the closest way to achieve this was seen by him in providing the opportunity for all citizens of the new Russia to work on land that was either publicly owned and provided for the benefit of the peasants, or in their private property. Pestel gave preference to public ownership of land over private ownership, since the use of land from the public fund should be free and everyone will be able to obtain it at their disposal, regardless of their property status. To be fair, it should be noted that Pestel’s agrarian project was not supported by all members of the Decembrist society. In particular, N.I. Turgenev (1789-1871) allowed the liberation of peasants without land, or for ransom. Unlike Pestel, Turgenev saw the future of Russia in the capitalist development of agriculture, led by large capitalist farms of landowners, where peasant farms were assigned a subordinate role as a source of cheap labor for landowners' estates.

The views of the Decembrists found further development in the economic ideas of the Russian democratic movement, which acted as the ideologists of the peasant revolution. In the 40-60s of the nineteenth century in Western Europe, the contradictions of capitalism became quite clearly evident. Therefore, representatives of the revolutionary democratic movement began to associate the prospects for the further development of Russia not with capitalism, but with socialism. A passionate critic of capitalism was A. I. Herzen (1812-1870), who wrote that both feudalism and capitalism “...represent two forms of slavery, but one is open, and the other is cunning, hidden in the name of freedom.” Herzen noted the growth of poverty and exploitation under capitalism, drew attention to the overproduction of goods, the unproductive destruction of enormous wealth, and unemployment. It was Herzen who began to develop the theory of peasant socialism, which was accepted by the majority of Russian democrats. It is based on the fact that in Russia the peasant community is the embryo of socialism, since it prevents the stratification of the village and gives rise to collectivist principles in everyday life. Herzen considered the transfer of land into the hands of the peasants to be the beginning of socialism and concluded from this that Russia could bypass capitalism and develop along a special, non-capitalist path.

However, the full credit for developing the theory of “peasant socialism” belongs to N.G. Chernyshevsky (1828-1889). In his opinion, the main task should be the gradual limitation and displacement of the trend of private capitalist development by the communal, socialist trend. This could be achieved by transferring the bulk of the land to communal use during the socialist revolution and organizing communal production on communal lands. Chernyshevsky considered it necessary to encourage peasants in every possible way, including with the support of state power, to form agricultural partnerships. He associated such communal production with the mandatory use of agricultural machines and tools, the most advanced technology capable of ensuring the profitability of large-scale farming. Without a doubt, this concept was based on the conviction of the existence of a spontaneous socialist spirit inherent in the Russian peasant community, on the conviction that the community has an internal source of socialist evolution.

As for direct works on political economy, they date back to the period 1857-61. and formally represent reviews of Russian and foreign economic works. Chernyshevsky knew well the work of representatives of classical political economy and shared some of its provisions, in particular, the labor theory of value. And from the position that labor is the only source of value of goods, he concluded that “labor must also be the only owner of production values.” This position is reminiscent of the views of S. Sismondi and anticipates the theory of the “worker’s right to the full product of labor.” Similarities with Sismondi's views are also evident in his view of the subject of political economy. Chernyshevsky notes that wealth is created by labor, but belongs to those classes that do not participate with their labor in its creation. Therefore, the subject of political economy should not be wealth, but the growth of the material well-being of the producers of this wealth. And the task of political economy is to find a form of relations that would ensure the material well-being of people.

Analyzing the labor theory of value, in particular in his Notes on Mill's Principles of Political Economy (1861), which is formally a review of Mill's work, Chernyshevsky singles out such concepts as exchange value and intrinsic value. He agrees with Mill that exchange value is the purchasing power of a thing. But at the same time, he emphasizes that only those objects that have an objective basis in the form of an internal value hidden from a direct observer have exchange value. And he writes that “No one will give anything for the most necessary and useful item if it is acquired without any difficulty. The difficulty of acquiring it depends on the amount of labor spent on its production, and therefore the exchange value cannot be divorced from the “intrinsic value”. Thus, it is labor costs that form "intrinsic value" that are the ultimate basis of exchange value or price. And continuing his reasoning, Chernyshevsky writes that in a future (socialist) society, not exchange, but internal value will have a purchasing power determined by the difficulty of obtaining an object " .

Chernyshevsky shares not only the labor theory of value of the classical school, but also a view of capital, which he considers material values ​​that go into production as means of production and means of subsistence for workers. But here, too, he draws his conclusions: since capital is the result of labor, it must belong to the class that created it, i.e., to the working people. Thus, from a theory that considers that everything is produced by labor, Chernyshevsky concludes that everything must belong to labor. As we can see, Chernyshevsky's views prepared fertile ground, but on which the "seeds" of Marxism sprouted.

To a large extent, the successors of the Russian tradition of considering economic phenomena in a broad social context were the “populists,” who paid great attention to such issues as the development of Russian capitalism, the path of transition to socialism and the organization of economic relations under socialism. It must be said that populism, represented by such prominent representatives as P. L. Lavrov (1823-1900), M. A. Bakunin (1814-1876), P. N. Tkachev (1844-1885) was one of the leading trends in Russian social -political thought in the 70s of the nineteenth century, which had a very strong influence on the subsequent development of domestic economic thought. The leitmotif of “populism” was the conviction that capitalism should not have been allowed into Russia, and once it had leaked in, it should have been limited as much as possible. However, in their opinion, capitalism in Russia has no basis for development, since it cannot solve the problem of implementation (they shared the views of S. Sismondi on the cause of crises of overproduction as a result of underconsumption). The people are too poor to buy the masses of goods that large capitalist industry is capable of producing, and for Russia such a way of selling goods as foreign markets, which have long been captured, is closed.

The Narodniks advocated a special path of development for Russia: bypassing capitalism, towards socialism. They saw the prospect in the progressive development of "people's production", filling its traditional forms (rural community) with new content - the transition to developed forms of cooperation, capable of competing with capitalist enterprises in their effectiveness based on the introduction of new technology and achievements in agronomy. The goal is to defend the independence of a significant part of the "working class", organizing it, if possible, into collective forms of "people's production." This, in their opinion, could bring closer the prospects for the future socialist reorganization of the country. At the same time, it is curious to note that the "populists" considered the degree of individual development of the individual, the ability of the latter to rise to the enjoyment of self-development, as the ultimate criterion of social progress. (These ideas are similar to the ideas of the "early" Marx, expressed by him in the economic-philosophical manuscripts of 1844.)

The humanistic principles of early Marxism were at the center of the philosophy of Russian populism. Socialism, according to the populist concept, is a necessary stage of social progress, because it realizes the inherent features of collectivism and solidarity in humanity. Types of popular forms of production were supposed to include not only self-government of specific economic units, but also an egalitarian principle. Moreover, the egalitarian principle was considered by the “populists” as the driving element of the transition to socialism. The views of P. L. Lavrov are of interest. The latter paid much attention to the criticism of capitalist relations, showing the negative role of competition, concentration and centralization of capital, the harmful consequences of capitalist working conditions, turning workers into appendages of machines. Lavrov examined in detail the economic problems of the future society. A significant place in his works is occupied by the justification of the need for public property, an analysis of the nature of labor under socialism, and the question of the economic role of the state.

The leading direction of the late nineteenth century were representatives of the Marxist trend, called “legal Marxism” (P. B. Struve, M. I. Tugan-Baranovsky, S. N. Bulgakov, N. A. Berdyaev). With their works they contributed to the development of Marxism, from the theory of value to the theory of economic conditions. N. A. Berdyaev (1874-1948) and S. N. Bulgakov (1871-1944) laid the foundation for modern concepts of ethical socialism, focusing on the problem of spiritual values: they considered the human personality as the absolute value of existence.

As regards the admissibility of private property, the majority of Russian socialists were in favor of establishing public property as a necessary constitutive principle of socialism. And this is the fundamental difference between Russian socialism and Western European socialism, which did not put forward a program for a radical change in property relations.

