Economía Política

jueves, 6 de febrero de 2020

12:10 p. m.
Understanding Classical Economics
Self-regulating democracies and capitalistic market developments form the
basis for classical economics. Before the rise of classical economics, most
national economies followed a top-down, command-and-control, monarch
government policies system. Many of the most famous classical thinkers,
including Smith and Turgot, developed their theories as alternatives to
the protectionist and inflationary policies of mercantilist Europe. Classical
economics became closely associated with economic, and later political,
freedom.
The Rise of Classical Economic Theory
Classical economic theory was developed shortly after the birth of
western capitalism and the Industrial Revolution. Classical economists provided
the best early attempts at explaining capitalism's inner workings. The earliest
classical economists developed theories of value, prices, supply, demand, and
distribution. Nearly all rejected government interference with market
exchanges preferring a looser market strategy known as "laissez-faire," or "let
it be."
Classical thinkers were not completely unified in their beliefs or understanding
of markets although there were notable common themes in most classical
literature. The majority favored free trade and competition among workers and
businesses. Classical economists wanted to transition away from class-based
social structures in favor of meritocracies.
 
Adam Smith 1723-1790
 
Adam Smith was an 18th-century Scottish economist, philosopher, and author
who is considered the father of modern economics. .
 
Adam Smith was born in 1723. His father was a lawyer and civil servant, and
during his years as a moral philosophy student at the University of Glasgow,
Adam Smith developed an increasing interest in liberty, reason and free
speech. He then went on to continue his studies at Oxford, where he started
writing about the low quality of education in English universities. Later, he
taught at Edinburgh and the University of Glasgow, where he would end up
occupying the position of rector until his death, in 1790.
 
Smith's most notable contribution to the field of economics was his 1776 book,
"An Inquiry into the Nature and Causes of the Wealth of Nations."
This year was very important in world history, he published at the height of
revolutionary fervor, not just in Europe but in the American colonies
 
“The Wealth of Nations,” which took twelve long years to write, is the
foundation of modern economics. It was basically against
prevailing  mercantilist theories, introducing the importance of the principle of
division of labour and defending free trade.
 
 
Division of Labor and Spontaneous Order ---> Assembly-Line Production
Method
Adam Smith begins his study of society and human association with an analysis
of the benefits from a system of division of labor: By cooperating in a system of
specialization, individuals are able to dramatically increase their potential
productivity in comparison to self-sufficient production, under which each
individual attempts to produce all that he needs through his own labor.
Through specialization of tasks, men develop speed, dexterity, and technical
precision with the assistance of machines that focus their activities on one or a
small handful of tasks. The productivity of labor – output per worker –
increases, as a result, the quantities, qualities, and varieties of goods available.
He used the imagery of a small enterprise such as pen factory to show the
gains from division of labor.
If one person were to undertake the 18 steps required to complete the tasks,
they could only make a handful of pins per week. However, if the 18 tasks were
completed in assembly-line fashion by 10 individuals, production would jump to
thousands of pins per week. Smith argues that the division of labor and
resulting specialization produces prosperity.
 
 
 
 
From Smith comes the idea of the "invisible hand" that guides the forces of
supply and demand in an economy.
Adam Smith argued that through this system of division of labor and a rule of
voluntary exchange, men become interdependent for all the necessities of life.
But precisely because the “system of natural liberty” excludes violence, theft,
or fraud, the only way any individual can acquire from others that which he
desires is by applying his own knowledge, abilities, and resources in a manner
that offers to those others what they desire, so they will give in trade what they
have, which that first individual wants to obtain.
Thus, though it is no part of their motivating intention to improve the
conditions of the life of others, in their own self-interest each individual must
devote his efforts to serving the wants of others as a means to his own ends.
Every person, by looking out for themselves, inadvertently helps to create the
best outcome for all.
Smith argued that this kind of system creates wealth for the butcher, brewer,
and baker, in addition to creating wealth for the entire nation.
 
 
 
Then comes the philosophy of free markets. ----> absolute advantage and
economic liberalism
The philosophy of free markets emphasizes minimizing the role of government
intervention and taxation in the free markets. Although Smith advocated for a
limited government, he did see the government as responsible for the
education and defense sectors of a country
 
as Adam Smith memorably explained, as if by an “invisible hand” each
individual is guided to apply his knowledge, ability and talents in ways that
serve the trading desires of others as the means of fulfilling his own self-
interested goals and purposes. Furthermore, not only is the need for
government regulation and control of economic affairs shown to be
unnecessary for societal improvement, Smith went on to argue that such
government intervention was detrimental to the most successful
advancements in human material and cultural life
 
Adam Smith argued that it was superfluous and counter-productive for
government to attempt to manage and direct the importing or exporting of
goods and services to maintain a presumed “favorable” balance of trade. Each
individual tries to minimize the costs that must be incurred in achieving his
goals and ends. He only makes at home what is less expensive to make than to
buy from others. And he buys desired goods from others only when those
others can provide them at a lower cost in resources and labor and time, than
if the individual attempted to produce those desired goods through his own
self-sufficient efforts.

Thus, goods are purchased from producers in other countries only when they
can offer them at a lower cost than manufacturing them in one’s own country.
And, in turn, one purchases those foreign produced goods by supplying the
foreign seller with some good or service at a lower cost than if he tried to
produce it in his own land.

When governments, through regulations and controls, force a product to be

produced at home that could be less expensively purchased from abroad, it is
misdirecting scarce resources and labor into wasteful and inefficient uses. The
result must be that the wealth of that nation – and the material wellbeing of its
citizens -- is reduced by the amount by which more resources and labor must
be devoted to making wanted goods than they could be obtained through a
free system of international division of labor and peaceful, mutually beneficial
exchange. Hence, it is more prudent for the prosperity of one’s own nation to
leave production and trade to the self-interested actions of its individual citizen