“Two Contributors to the Field of Economics”

JEAN BAPTISTE-SAY (5 January 1767 – 15 November 1832)

He was sent together with his brother, Horace to London to study. He chose to pursue a commercial career and spent some of his early years practicing. He first acted as a clerk and then was In service of another employer afterwards. Upon the death of the latter, he returned to France and married a woman who was also a lawyer’s daughter.

He published his major work, “A Treatise on Political Economy”, and later, he added a second version and then followed a third version.

Say died on November 15, 1832.

WORKS

One of his major works published was a book called “A Treatise on Political Economy”

TREATISE ON POLITICAL ECONOMY

In his most famous published work lies a Law said to be formulated by Say in which also is one of the famous law of 19th century economists. It is called Say’s Law. Although the source is still not yet determined, credentials have been given to Say.

SAYS LAW

Composed of a popular expression which says supply creates its own demand.

This quotation was not found under the times of say and other fellow economists, this law occurred when previous economist begun to notice that the economic system would be subject to crises. Before, they didn’t have the devices to determine the change in economic conditions unlike now, we have all we need. However, merchants at that time began to notice within their community where trading began to diminish, increase in beggars, and bankruptcies..

The nature of these crises, unknown, became a topic of debate. The major figure on one side of the debate was Thomas Malthus, better known for his theory of population. He argued that crises were a result of a “general glut” of goods. The production of goods could outrun the ability or desire of people to purchase these goods, and it was the oversupply that led to an economic crisis.

On the other side of the debate were David Ricardo, James and John Stuart Mill, and Say. Those ideas that are called Say’s Law were developed by all of them in their attempt to show that the opposing thesis was wrong.

In my own understanding, Say’s Law can be illustrated with a three-person, three-commodity, barter economy. Let’s take an example of three persons, namely, A, B, and C. A sells 5 boxes, B sells 5 cans and C sells 5 bags. A can trade 2 boxes to B in exchange for 2 cans. However, he can also trade 1 box to C in exchange for 1 bag. Also, B can trade 2 cans to C in exchange for 2 bags.

Boxes Cans Bags Total
Person A 2 2 1 5
Person B 2 1 2 5
Person C 1 2 2 5
Total 5 5 5

Since buying cannot be done without selling and vice-versa, these persons have to trade each other with a quantity of their goods equal to the desire of the other. In this situation we can conclude and formulate that supply creates its own demand.

According to Peter Anderson, Summer fellow at the Mises Institute, and studying at Dordt College, the misunderstanding of the importance of Say’s Law is due to looking only at chapter XV of Book I without observing how it fits into the complete Treatise. Say’s Law is like a pane in a stained glass window. When one removes the pane it loses its significance; only when the pane is placed in the window as a whole can we accurately view the beauty of the edifice.

Another explanation of Anderson is that, as stated earlier, Say’s Law cannot be accurately understood in and of itself. Say’s law of markets incorporates catallactics, the impetus for production and the adventurer, subjective value, and a framework for the refutation of violent government intervention that decreases production and exchange. Thus Say’s Law cannot be separated from the Treatise as a whole and still be accurately understood.

Sources:

Say’s Law in Context – Peter Anderson – Mises Institute

http://mises.org/daily/1264#ixzz0nWPh6O7s

http://ingrimayne.com/econ/Connections/Says.html

Mill

JOHN STUART MILL

“Although it is not true that all conservatives are stupid people……..it is true that most stupid people are conservatives”

Son of former economist James Mill, J.S. Mill (as his name is fondly called) was born on 1806. Mill was educated by his father, with the assistance of Jeremy Bentham and Francis Place. He learned Greek at three, then Latin, and by the age of 12, he was a competent logician and by 16 a well-trained economist. At 20 he suffered a nervous breakdown that persuaded him that more was needed in life than devotion to the public good and an analytically sharp intellect. Having grown up as a utilitarian, he now turned to Coleridge, Wordsworth and Goethe to enhance his work as an economist. In his later years, he tried to persuade the British public of the necessity of a scientific approach to understanding social, political and economic change.

Mill died on May 8, 1873.

WORKS

His major work during his life was a term called utilitarianism. Though really not originated from him, his work has a definition to the term utilitarianism up to this day.

Utilitarianism’s basic principle

“Actions are right to the degree that they tend to promote the greatest good for the greatest number.”

A term that confuses us a little is what we call “the greatest good.” For Bentham (1748–1832), it was simply “the tendency to augment or diminish happiness or pleasure,” with no distinctions to be made between pleasures or persons–all measures are strictly quantitative. For Mill, however, not all pleasures were equally worthy. He defined “the good” in terms of well-being, and distinguished not just quantitatively but also qualitatively between various forms of pleasure. In either case, the principle defines the moral right in terms of an objective, material good. The point is to make the theory “scientific,” and the utility principle is an attempt to bridge the gap between empirical facts and a normative conclusion–a simple cost/benefit analysis is proposed. However, both men insisted that “the greatest number” included all who were affected by the action in question with “each to count as one, and no one as more than one.”

(http://www.answers.com/topic/utilitarianism)

DEFINITION (UTILITARIANISM)

In my own understanding, the term utilitarianism is used in such a way that actions are described by its results. The efficiency/value of a good is determined by it’s final outcome. Utilitarianism is also distinguished by impartiality and agent-neutrality. Everyone’s happiness counts the same. When one maximizes the good, it is the good impartially considered.

There are some examples of utilitarianism, here are two of them:

Act Utilitarianism– each individual action is to be evaluated directly in terms of the utility principle.

Mainly, I can consider act utilitarianism as a deviance, in a way that you cannot judge your own actions but others only. What they think as right or wrong act may lead to the greatest good in an economy of stupid morons. You cannot rely on your own doings since what you do may happen to be the opposite of what they think, (e.g.; dyeing your hair may seem improper to other people who look at you).

One objection to act utilitarianism is that it seems to be too permissive, capable of justifying any crime, and even making it morally obligatory, if only the value of the particular consequences of the particular act is great enough. Another objection is that act utilitarianism seems better in theory than in practice, since we hardly ever have the time and the knowledge to predict the consequences of an act, assess their value, and make comparisons with possible alternative acts.

Rule Utilitarianism (Indirect utilitarianism) – generally, rules are imposed and when followed, will lead to the greatest good for the greatest number.

A version of utilitarianism which means that doing any acts, whether good or bad, would not be credited to the resulting of the greatest good, but by generally following the rules which need to be acted upon.

Objections include: the apparent pointlessness of mechanically following a rule which on this occasion will clearly not have the best results; the pointlessness or counter productiveness of following a rule which would be the best if everyone followed it but which one knows not everyone will; and the difficulty in the end of even distinguishing rule utilitarianism from act utilitarianism.

Sources:

http://www.philosophyprofessor.com/philosophies/rule-utilitarianism.php

(http://www.answers.com/topic/utilitarianism)

Sources: (en/wiki/org)/ Wikipedia, the free Encyclopedia

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