Famous Russian economist M.I. Tugan-Baranovsky. (1865-1919) also pays great attention to the problems of economic and socio-political development of Russia. His famous work “Socialism as a Positive Doctrine” (1918) is devoted to this problem. Unlike representatives of populism, Tugan-Baranovsky believes that Russia has already embarked on the path of development of capitalism and the whole question is whether capitalism brings death or “with it the dawn of hope lights up.” In the traditions of Russian socio-economic thought, he criticizes the capitalist economic system, noting that under this system, the vast majority of the population are doomed to constantly serve as a means to increase the well-being of other social classes, incomparably less numerous. Therefore, the transition to a socialist society is inevitable. The goal of socialism, as Tugan-Baranovsky notes, is to arrange life on the principles of freedom, truth and justice. He believed that the basis of socialism as a doctrine of a just society should be the ethical idea formulated by I. Kant - the idea of ​​​​the equivalence of the human personality, of the human personality as an end in itself. Tugan-Baranovsky writes, “...that people are equal in their rights to life and happiness, they are equal in the respect with which we should treat the interests of them all, they are equal in the infinite value that the personality of each of them possesses.” Under socialism, in his opinion, the development of each individual becomes the main social goal.

Tugan-Baranovsky pays great attention to the analysis of the types of socialism, singling out state, communal and syndical socialism, believing that it is state socialism that gives proportionality and regularity to social production and makes it possible for the rapid growth of social wealth. He believes, considering

These questions he showed that the correctly understood theory of marginal utility not only does not refute the labor theory of value of D. Ricardo and K. Marx, but also represents an unexpected confirmation of the doctrine of value of these economists. Like most Russian economists, Tugan-Baranovsky did not limit himself to a one-sided opposition of utility and costs as two main factors of value. Believing that Ricardo's theory emphasizes objective factors of value, and Menger's theory - subjective ones, he tries to prove that Ricardo's theory does not exclude, but only complements the theory of marginal utility. The logic of Tugan-Baranovsky’s reasoning is as follows: “Marginal utility - the utility of the last units of each type of product - varies depending on the size of production. We can lower or increase marginal utility by expanding or reducing production. On the contrary, the labor value of a unit of product is something objectively given, not depending on our will. It follows that when comparing an economic plan, the determining factor should be labor value, and the determined one should be marginal utility. If the labor value of products is different, but the benefit received in the last unit of time is the same, then the conclusion follows that the utility of the last units freely reproduced products of each kind - their marginal utility - must be inversely proportional to the relative quantity of these products per unit of labor time. In other words, it must be directly proportional to the labor value of the same products." And this means, according to Tugan-Baranovsky, both theories are in complete harmony. The theory of marginal utility clarifies the subjective, and the labor theory of value, the objective factors of economic value. It was Tugan-Baranovsky who substantiated the position that the marginal utility of freely reproduced economic goods is proportional to their labor costs. This position is called the Tugan-Baranovsky theorem in economic literature.

In his work “Socialism as a Positive Doctrine,” M. I. Tugan-Baranovsky emphasized that to build an economic plan, a socialist society will draw utility curves for each product and their labor cost curves, and at the point of their intersection the optimal price for all types of products will be found .

Considering state socialism, Tugan-Baranovsky notes that although the latter ensures planned development, proportionality of development and the priority of social needs, it retains elements of coercion and contradicts the idea of ​​the full and free development of the human personality. And therefore, according to Tugan-Baranovsky, although the creation of social wealth has "considerable positive value," it cannot come at the expense of belittling the human personality. It cannot be considered a public good to reduce a working person to a simple cog in a huge state mechanism, to a "simple subordinate instrument of the social whole." Therefore, Tugan-Baranovsky proposes to supplement the system of state socialism with elements of communal and syndical socialism. He believes that such a form of labor organization as cooperation is most consistent with the ideal of free development of a person, since it is based on the mutual consent of members with freedom to enter and leave the cooperative organization. In the trend, according to Tugan-Baranovsky, society must completely turn into a voluntary union of free people - become a free cooperative through and through. It should be noted that the social ideal of Tugan-Baranovsky is not social equality, but social freedom. A society of completely free people is, in his opinion, the ultimate goal of social progress. In approaching the socialist ideal lies the entire historical progress of mankind. This provision clearly has much in common with the idea of ​​Marx, who considers the future society as a union of free people working with common means of production and systematically spending their individual labor forces as one common force.

As for the contribution of Tugan-Baranovsky to modern economic science, it largely boils down to the creation of a modern investment theory of cycles. His work "Industrial Crises in Modern England, Their Causes and Influence on People's Life" had a significant impact on the development of this area of ​​economic science. In this work, arguing with the "populists", Tugan-Baranovsky proves that capitalism in its development creates a market for itself and in this respect has no restrictions on growth and development. Although he notes that the existing organization of the national economy, and above all the dominance of free competition, makes the process of expanding production and accumulating national wealth extremely difficult.

Tugan-Baranovsky criticizes not only the theory of underconsumption as the cause of crises of overproduction, but also theories that explain crises by violations in the sphere of money and credit circulation.

In his theory, Tugan-Baranovsky took as a basis the idea of ​​Marx about the connection between industrial fluctuations and the periodic renewal of fixed capital and laid the foundations for the tendency to turn the theory of overproduction crises into a theory of economic fluctuations. Noting that the years of increased creation of fixed capital are the years of a general revival of industry, Tugan-Baranovsky writes "The expansion of production in each industry increases the demand for goods produced in other industries: the impetus for increased production is transmitted from one industry to another and therefore the expansion of production always acts contagiously and tends to embrace the entire national economy. During the period of the creation of new fixed capital, the demand for all commodities rises decisively." But now the expansion of fixed capital has ended (factories have been built, railways have been built). The demand for means of production has declined and their overproduction is becoming inevitable. Due to the dependence of all branches of industry on each other, partial overproduction becomes general - the prices of all goods fall and stagnation sets in.

With good reason, we can say that Tugan-Baranovsky was the first to formulate the basic law of the investment theory of cycles: the phases of the industrial cycle are determined by the laws of investment. The violation of the rhythm of economic activity, leading to a crisis, follows, according to Tugan-Baranovsky, due to the lack of parallelism in the markets of different areas during the period of economic recovery, the mismatch between savings and investment, due to disproportion in the movement of prices for capital goods and consumer goods. products. Tugan-Baranovsky's main idea is that the general overproduction of goods is based on partial overproduction, the disproportionate distribution of "people's labour". Thus, the first is a peculiar expression of the second.

Tugan-Baranovsky also studied the role of loan capital in the process of cyclical fluctuations in the economy. He noted that an increase in loan interest is a sure sign that the free loan capital in the country is too small for the needs of industry, and drawing from this the conclusion that the immediate cause of crises is not an excess of loan capital that does not find its use, but its lack. As we can see, Tugan-Baranovsky reveals many elements of the modern investment theory of cycles.

The views of such a prominent Russian economist as A.V. Chayanov (1888-1937) are also of interest. The main range of his scientific interests is the study of processes occurring in the Russian economy, the specifics of socio-economic relations in domestic agriculture. The main subject of the scientist’s research was the family-labor peasant economy. Chayanov proved the inapplicability of the conclusions of classical economic theory to peasant farming, which was characterized by non-capitalist motivation. Extensive research allowed Chayanov to conclude that a peasant farm differs from a farm in the very motive of production: the farmer is guided by the criterion of profitability, and the peasant farm is guided by an organizational and production plan, representing the totality of the cash budget, labor balance over time and across various industries and types of activities, turnover of funds and products. He noted that a peasant family is not interested in the profitability of production, but in the growth of gross income and ensuring equal employment for all family members.

Chayanov formulated a position on the exceptional survival of agriculture, which for a long time is able to withstand such a decrease in prices and an increase in costs that completely destroys profits and part of wages, which is disastrous for entrepreneurs using wage labor. And precisely because the peasant economy does not pursue profit, but takes care of maintaining the existence of the farmer himself and his family.

Concretizing the thesis about the consumer nature of peasant farms, Chayanov used the theory of marginal utility. He argued that in the peasant economy there is a certain "natural limit" to the increase in production, which occurs at the moment when the burden of the marginal expenditure of labor will be equal to the subjective assessment of the marginal utility of the amount received. With certain reservations, it can be said that the expenditure of one's own forces goes to the limit at which the peasant economy receives everything necessary for the existence of its family.

