Text в. Famous Economists of the World

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Adam Smith.

In 1776 one of the most influential books of our time, the Wealth of Nations, was written by Adam Smith. It earned the author the title “The father of economists”. Smith believed that a nation’s wealth was dependent upon production, not agriculture alone. How much it produced depended upon how well it combined labor and other factors of production. The more efficient the combinations, the greater the output²⁴, and the greater the nation’s wealth.

The heart of Smith’s economic philosophy was his belief that the economy would work best if it was left to function on its own without government regulations. Self-interest²⁵ would lead business firms to produce only those products that consumers wanted and to produce them at the lowest possible cost. They would do this to get the greatest profits. But all this self-interest would benefit²⁶ the society by providing it with better goods and services at lower prices.

David Ricardo.

David Ricardo is one the most influential economists.

Born in England Ricardo made a fortune on the London Stock Exchange²⁷. This wealth gave him the time to write and serve in Parliament’s House of Commons.

His most famous work, Principles of Political Economy and Taxation (1817), made him one of the greatest economists since Adam Smith. Ricardo is especially famous in international economics for demonstrating the advantages of free trade²⁸. Free trade is a policy in which tariffs and other barriers²⁹ to trade between nations are removed.

As a member of the British Parliament, Ricardo pressed the government to abandon³⁰ its traditional policy of protection. Thanks to his efforts England became the first industrial power to adopt a policy³¹ of free trade. There followed 70 years of economic growth during which the nation became the world’s wealthiest industrial power.

Alfred Marshall.

Alfred Marshall was a professor of economics at Cambridge University. In 1890 he published his textbook “Principles of Economics” which became the text book for the teaching of economics up to 1940s. His most famous student John Maynard Keynes described Marshall as the greatest economist of the 19^th century. Interestingly, Keynes himself became the most influential economist of the 20^th century.

Alfred Marshall analyzed market forces in his “Principals”. This analysis is still relied on to explain economic events.

According to Marshall’s theory, economic events could be explained by interaction³² of supply and demand³³.

John Maynard Keynes.

John Maynard Keynes is considered one the world’s famous economists of the 20^th century.

In 1936 he published his “General Theory of Employment, Interest and Money”. His work transformed economic thinking in the 20^th century as much as Adam Smith’s the Wealth of Nations did in the 19^th century.

Keynes’s work was published in the period of the Great Depression of the 1930s³⁴. During this period unemployment and business failure increased greatly in the United States and the rest of the industrialized world.

Keynes demonstrated that it was possible for total supply and demand to be at equilibrium³⁵ if there is full employment. As to Keynes if government makes some steps and spends money on public works, the income received by formerly unemployed workers will lead to increased demand, the increased demand will increase business activity that in its turn will lead to full employment. His advanced ideas called “Keynesian Revolution” have become part of conventional wisdom³⁶.

Now, whenever a nation appears to be entering into a period of recession³⁷ or inflation, economists and governments immediately think of steps offered by Keynes to reverse a trend³⁸.

UNIT 4