By Lefteris Tsoulfidis
The maximum works of economists have the aptitude to supply insights on present financial advancements and coverage demanding situations lengthy once they are written. This e-book seeks to enquire the evolution of the middle rules and coverage suggestions of the key faculties of monetary concept, and to offer and significantly evaluation these theories that experience survived through the years and will tell us approximately present advancements and fiscal rules. The theories of significant economists are offered and used to advertise an realizing of the underlying mechanisms of the economic system and to deal with modern difficulties and matters. furthermore, the booklet explores the interesting dynamics of moving from one institution of financial idea to a different. each one bankruptcy concludes with a precis, severe comments, a suite of questions for mirrored image and dialogue, and proposals for additional reading.
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This theory is known as the adding-up theory of value,6 according to which the value of a commodity is determined by the sum of three natural incomes, that is, natural wages, natural profit and natural rents. Smith notes: When the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land, the wages of the labour, and the profits of the stock employed in raising, preparing, and bringing it to market, according to their natural rates, the commodity is then sold for what may be called its natural price.
We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens. (WN, p. 14) Self-interest, nevertheless, constitutes only one part of the whole story, because it only explains human actions. While, one would expect that self-interest would lead to a chaotic society, Smith instead argues that society does not collapse because of competition.
Smith’s argument of the falling rate of profit is couched on the idea that the profit motive as an end in itself is what stands behind the actions of capitalists. This insatiable desire for profit leads to the division of labour as the means to increase the productivity of labour, which in turn reduces the unit cost of production and the selling price. The expansion of demand that follows necessitates even further division of labour, which becomes possible through the introduction of fixed capital.