Chayanov's theory of peasant economy is also connected with the theory of cooperation. In his opinion, there are no prerequisites for the development of American-type farms in Russia, despite the fact that large-scale agricultural production has a relative advantage over small-scale one. Therefore, the combination of individual peasant farms with large farms of the cooperative type would be optimal for our country. Chayanov believed that cooperation is able to combine various types and forms of activity, formed vertically "from the field to the market." At the same time, the process of growing plants and animals remains behind the family production. All other operations, including the processing of products, their transportation, sale, lending, and scientific services will be carried out by cooperative organizations. The development of cooperatives, which enter into direct contacts, bypassing the capitalist organized enterprises, weakens the latter. Thus, each new form of cooperation (consumer, production, credit - through the organization of savings banks of cooperation) undermines some type of capitalist exploitation, replacing it with a "comradely" method of satisfying needs.

Such a famous Russian economist as N. D. Kondratiev (1892-1938) also paid tribute to agrarian problems, in particular the theory of cooperation. Kondratiev shared the views of the Socialist Revolutionary Party, based on communal labor views, a view of the land as the common property of all workers. Representatives of this party (V.M. Chernov, P.P. Maslov, S.S. Zak and others) insisted on the socialization of land, i.e., its removal from the private property of individuals and its transfer to public ownership and disposal of democratically organized communities on the basis of equal use. Kondratiev also stands for the transfer of all lands to the status of public property, for the labor use of the people. But Kondratiev, like Chayanov, believes that labor farms themselves, due to their natural economy, are not aimed at an economic perspective, at development in the name of the interests of the state. Kondratiev saw overcoming the economic limitations of these forms through cooperation. Cooperation, in his opinion, has two advantages: the lack of emphasis on profit and the ability to ensure significant labor productivity. And it is he who is responsible for the justification of the basic principles of cooperation - voluntariness and consistent change of forms of cooperation from lower to higher based on economic feasibility.

However, it was not the theory of cooperation that brought N.D. Kondratiev worldwide fame, but the theory he developed of large cycles of the environment, known as the “theory of long waves of Kondratiev.” This theory was presented in the article “The World Economy and Its Conditions During and After the War,” written by him in 1922. Kondratiev's interest in the theory of market conditions and the problem of long-term fluctuations was caused by the desire to clarify the trends in the development of the national economy. This problem corresponded to his scientific interests, since it was Kondratiev who created and headed the Market Research Institute until 1928.

Kondratiev processed time series of the most important economic indicators (commodity prices, interest on capital, wages, foreign trade turnover and others) for four countries (England, Germany, USA, France) over a period of approximately 140 years. As a result of data processing, he identified a trend showing the existence of large periodic cycles lasting from 48 to 55 years.These cycles included a boom phase and a recession phase.These phases can be represented as follows.

Attention to the problems of cyclical development of the economy, to which both Tugan-Baranovsky and Kondratiev paid tribute, was not least associated with the theory of cyclical development, the foundations of which were laid by K. Marx. It is no coincidence that Kondratiev is looking for the roots of long cycles in processes similar to those that, according to Marxist theory, give rise to periodic fluctuations in the capitalist economy every 7-11 years (the so-called Juglar cycles). Kondratiev believes that the duration of a long cycle is determined by the average life of production and infrastructure structures (approximately 50 years), which are one of the main elements of capital goods of society. At the same time, the renewal of “basic capital goods” does not occur smoothly, but in spurts, and scientific and technical inventions and innovations play a decisive role in this.

In the dynamics of economic cycles, Kondratyev identified some regularities. Thus, the "upward" phase of a large cycle (the upswing phase) occurs, in his opinion, under the following conditions:

▪ high savings intensity;

▪ relative abundance of supply and cheapness of loan capital;

▪ its accumulation at the disposal of powerful financial and business centers;

▪ low level of commodity prices, which stimulates savings and long-term investment of capital.

If these conditions are met, then sooner or later a moment comes when a significant investment in large facilities that cause radical changes in the conditions of production becomes quite profitable. A period of relatively grandiose new construction begins, when the accumulated technical inventions find their wide application, when new productive forces are created. In other words, the intensive accumulation of capital is not only a prerequisite for the economy to enter a phase of a long recovery, but also a condition for the development of this phase.

The impetus for the transition to the "downward" phase (phase of recession) is the lack of loan capital, leading to an increase in loan interest, and ultimately to curtailment of economic activity and falling prices. At the same time, the depressive state of economic life pushes for the search for new ways to reduce the cost of production, namely, technical inventions. However, these inventions will be used already in the next "upward" wave, when the abundance of free money capital and its cheapness will make radical changes in production profitable again. At the same time, Kondratiev emphasizes that free money capital and low interest rates are a necessary but not sufficient condition for the transition to the "upward" phase of the cycle. It is not the accumulation of money capital in itself that brings the economy out of depression, but its activation of the scientific and technological potential of society.

The theory of “long waves” by N. D. Kondratiev generated an extensive literature on this issue, giving impetus to the development of various concepts of long-term economic fluctuations. Discussions are ongoing regarding the causes of large cycles, but few deny that “long waves” are associated with processes of structural restructuring of the economy.

The economic views of the representative of Russian Marxism V. I. Ulyanov (Lenin) were largely presented in the lecture “Theories of monopoly and monopolistic pricing.” As for the model of socialism, in Lenin’s concept a model of state socialism was developed, in which all citizens turn into employees of the state, becoming workers of one nationwide state “syndicate”. It is no coincidence that the inevitable principle of violence that accompanies this model (this danger was pointed out by both M.I. Tugan-Baranovskaya and M.I. Bakunin) in Russia after the victory of the Bolsheviks is expanding and finally, from a means of suppressing opponents of the revolution, it becomes a means of purely economic problems. The final expression of these views was the economic program of one of the leaders of the Bolshevik Party, L. Trotsky, which he outlined at the Ninth Congress of the All-Union Communist Party (Bolsheviks) in 1920 and was called the concept of militarization of labor. Its main idea is the creation of a system of forced labor, a barracks-like organization of society. Production was organized according to a military model, where the issue of labor discipline was resolved according to wartime laws, and the highest government bodies made decisions on all economic and political issues. And although this model of economic development was rejected in connection with the transition from the policy of “war communism” to the NEP, its main features were reproduced in the 30s, when a command-administrative system for managing the national economy was created.

But no matter how paradoxical it may seem at first glance, the real model of socialism, which has taken place in the Soviet Union for more than seventy years, has its theoretical roots not only in the works of Marx, but has a deeper foundation - two centuries old traditions of Russian socio-economic thought, which, in turn, is associated with a special psychological type of personality inherent in the Russian people. This is a pronounced desire to arrange life on the basis of truth and justice. It is no coincidence that in Russian economic literature so much attention is paid to the problems of the future structure of society (where the supporting structures are precisely the idea of ​​community and statehood) and so few theories dealing with the definition of the principles and mechanisms of the functioning of a given society. It does not contain developed theories of general and partial equilibrium of the economic system, theories devoted to the analysis of the contribution of this factor to the growth of social wealth, factors of the dynamic development of the economy. But at the same time, the strength of Russian economic thought is its ethical orientation, the emphasis on the problems of ensuring the growth of welfare, considered from the standpoint of improving distribution.

Within the framework of these lectures, we will not consider the content of Soviet political economy, which essentially boiled down to the explanation and propaganda of the works of Marx, Engels, Lenin and proof of the advantages of socialism over capitalism. The only exceptions are the works of representatives of the mathematical direction, in particular, L. V. Kantorovich (1912-1986), who in 1975 won the Nobel Prize in Economics for developing the theory of optimal use of resources.

Conclusion

Even a brief acquaintance with the course "History of economic doctrines" allows us to conclude that no economic theories are absolutely correct, and no theoretical conclusions are exhaustive and valid for all time. But at the same time, a grain of truth is contained in any economic theory. Depending on the positions from which the economic theories of representatives of past eras are considered, one can consider early economic teachings either as simply erroneous opinions of long-dead people, or as a repository of a number of insightful, and sometimes brilliant conjectures.

