Economics is considered to be one of the most ancient sciences. Even primitive people possessed basic knowledge in this area: they had a certain idea of the principles of housekeeping, of the emerging relationships between all members of the community in the process of extraction and distribution of goods and the exchange of received products. However, these representations were not combined into an independent field of knowledge.
History of Economic Theory
The emergence of economic thought is characterized by the pre-industrial (agrarian) period of social development and embraces such ancient civilizations as the Roman Empire, Greece, etc. (IV millennium BC. - V century A.D.). It was closely intertwined in this era with religious ideology and political and legal views.
The written economic mindsets were expressed mainly by the problems of functioning, as well as by the rational organization of economic and labor activity, the system of state administration and responsibility for property. These writings were: codes of laws, texts of the Old and New Testaments, various treaties, social and philosophical treatises of individuals.
Further evolution of the economic outlook took place in medieval times: Western Europe - V-XVIII centuries, including bourgeois revolutions, Russia - IX-XIX centuries, more precisely, before the reform of 1861. This era is associated with emerging views regarding problems of estate status, distribution income, land ownership, corporate-type relationships (city communes, merchant guilds, neighboring communities, craft workshops, knightly and monastery orders, etc.). Political power belonged to secular and church feudal lords (landowners), significant positions were given to traditions, in addition, a religious worldview reigned.
At that time, interest began to emerge aimed at commodity-money relations. The scholastics were the main theorists, and economic ideas were borrowed mainly from heresies, for example, equality, condemnation of the sale of indulgences, the obligation to work, etc.
In the context of the emergence of capitalist relations and the decomposition of feudalism, the first school of economic etiology - mercantilism (XV-XVIII centuries) was born. So, precisely this period is characterized by the perception of economic theory as an independent science in view of the appearance of the first system of economic views, the central place in which is the problem of wealth.
Economic theory: definition, main directions and sections
It acts as a discipline of economic science and represents its philosophical and theoretical foundation, consisting of many areas and schools. Economic theory, the definition of which was presented above, can be supplemented by the fact that it is, first of all, the science of the process of conscious choice by people and society of the way of using scarce resources with a multi-purpose purpose.
Economic theory includes a number of sections:
- methodology of economic science;
- microeconomics;
- macroeconomics;
- international economy;
- econometrics;
- game theory.
Currently, the following scientific schools and areas of economic theory can be distinguished:
- neo-Keynesianism;
- new institutional economic theory;
- monetarism;
- neuroeconomics;
- new political economy;
- Austrian school;
- economics and law.
What is the subject of this science?
The answer to this question is several definitions. So, economic theory studies:
1. Activities related to exchange processes and commercial transactions that are carried out between people.
2. The daily business activities of people, as well as the reproduction and distribution by them of the means necessary for subsistence.
3. Behavioral characteristics of a person and a group of people in the framework of production, distribution, exchange and consumption of material goods.
4. The ability of mankind to cope with emerging challenges in the sphere of production and consumption.
5. Wealth as a result of human relationships.
6. Laws governing the production, exchange of material goods at the appropriate stages of the evolution of society (Engels).
7. Wealth and incentives that act as impulses for human activity, as well as motives for their opposition (A. Marshall) and other interpretations of what economic theory is studying.
Neo-Keynesian Theory of Economic Growth
This teaching relates to the post-war period. The objective prerequisite for its occurrence is the processes that took place within the framework of the world economy at the end of the 20th century. These include:
- Deployment of NTR.
- A significant increase in economic growth in socialist countries.
- Unevenness in the development of capitalist countries, etc.
The above processes highlighted the task of accelerating growth rates and led to the emergence of several theories of economic growth, in which the authors were aimed at elucidating the general factors of this process.
The theory of R. Harrod (England) and E. Domara (USA) was singled out, which is based on the conclusion that a steady rate of economic growth is acceptable as a prerequisite for a dynamic state of equilibrium of the economy, which allows achieving full consumption of both production capacities and labor resources.
Another provision of the Harrod-Domar model is the recognition of the prerequisite for the constancy of parameters: the average investment efficiency indicator and the share of savings in total income.
The third general provision was the statement that it is possible to achieve constant growth and dynamic equilibrium through active government intervention in the economy.
The authors concluded: subject to stable capital productivity and the rate of accumulation, the growth rate of national income will also be stable (“guaranteed growth rate”). It was obvious the difficulty of ensuring this balance within the framework of the market element, namely the lack of automatic factors that would contribute to the rapid restoration of the previously disturbed balance.
A significant drawback of this neo-Keynesian model is the fact that Harrod and Domar ignore the socio-economic structure of the existing capitalist society, which has a direct impact on the dynamics of macroeconomic indicators.
New Institutional Economic Theory
She is studying the behavior of economic objects. This is another new direction that is part of the basic economic theory. The emerging interest in the institutional model is associated with attempts aimed at overcoming a number of prerequisites that are characteristic of neoclassicism (perfect competition, the axiom of complete rationality, establishing an equilibrium state using the price mechanism), with an analysis of economic processes in combination, with the need to study new phenomena, associated with the STR.
The provisions of the model under consideration
First, institutions are represented by the behavior of economic agents.
Secondly, they are considered from the point of view of their influence on decisions made by economic agents.
Thirdly, many objects were not associated with black boxes, that is, an organization (government, households, firms) is perceived as a system with an internal structure of interests.
Fourth, comparing institutional alternatives among themselves, and not just with the ideal version of things.
Fifth, a more global approach to determining the situation with regards to the choice within the framework of the institutional model, which allows relaxing the restrictions on the method of comparative statics.
Sixth, this direction is aimed at bringing the economic approach to uniformity.
The most important method of scientific knowledge
They are the method of scientific abstraction. In economics, it is represented by the purification of the study of an object from temporary and random factors, as well as the determination of typical, purely individual and permanent features.
Economic phenomena are not amenable to study through material tools, therefore, as the main method for their study, they use abstraction, or rather, distraction from all factors that do not correspond to the nature of the studied subject.
It may seem that scientific abstraction leads away from the real economic significance of the analyzed object. However, this is fundamentally the wrong conclusion. On the contrary, it brings it closer to its true manifestations, hiding behind a pile of numerous side events and phenomena.
The role of this method in economic analysis
It consists in simplifying the process of studying an economic phenomenon. The method of scientific abstraction assumes that all other events, excluding those that are studied at this stage, remain unchanged.
Generalization, in fact, is an abstraction and intentional simplification. Thus, scientific abstraction is interpreted as highlighting the most significant aspects of the phenomenon under study and avoiding all that is accidental and secondary.
Basic techniques of the method under consideration
In economic theory, researchers widely apply, as mentioned above, the method of scientific abstraction, which has two main methods by which it is implemented - deduction and induction.
They are complementary, and not opposing, research methods. The hypotheses formulated on their basis are for the economist a kind of guide in the process of collecting empirical data. A variety of ideas regarding certain facts and the world as a whole serve as a prerequisite for further substantive judgments.
The essence of these techniques
As already mentioned, the method of scientific abstraction in economics is represented by two methods. So, induction (guidance) is a method of inference, which is based on a generalization of certain facts. Through this technique, the so-called transition from the study of particular (single) phenomena to general conclusions and statements is ensured.
The method of scientific abstraction also includes such a method of researching an object as deduction (derivation) - reasoning by which a hypothesis is verified by real-world facts. This technique makes available the transition from general conclusions to particular ones.
The method of scientific abstraction, expressed by abstract thinking, allows you to gradually reveal the essence of economic phenomena. This requires the formation of certain logical concepts that fully reflect the true economic reality.