Probably, this is also the difference between economic science and other sciences, that it does not have an inevitable transition from lesser to greater certainty, it does not contain truth, which, once revealed, will be eternal truth. The development of economic science is somewhat reminiscent of the "pendulum principle" when it sometimes seems as if the economy is moving forward, driven by a sense of symmetry, which requires that each new theory is always the opposite of the old one. An example is the rejection of the labor theory of value and the development by representatives of the "Austrian school" in the 70s of the nineteenth century of the theory of marginal utility as a theory of pricing. Or an equally abrupt transition during this period from the analysis of macroeconomic problems, in particular, the study of the causes of the "wealth of nations" and the laws governing the distribution of the created product, to the problems of microeconomics, when the subject of economic science is the study of the behavior of an economic subject in conditions of limited resources.

But after some time, theories appear that bear the essential features of economic theories that were previously rejected.

But if none of the economic theories is absolutely correct, then why study economics, and even more so, study the history of economic doctrines?

The history of economic thought is the history of attempts to understand the operation of an economy based on market transactions. It was the study of the problem of market exchange that gave the initial impetus to economic science (remember the views of Aristotle). If each of these attempts, embodied in economic theory, helps to understand the nature of certain causal relationships in the economy, then knowledge of various economic theories helps to understand the complexity and interdependence of all economic variables and avoid the human tendency to look for simple and clear, but wrong solutions to complex problems. problems.

And it is difficult to argue with M. Blaug, who writes... “It is much better to know the intellectual heritage than to guess that it is stored in a place unknown to us and written in an unfamiliar language.”

Short Biographies of Economists

Petty William

Petty William (1623-1687), English economist. The son of a clothier from Hampshire (England). At the age of 15, he went to Normandy with trading purposes, doing there in between the study of ancient languages ​​​​and mathematics. At one time he served in the Navy.

In 1643-1646. spent in France and Holland, devoting much time to scientific studies. Then he became close to the philosopher Hobbes and even at one time was his secretary. In 1648, we see Petty at Oxford University, where he teaches anatomy and chemistry, and a year later receives a doctorate in physics. In 1851, Petty received the chair of anatomy at the same university and at the same time taught music there.

In 1652, Petty was appointed chief physician to Cromwell's Irish army. Interested in the troubles in the arrangement of land confiscated from the Irish in 1641 and intended for distribution to soldiers, Petty introduces his draft of a new land registry. Having received 9000 pounds for his work, he uses them to buy up soldier's certificates for allotments and becomes a large landowner.

In 1658, Petty was elected to Parliament (Richard Cromwell). After the restoration of the Stuart dynasty, and for the services that Petty rendered to her, he was elevated in 1661 to a knighthood. In the same years, Petty became one of the first members of the then founded Royal Society - the first Academy of Sciences of the New Age. By this time, Petty's interests are shifting to the field of economics and politics. He has ideas about reforming the tax system, organizing a statistical service, and projects to improve trade. Having gained access to the court, Petty publishes pamphlets in which he expresses his thoughts in the hope that they will be heard by the authorities.

Petga's first serious economic essay, A Treatise on Taxes and Duties, was published in 1662. And this is his most important work: in an effort to show the Duke of Ormond (appointed Viceroy of Ireland) ways to increase tax revenues, Petty in this work most fully outlined his economic views.

Petty's views can be found in the following works translated into Russian1:

W. Petty. "Treatise on taxes and fees." In the book. "Anthology of Economic Classics", T. 1. M., 1993.

W. Petty. Selected works. M., 1997.

Smith Adam

Adam Smith (1723-1790), English economist and philosopher, founder of classical political economy. Born in Scotland (Kirkcaldy) in the family of a customs officer. In 1737 he entered the University of Glasgow, where, after the compulsory class of logic (first year) for all students, he transferred to the class of moral philosophy, thereby choosing a liberal arts education. Having successfully graduated from the university in 1740, Smith received a scholarship to further study at Oxford University, where he studied from 1740 to 1746. Political events in England (the uprising of supporters of the Stuarts in 1745-1746) forced Smith to leave for Kirkcaldy in the summer of 1746, where he lived for two years, educating himself.

In the years 1748-1751, Smith reads in Edinburgh a course of public lectures on natural law, which included in the eighteenth century not only jurisprudence, but also political doctrines, sociology, and economics. In 1751 he headed the department of logic, in 1752 - the department of moral philosophy at the University of Glasgow.

In 1759, Smith published in London his first major scientific work, The Theory of Moral Sentiments, which represents a significant stage in the development of Smith's philosophical and economic ideas.

In 1764-1766. A. Smith was abroad, mainly in France, where he was invited to tutor the young Duke of Buccleuch. The payment for his services was such that it allowed Smith to work for the next 10 years only on his main work, which later brought him world fame, “An Inquiry into the Nature and Causes of the Wealth of Nations.” In 1767-1773, Smith lived in his homeland, Scotland, devoting himself entirely to this work. An Inquiry into the Nature and Causes of the Wealth of Nations was published in London in March 1776.

In 1778 (two years after the publication of The Wealth of Nations), Smith received the post of one of the Scottish Customs Commissioners and lived in Edinburgh until the end of his days.

Works of A. Smith, translated into Russian:

A. Smith. "The Theory of Moral Sentiments." M., Republic, 1997.

A. Smith. "An Inquiry into the Nature and Causes of the Wealth of Nations." M., Sotsekgiz, 1962.

A. Smith. "An Inquiry into the Nature and Causes of the Wealth of Nations" (separate chapters). In the book. "Anthology of Economic Classics". T. 1. M., Ekonov, 1993.

Ricardo David

Ricardo David (1772-1823), English economist, a prominent representative of the classical trend in political economy. Born in London in the family of a wealthy merchant who was engaged in wholesale trade in goods, and then switched to trading in bills and securities. David Ricardo did not receive a systematic education: after graduating from elementary school, he studied at a trading school for only two years, and then, from the age of 16, began to help his father in a trading office and on the stock exchange. After parting with his father, Ricardo in 1793 took up independent commercial activities, and quite successfully.

Since 1802, Ricardo has been a member of the governing committee of the London Stock Exchange. In the same period, the first economic works of Ricardo, devoted to the issues of monetary circulation and currency regulation, were published. In several articles and pamphlets, Ricardo argued that the increase in the market price of gold in paper money is a consequence and manifestation of their depreciation due to excessive issuance. By 1811, Ricardo was already a recognized authority, the leader of the movement to restore the change of banknotes.

Having created a huge fortune of £1 million by playing on the stock exchange, in 1812 Ricardo retired from commercial activities, becoming a large rentier and landowner and devoting himself to scientific work. In 1817, his main theoretical work, “Principles of Political Economy and Taxation,” was published, where he completed the development of classical political economy begun by A. Smith.

In 1819, Ricardo was elected to Parliament, where he spoke from the standpoint of radical liberalism.

Ricardo's works translated into Russian:

D. Ricardo. Op. In 3 volumes. M., Gospolitizdat, 1955. T. 1. “The beginnings of political economy and taxation.”

D. Ricardo. "The beginnings of political economy and taxation" (separate chapters). In the book. "Anthology of Economic Classics". T. 1. M., Ekonov, 1993.

Say Jean Baptiste

Say Jean Baptiste (1767-1832), French economist, representative of the classical direction of political economy. Born in Lyon into a bourgeois Huguenot family. Say received a good commercial education in England, but the study of political economy, in particular the work of A. Smith, “An Inquiry into the Nature and Causes of the Wealth of Nations,” was an element of his self-education.

Say returned to Paris at the beginning of the French Revolution, and in 1794 he became the editor of a reputable philosophical and political journal. In 1799, Say was appointed to serve on the financial committee of the tribunate. At the same time, he was working on a large essay, which was published in 1803 under the title “A Treatise of Political Economy, or a Simple Statement of the Method in which Wealth is Formed, Distributed, and Consumed,” in which he popularizes the ideas of A. Smith, in particular, he defends the ideas of economic liberalism. The work attracted the attention of Napoleon, who suggested that the author rework, according to his instructions, the section on public finances. Say rejected the offer and was dismissed from service. In subsequent years, Say fell into disgrace and only the Bourbon restoration strengthened his social position.

In 1814, after the fall of Napoleon, Say published the second edition of the Treatise of Political Economy and was soon elected a member of the French Academy of Sciences. In the years that followed, Say lectured publicly on political economy, and in 1819 took the newly established chair of political economy at the Conservatory of Arts and Crafts.

In 1828-1829, Say publishes the "Complete Course of Practical Political Economy", which, however, in theoretical terms did not introduce anything new in comparison with the "Treatise of Political Economy", and in 1830 he headed the department of political economy specially created for him at the College. de France.

Say and his followers formed the so-called "Say school", which represented the official economics in France in the first half of the nineteenth century.

Say's views can be found in:

J.B.Say. "Treatise of Political Economy". M., Publishing house K. T. Soldatenkova, 1896.

Malthus Thomas

Malthus Thomas (1766-1834), English economist and clergyman. He came from a family of a wealthy esquire (landlord). After completing his studies at Jesus College, Cambridge University (1788), Malthus took holy orders in the English Church and received a vicar (second priest) position in one of the rural parishes of Surrey. Malthus received his theological degree in 1793.

Reflecting on the problems of poverty, Malthus formulated his famous "law of population". He outlined his position in a short work "An Essay on the Law of Population in Connection with the Future Improvement of Society", which was published in London in 1798. The book was a huge success, withstood several reprints, and it was largely thanks to this work that in 1805 Malthus received the chair of professor of modern history and political economy at the college of the East India Company, which he headed until his death in 1834. In the same college, he also served as a priest.

In addition to the “Essay on the Law of Population”, mention should be made of Malthus’s work “Principles of Political Economy” published in 1820, the content of which was mainly a polemic with D. Ricardo.

Work published in Russian:

T. Malthus. "An Essay on the Law of Population." In the book. "Anthology of Economic Classics". T. 2. M., Ekonov, 1993.

Sismondi Sismonde

Sismondi Sismonde (1773-1842), Swiss economist and historian. Born near Geneva. The family was wealthy and belonged to the Genevan aristocracy. Sismondi's father was a Calvinist pastor and a member of the Grand Council of the Republic of Geneva. Sismondi was educated at the Calvinist theological college, and then at the university, where, for family reasons, he had to interrupt his studies, joining one of the banking houses of Lyon (France). Revolutionary events in France forced Sismondi to return to Geneva.

When the French Revolution also captured Geneva, the Sismondi family was forced to emigrate in 1793 to England, where they lived for a year and a half, and then to Italy. In England, Sismondi became acquainted with the work of A. Smith and became a supporter of classical political economy. In 1800, Sismondi returned to Geneva and published his work “On Commercial Wealth” (1801), in which he acts as a student of A. Smith and a preacher of his ideas. Having declined an invitation to take a chair at the Paris Sorbonne, Sismondi traveled around Europe for several years, collecting material for historical and economic works. Having visited England again during his travels (1815), where the development of capitalism led to the ruin of peasants and artisans, Sismondi now acts as a critic of capitalism and classical political economy. He expressed his disagreement in his main economic work, “New Principles of Political Economy or on Wealth in Its Relation to Population” (1819).

The book soon made him a European celebrity. In 1833 Sismondi was elected a member of the French Academy of Moral and Political Sciences.

After many years of wandering, caused by both the French Revolution and the Napoleonic Wars, in 1818 Sismondi finally returns to his homeland and devotes himself entirely to scientific work.

During his lifetime, Sismondi was considered more of a historian than an economist. Indeed, his historical research is enormous. This can be seen at least from the History of the French. 29 volumes were released, but Sismondi never had time to complete the work.

Work published in Russian:

J.S. Sismondi. "New principles of political economy or On wealth in its relation to population." In 2 vols. M., Sotsekgiz, 1937.

Mill John Stewart

Mill John Stuart (1806-1873). Born in London in the family of the philosopher and economist James Mill. The latter had a peculiar system of education. Mill was educated at home under the guidance of his father. From the age of three he began to study the Greek language, from the age of six he began to write independent historical works, from the age of twelve he began to study higher mathematics, logic and political economy. By the age of fourteen, when Mill's education is over, the child turns into a real prodigy. And at the age of sixteen (1822), Mill Jr. published his first works: two short articles on the theory of value.

In 1823, John Mill took the place of a clerk in the department of the East India Company, which was in charge of his father (James Mill). And by 1858, Mill is an employee of this company. Along with this, he leads an active political life and is engaged in scientific work. As Mill himself writes, the childhood habit of working 14 hours a day is affecting.

In 1822, Mill and other ardent supporters of I. Bentham organized a circle called the “utilitarian society”, and in the “Benthamite organ” they founded, the Westminster Review, he published a number of articles of economic content.

Only by the mid-40s did Mill free himself from the influence of Bentham, having lost (by his own admission) his former confidence in the omnipotence of rational feeling. And acquaintance with the teachings of the Saint-Simonists shook his former confidence in the benevolence of a social system based on private property and unlimited competition. The publication of the most important works of Mill belongs to the same period: the philosophical work The System of Logic (1843) and his most famous work on economics, The Foundations of Political Economy (1848). In subsequent years, Mill published several political and philosophical writings, in particular, "On Freedom" (1859).

After finishing his service in the East India Company (1858), Mill tries himself in the political field. From 1865 to 1868 he was a Member of Parliament, serving as a representative of the Westminster constituency in the House of Commons. Having been defeated in the next election (1868), Mill leaves for France, where he spends the last years of his life.

The following works by Mill were published in Russian:

J. S. Mill. "Fundamentals of Political Economy". In 3 volumes. M., Progress, 1980-1981.

J. S. Mill. "About freedom". In the book. "Anthology of Western European classical liberal thought." M., Nauka, 1995.

Marx Karl

Karl Marx (1818-1883), German economist and philosopher. Born in Trier (Germany), in the family of a lawyer.

In 1835, Marx entered the University of Bonn, then (a year later) continued his studies at the University of Berlin, where he studied law, philosophy, and the theory of art. After graduating from the university (1841), Marx returned to Bonn, where he became an employee, and soon the editor of the Rhine Gazette. For political reasons, the newspaper was closed in 1843 and Marx moved to Paris with the aim of publishing the "German-French Yearbook" and distributing it in Germany. Marx's first economic work, The Economic-Philosophical Manuscripts of 1844, dates back to this time.

The second half of the forties of the nineteenth century - the time of the cash performances of the European working class and Marx does not remain aloof from the political struggle. In the spring of 1847, Marx (together with a friend and co-author of many works

F. Engels) joined the "Union of the Just", reorganized in June of the same year into the Union of Communists (the first international communist organization) and developed its program "The Communist Manifesto", published in February 1848 in London.

In 1848, Marx went to Germany and created the New Rhine Gazette. The newspaper is closed again, Marx is expelled from Germany. Then Paris, expulsion again, and in 1849 Marx moved to London, where he lived for the rest of his life.

In London, Marx is engaged in the development of revolutionary theory, but at the same time intensive work is underway on economic writings, in particular, on Capital, the version of the first volume of which Marx completed in 1865. At the same time (1864), on the initiative of Marx, the International Association of Workers - the First International was created in London, where he was not only the founder, but also the head of its General Council.

In subsequent years, Marx was engaged, among other things, in the development of the theory of socialism, the main provisions of which he outlined in his Critique of the Gotha Program (1875). In particular, the foundations of the program of the proletarian parties and formulated the provision on the transition period from capitalism to socialism.

In Soviet times, Marx's works were published many times in thousands of copies, including complete works, so finding any of his works is not difficult. In the opinion of the author of this work, the most easy to present and at the same time quite fully expounding the views of Marx are the following works:

K. Marx. "Toward a critique of political economy." M., Politizdat, 1990.

K. Marx. "Wages, Prices and Wage Labor and Capital". M., Politizdat, 1990.

K. Marx. "Critique of the Gotha Program". M., Politizdat, 1989.

Böhm-Bawerk Eigen

Böhm-Bawerk Eigen (1851-1919), Austrian economist. Born in Brunn, in the family of a politician (his father was the vice-governor of Moravia). After graduating from the University of Vienna (1872), where, in accordance with family tradition, he devoted himself to the study of jurisprudence, Böhm-Bawerk received a position as a civil servant in Lower Austria, and subsequently entered the service of the Ministry of Finance. This period dates back to the awakening of Böhm-Bawerk’s interest in economic theory, not least associated with his acquaintance with the original views of K. Menger.

The beginning of Böhm-Bawerk's academic activity dates back to 1880, when he received a position as Privatdozent of Political Economy at the University of Vienna. And from 1881 to 1899 Böhm-Bawerk was a professor at the University of Innsbruck. This relatively quiet period of his activity includes the writing and publication of his most famous works: "Fundamentals of the Theory of the Value of Economic Goods" (1886), written on the basis of the dissertation "Rights and Relations from the Point of View of the Doctrine of National Economic Goods", which he defended in 1881 , "Capital and Profit" (1884) and "The Positive Theory of Capital" (1889).

In 1899, Böhm-Bawerk was again invited to serve in the Ministry of Finance, where he worked until 1904, holding the post of Minister of Finance of Austria three times during this period.

In 1905 Böhm-Bawerk left the civil service and assumed the duties of a professor at the University of Vienna. Since 1911 Böhm-Bawerk has been president of the Austrian Academy of Sciences. Both Wieser and Böhm-Bawerk were life members of the Upper House of Parliament.

Work published in Russian:

Boehm-Bawerk E. "Fundamentals of the theory of the value of economic goods." In the book. "The Austrian School in Political Economy". M., Economics, 1992.

Of considerable interest is also the work that was not published in Russia after the revolution:

Boehm-Bawerk E. "Capital and profit. History and criticism of theories of interest on capital." St. Petersburg, 1909.

Marshall Alfred

Marshall Alfred (1842-1924), English economist, founder of the Cambridge School of Political Economy. Born in the family of an employee. As a child, under the influence of his father and following the example of his grandfather, who was a priest, he prepared for a spiritual career. However, fate decreed otherwise. Marshall goes to study mathematics at the University of Cambridge. In 1865, while studying at St. John's College, Marshall took second place in mathematics and was immediately enrolled in graduate school. After graduating with honors from the University of Cambridge, Marshall was left for teaching, which became the main occupation of his life.

Marshall's transition to the problems of ethics, and then to political economy, dates back to 1867, when Marshall, by his own admission, begins to seriously study economic science. And his own doctrines, which he outlined in his work "Principles of Economic Science", were largely formed by 1875.

In 1868, Marshall was appointed as a lecturer at Cambridge, where he worked for nine years, except for the four months that Marshall spent in the United States in 1875. Returning from there, he gave a course of lectures on American industry.

From 1877 to 1885 Marshall was forced to temporarily (due to family reasons) leave Cambridge and work at Bristol (1877-1881), where he was mainly involved in various administrative activities and Oxford (1883-1885) universities. In 1885, Marshall returned to Cambridge University, where in 1908 he headed the Department of Political Economy (Economics). In 1908, Marshall left the department and until the end of his life was engaged in the creation of his works.

Since 1902, on Marshall’s initiative, a new presentation of this subject called “Economics” was introduced, and thus the construction of a course based on the textbooks of political economy of the “classical school” represented by J. S. Mill was finally supplanted.

A. Marshall is the author of a number of works, in particular, "The Economics of Industry" (1889), "Industry and Trade" (1919), "Money, Credit and Trade" (1923). But it was the main work "Principles of Economic Science" (1890) that brought him world fame.

For many years, Marshall was an expert on various industrial commissions, in particular, in the early 90s he served on the Royal Commission on Labor. It should be added that Marshall was one of the organizers of the Royal Economic Society.

Two editions of Marshall's work were published in Russian:

A.Marshall. "Principles of Political Economy". In 3 volumes. M., Economics, 1983-1984.

A.Marshall. "Principles of Economic Science". In 3 volumes. M., Progress, 1993.

Veblen Thorstein

Veblen Thorstein (1857-1929), American economist and sociologist, founder of the institutional movement in economics. Born into the family of a Norwegian emigrant peasant in rural Wisconsin. Thanks to his outstanding abilities, Veblen received a higher education, graduating from Yale University (USA) and even a doctorate, which he received from the same Yale University, presenting a dissertation on the ethics of I. Kant. However, he did not receive a teaching position after graduating from university and was forced to return to his father’s farm, where he spent the next 7 years.

Only in 1890 did Veblen get an assistant position at Cornell University (USA), but he did not work there for long. And all subsequent years Veblen did not have a permanent teaching job, partly because of his extremely radical views, partly because of his quarrelsome character. In the academic world, he did not become his own and was forced to often change colleges and universities where he taught. Only in 1900 (a year after the publication of The Theory of the Leisure Class) Veblen became a junior professor at the University of Chicago, but he did not stay there for long, continuing to roam from university to university in subsequent years.

In the early 20s, Veblen moved to the newly founded New School for Social Research. Here he also could not resist, and after an unsuccessful attempt to get a professorship, Veblen leaves for California, where he spends the rest of his life in poverty.

Veblen's main works: The Theory of the Leisure Class (1899), The Theory of Business Entrepreneurship (1904), The Instinct of Mastery and the Level of Development of Production Technology (1914), and Absentee Property and Entrepreneurship in Modern Times (1923).

The following work has been translated into Russian:

T. Veblen. "The Theory of the Leisure Class". M., Progress, 1984.

Schumpeter Joseph Alois

Schumpeter Joseph Alois (1883-1950), Austrian economist and sociologist. Born in Moravia, which was part of Austria-Hungary, in the family of a small manufacturer. Educated at the University of Vienna, where Böhm-Bawerk was his teacher in economics.

In 1906, Schumpeter graduated from the Faculty of Law at the University of Vienna with a doctorate in law, and in 1908 he published his first major theoretical work, The Essence and Main Content of Theoretical Political Economy. On the basis of this book, his teacher and patron Böhm-Bawerk seeks Schumpeter's appointment first to Chernivtsi and then to Graz. Since 1909, Schumpeter has been lecturing on the whole range of economic problems at these universities, where he becomes the youngest professor. During these years, Schumpeter offers a special course on such exotic issues for that time as economic democracy and social classes. And it was during this period that one of Schumpeter's most famous works, The Theory of Economic Development (1912), was published.

The revolution interrupted Schumpeter's scientific activity, his interests shifted towards politics. In 1919 he was invited to the post of Minister of Finance of the Republic of Austria. While in office, Schumpeter developed a plan for financial stabilization. The harsh anti-inflationary measures proposed by him aroused dissatisfaction, and as a result, after spending a little more than six months in the ministerial chair, Schumpeter was forced to resign.

After leaving the government, Schumpeter takes over as president of a small bank. However, his career as a financier-practitioner failed, in 1924 the bank collapsed, and Schumpeter, having lost all his fortune, returned to academic activity.

From 1925 to 1932 Schumpeter headed the Department of Public Finance at the University of Bonn. In 1927-1928. and in 1930 Schumpeter taught for several months at Harvard University (USA). In 1932, Schumpeter finally moved to the United States, where he remained a professor at Harvard University until the end of his life. And it was during these years that such famous works as "Economic Cycles" (1939) and "Capitalism, Socialism, Democracy" (1942) come out from under his pen.

In recent years, Schumpeter has been working on the History of Economic Analysis. However, the manuscript remains unfinished. The following works of Schumpeter have been translated into Russian: J.A. Schumpeter. "Theory of Economic Development". M., Progress, 1982.

J. Schumpeter. "Capitalism, socialism, democracy." M., Economics, 1995.

Chamberlin Edward

Edward Chamberlin (1899-1967), American economist. Born in Washington state, in the family of a priest. After graduating from the University of Iowa in 1921, he received a master's degree from the University of Michigan the following year and entered the doctoral program at Harvard University. Here, in 1927, Chamberlin finished his dissertation, in which he put forward and substantiated the theory of monopolistic competition. From that year until his death, all his activities were connected with teaching at Harvard University. The only exception is the period associated with the work of Chamberlin in the US Office of Strategic Services during the Second World War and a year of teaching at the University of Paris immediately after the end of the war.

In 1933, Chamberlin published his famous work, The Theory of Monopolistic Competition, which has been recognized as a classic. Very soon, Chamberlin was elected head of the department of economic theory at Harvard University (1939-1943), received honorary degrees from many universities, became a member of the American Economic Association (being its vice president in 1944).

The following work has been translated into Russian:

E. Chamberlin. "The Theory of Monopolistic Competition". M., Economics, 1996.

Pareto Wilfred (1848-1923), Italian economist and sociologist. Born in Paris. The son of an Italian aristocrat who emigrated to France for political reasons. V. Pareto received a mathematical and engineering education at the University of Turin. After graduating, he began working for the Roman railway company.

Since 1877, Pareto began to study political economy; the formation of his scientific interests was influenced by the works of L. Walras. Pareto published a number of articles on the doctrine of Walras, and after the latter resigned, in 1893 he headed the department of political economy at the University of Lausanne.

In 1893-1906. Pareto is a professor of political economy at the University of Lausanne. However, heart disease forced Pareto to stop teaching and in 1906 to abandon the leadership of the department.

Pareto's interests are diverse: ancient history, philosophy, sociology, as well as mathematics and economics. After his resignation, Pareto moved away from the development of economic problems, and since 1906, having settled in his estate on the shores of Lake Geneva, for seventeen years he was busy developing his sociological system. In 1912, Pareto completed his main work, Treatise on General Sociology.

The following work has been translated into Russian:

V.Pareto. "Net Economy". Voronezh, 1912.

This paper presents the economic views of Pareto. As for his sociological views, an idea of ​​them can be obtained from the article:

V. Pareto. "Transformation of Democracy". On Sat. "Texts on the history of sociology of the 1994th-XNUMXth centuries." Reader. M., XNUMX.

Pigou Arthur

Pigou Arthur (1877-1959), English economist, student and follower of A. Marshall. He was educated at the University of Cambridge where he studied mathematics and history. This gave him, by his own admission, a solid foundation of knowledge for work in the field of political economy.

Having begun work at Cambridge under the leadership of A. Marshall, Pigou began to study the practical issues of a market economy, but he paid his main attention to issues of political economy. When Marshall left the department in 1908, he recommended transferring its leadership to his favorite student, A. Pigou. Pigou held this post from 1908 to 1943.

During these years, Pigou was repeatedly involved by the government in developing a number of specific decisions on economic policy. In particular, in 1918-1919. he was a member of the Currency Committee in 1919-1920. - Member of the Royal Commission on Income Taxes, 1924-1925. - member of N. Chamberlain's committee on monetary issues, whose report led to the restoration of the gold standard in Great Britain for a short time.

Major works: Fluctuations in Industrial Activity (1929), Steady State Economics (1935), Employment and Equilibrium (1941). However, world fame brought him the work "The Economic Theory of Welfare" (1920).

The following work has been translated into Russian:

A. Pigou. "The Economic Theory of Welfare." In 2 vols. M., Progress, 1985.

Keynes John Maynard

Keynes John Maynard (1883-1946), English economist and statesman. Born in Cambridge, in the family of a professor of logic and economics.

After graduating from King's College, Cambridge University, where he studied from 1902-1906, Keynes enters the civil service with the Indian Office.

In 1908, Keynes returned, at the invitation of A. Marshall, to the University of Cambridge as a teacher of economic theory, where he worked until 1915. Already for his first economic work, “The Index Method” (1909), Keynes received the A. Smith Prize.

In 1911, Keynes became editor of one of the most significant periodicals, the Economic Journal, and remained in this post until 1945. Since 1913, Keynes has been Secretary of the Royal Economic Society. In 1913-14. Member of the Royal Commission on the Finance and Monetary Circulation of India.

In 1915, Keynes left teaching. In 1915-1919. he serves in the British Treasury, dealing with issues of international finance. In 1919, as its representative, Keynes participated in the Paris Peace Conference, which worked out the conditions for a post-war order in Europe. However, in protest against the wrong, in his opinion, decisions, he left the conference, resigning his powers. And in the same year, Keynes's work "The Economic Consequences of the Treaty of Versailles" was published, which brought the author world fame.

In 1920, Keynes returned to teaching at the University of Cambridge, where, thanks to his efforts, the Faculty of Applied Economics was organized. In 1930, his work "A Treatise on Money" was published, as a generalization of his lectures on the theory of money circulation, read at Cambridge University for a number of years, and in 1936 his famous work "The General Theory of Employment, Interest and Money".

However, despite the transition to teaching, Keynes does not break with social and political activities. Since 1929, he has been a member of the British government committee on finance and industry, and since 1930 - chairman of the government's economic council on unemployment. In 1940, Keynes became an adviser to the British Treasury, and in 1942 he was appointed one of the directors of the Bank of England. In the same year, Keynes becomes a member of the House of Lords and receives the title of baronet.

In 1944, Keynes led the British delegation to the Bretton Woods Monetary Conference. His ideas about the management of interstate settlements contributed to the creation of the International Monetary Fund and the International Bank for Reconstruction and Development. Keynes was appointed as a member of the board of these organizations (IMF and IBRD) as a representative of Great Britain.

Keynes' work "The General Theory of Employment, Interest and Money" was published in Russian several times, in particular, in 1978 by the Progress publishing house. But the following editions are the most available:

J. M. Keynes. "The General Theory of Employment, Interest and Money."

(Selected works.) M., 1993.

J. M. Keynes. "The General Theory of Employment, Interest and Money." In the book. "Anthology of Economic Classics". T. 2. M., Ekonov, 1993.

From other works of Keynes translated into Russian:

J. M. Keynes. "The Economic Consequences of the Treaty of Versailles." M., State ed., 1922.

J. M. Keynes. "Treatise on Currency Reform." M., "Economic life", 1925.

Mises Ludwig

Mises Ludwig (1881-1973), Austrian economist and sociologist. Born in Glemberg (now Lviv), in the family of an engineer. He graduated from the University of Vienna, where he received a doctorate in law (1906). From 1906, Mises worked in a number of civil, commercial and criminal courts, but very soon moved away from pure jurisprudence. In 1909, Mises went to work in the Chamber of Commerce, with which he would be associated for the next quarter of a century.

During this period, the scientific interests of Mises, directly combined with his practical activities as an economic adviser, lie in the field of money circulation. In 1912, his first book, The Theory of Money and Medium of Circulation, was published, which served as the basis for inviting Mises in 1913 to a professorship at the University of Vienna.

Mises' scientific and teaching activities were interrupted by the war, where he served for three years as an artillery officer at the front. After the collapse of the Austro-Hungarian Empire, Mises continues to work at the Vienna Chamber of Commerce, which has become a kind of economic headquarters for the government, where, as an economic adviser, he recommends a tough anti-inflationary course. In the same place, in the premises of the Chamber of Commerce, Mises, who was denied a professorship after the war, organizes a private seminar that worked from 1920 to 1934.

In 1926, Mises founded the Austrian Institute for Business Cycle Research. And in 1934 he received an invitation to take a professorship at the Higher Institute for International Studies at the University of Geneva.

In 1940, Mises emigrated to the United States, where his name (his work "Socialism" brought him world fame) ensured that in 1941 he received a grant from the National Bureau of Economic Research. In 1943-1954. Mises serves on the economic commission of the National Manufacturing Association. At the same time, his teaching activities are resumed. From 1949 to 1968 he taught seminars in economic theory at New York University. In 1949, his main, according to Mises himself, book "Human Actions: A Treatise on Economics" was published.

Mises died in New York at the age of 92. Mises' works translated into Russian: L. Mises. "Socialism: economic and sociological analysis." M., "Catalaxy", 1994.

L. Mises. "Bureaucracy. Planned chaos. Anti-capitalist mentality." M., Delo, 1993.

Hayek Friedrich

Hayek Friedrich (1899-1992), Austrian economist and sociologist. Born in Vienna, in the family of a local health officer and part-time professor of biology at the University of Vienna.

In 1918, Hayek entered the University of Vienna, where he studied law, economics, philosophy and psychology. Upon graduation (1921), he received a doctorate in law and began working at the Austrian Bureau for the Settlement of War Claims (under the leadership of L. Mises). At the same time, he continued his studies at the University of Vienna and in 1923 received a doctorate in economics.

In 1924, Hayek - in the public service, being in 1927-1931. director of the Austrian Institute for Economic Research. These years accounted for a large number of Hayek's articles on the trade cycle, monetary theory, and economic policy.

In 1929, Hayek began lecturing at the University of Vienna, and the following year he was invited to lecture at the London School of Economics, where he was soon promoted to professor of economics and statistics. Hayek was a professor at the London School of Economics from 1930 to 1950.

The success of The Road to Slavery (1944) led to Hayek receiving several invitations to visit the US in the postwar years. In 1950, Hayek stepped down from his post at the London School of Economics and became professor of social science and morality at the University of Chicago.

In 1963, Hayek returned to Europe to take up the post of professor of economic policy at the University of Freiburg (Germany). Since 1970 he has been a Consulting Professor at the University of Salzburg (Austria).

Hayek was a member of the British and Austrian Academy of Sciences, and in 1974 he was awarded the Nobel Prize for his work on the theory of economic fluctuations and a deep analysis of the interdependence of economic, social and institutional phenomena.

Hayek's works translated into Russian:

FHayek. "Detrimental arrogance. Mistakes of socialism." M., News, 1992.

F. Hayek. "Society of the Free". London, 1990.

F. Hayek. "The Road to Serfdom" M., Ekonov, 1992. F. Hayek. "Private money" M., Institute of National Economic Model, 1996.

Friedman Milton

Friedman Milton (born 1912), American economist, was born in Brooklyn. At the age of 16, he entered Rutgers University (USA) by competitive selection with the right to receive a partial scholarship. After graduating in 1932, Friedman was awarded a bachelor's degree in two disciplines at once: economics and mathematics. After receiving a master's degree (1933), in 1934 Friedman became a research assistant at the University of Chicago.

Friedman's collaboration with the National Bureau of Economic Research began in 1937. And in 1940, the first major work, written jointly with another American economist S. Kuznets, “Income from independent private practice,” was published. During the Second World War, Friedman participated in the development of tax policy on behalf of the Federal Ministry of Finance.

In 1945-46. Friedman teaches economics at the University of Minnesota (USA), then returns to the University of Chicago and becomes an assistant professor in economics. In 1950, Friedman participated as a consultant in the implementation of the Marshall Plan.

In 1957, Friedman's book "The Theory of the Consumption Function" was published, where he proved the fallacy of Keynes's concept, and in 1963 his fundamental work "The Formation of the Monetary System in the USA", which outlined the main provisions of the monetarist theory.

In the early 70s (1971-1974), Friedman was an adviser to US President R. Nixon on economic issues. And many of his proposals, which boil down to reducing intervention in the economy, have been put into practice.

Doctor of Philosophy (1946), Doctor of Laws (1968), Nobel Laureate in Economics in 1976, in 1977 Friedman became a senior researcher at the Hoover Institution at Stranford University. It should be added that for more than three decades, Friedman was an active member of the American Economic Association, of which he was president in 1967.

The following work has been translated into Russian:

M. Friedman. "The Quantity Theory of Money". M., Elfpress, 1996.

Tugan-Baranovsky M. I. 

M.I. Tugan-Baranovsky (1865-1919), Russian economist. A native of the Kharkov region. At the age of 23, he graduated from the course of Kharkov University in two faculties at once: natural and legal.

However, Tugan-Baranovsky chose political economy as the sphere of his activity. In 1894, having published the work "Industrial Crises in Modern England, Their Causes and Influence on People's Life", he became the first Russian scientist with a worldwide reputation (the book was translated into German in 1901, and then into French). For this work, Tugan-Baranovsky was awarded a master's degree from Moscow University in 1894. In 1895 he became assistant professor at St. Petersburg University and in the same year he was accepted as a member of the Imperial Free Economic Society.

As a representative of "legal Marxism", Tugan-Baranovsky participates in the editing of Marxist journals, such as Novoye Slovo, Nachalo, and Mir Bozhiy. In 1898, Tugan-Baranovsky published the book "Russian Factory", where he developed ideas about the development of capitalism in Russia and defended it in the same year as a doctoral dissertation.

New, twentieth century Tugan-Baranovsky meets disgraced scientists, expelled from the capital for participating in student unrest. Petersburg, with the permission of the authorities, he returned in 1905.

In subsequent years, Tugan-Baranovsky was interested in the problems of the development of the cooperative movement. Since 1908, he was a member of the leadership of the "Committee on rural, savings and industrial partnerships." In 1909, Tugan-Baranovsky began to publish the journal Vestnik Kooperatsia. And in 1916, his work "The Social Foundations of Cooperation" was published. At the same time, a number of his works on socialism were published, and in 1918 - one of the most famous - "Socialism as a positive doctrine."

Before the revolution, Tugan-Baranovsky's works were published several times, in particular the work where he most fully outlined his economic views:

M.I. Tugan-Baranovsky. "Fundamentals of Political Economy". Pg., Pravo, 1917.

As for our time, a number of works by Tugan-Baranovsky have been published in recent years, in particular:

M.I.Tugan-Baranovsky. "Periodic industrial crises." M., Nauka, 1997.

M.I.Tugan-Baranovsky. "Socialism as a positive doctrine." In the book. "The image of the future in Russian socio-economic thought of the late 19th and early 20th centuries." Reader. M., 1994.

M.I.Tugan-Baranovsky. "Social foundations of cooperation." In the book. "The image of the future in Russian socio-economic thought of the late 19th and early 20th centuries." Reader. M., 1994.

Kondratyev N. D.

N.D. Kondratiev (1892-1938), Russian economist. Born in the Kostroma province, into a peasant family. He received his education in parish and church-teacher schools, at the College of Agriculture and Gardening (1907-1908), as well as at the St. Petersburg general education courses of A. S. Chernyaev (1908-1911).

In 1911, Kondratiev passed the matriculation exams as an external student at the Kostroma Gymnasium, and in the same year he entered the Faculty of Law of St. Petersburg University. While studying at the university, Kondratiev took part in a scientific circle led by Tugan-Baranovsky, who had a great influence on him. In November 1915, on the recommendation of prof. I. I. Chistyakov, the Faculty of Law made a petition to leave Kondratiev at the university for “preparation for a professorship in the department of political economy and statistics.” The request was granted.

In 1916, while continuing his scientific activities at the university, N.D. Kondratyev began working as the head of the statistical and economic department of the Zemstvo Union of Petrograd. This period dates back to the shift of his interests to agrarian problems. In October 1917, Kondratiev was appointed associate minister of food in the last composition of the Provisional Government, and in November 1917, Kondratiev became a member of the Main Land Committee. In 1919, his scientific interests led him to the Petrovsky Agricultural Academy (K. A. Timiryazev Agricultural Academy), where in 1920 Kondratiev became a professor, and in 1923 head of the department “Teaching of Agricultural Markets.”

An important event for Kondratiev was the formation in October 1920 of the Institute for the Study of Economic Market Conditions (Conjuncture Institute), which Kondratiev headed from the beginning of its foundation until 1928, until his resignation. It was to this period that the writing of the work that brought him world fame "Great cycles of conjuncture" (1922) belongs.

In 1930, Kondratiev was arrested in the case of the so-called "Labor Peasant Party", and in 1938 he was executed by a second sentence in his case.

The work of N. D. Kondratiev “Large Cycles of Conjuncture” and a number of other works can be found in the book:

N.D.Kondratiev. "Problems of economic dynamics". M., Economics, 1989.

Recommended reading

1. Anthology of economic classics. M., 1993

2. Blaug. Economic thought in retrospect. M., 1994

3. Mayburd E. M. Introduction to the history of economic thought. M., 1996

4. Browning. Modern economic theories are bourgeois concepts. M., 1987

5. Pesenti. Essays on the political economy of capitalism. M, 1976.

6. Seligman P. Main currents of modern economic thought. M., 1968.

7. Modern economic thought. M., 1981. parts 1-4.

8. Anikin. The youth of science. M., 1979.

9. Marshall. Principles of political economy. M., 1983.

10. Mill J. Fundamentals of political economy. M., 1980.

11. Keynes J. General theory of employment, interest and money. M., 1978.

12. Galbraith J. Economic theories and goals of society. M., 1976.

13. League. Economic theory of welfare. M., 1989.

14. Robinson J. Economic theory of imperfect competition. M., 1986.

15. Tugan-Baranovsky M. I. Favorites. M., 1997.

16. Hayek. Detrimental arrogance. M., 1992.

17. Harris. Monetary theory. M., 1990.

18. Hicks. Cost and capital. M., 1988.

19. Theory of consumer behavior. St. Petersburg, 1993.

Author: Agapova I. I.

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