Fundamentals of economic theory as a basis for effective activities of any kind

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

Any business and any activity should be based on economic knowledge. Only the ability to analyze the activities of an economic entity in the current market situation will allow the organization to work effectively and profitably. It is for this that any leader, manager and, of course, an economist must know the basics of economic theory. After all, exactly what all modern commodity-money relations are based on, the principles of the market and the models of its development lie in the teachings of great people who proved on paper and practice the need for knowledge and possession of the basics of planning and analysis.

Fundamentals of economic theory include a huge number of questions that characterize the emergence, formation and development of economic thought and the economy as a whole from different points of view. The beginning of the process of the birth of this science was laid by the ancient philosophers - Aristotle and Xenophon. It was they who first used the term "economy". This word has Greek roots and at that time meant the science of housekeeping.

Teachings and reflections of Xenophon wererethought already by medieval men. The first of these was Montchretien, who represented the very first economic school - the school of mercantelism. In the ranks of adherents of this trend, the science of economy began to be regarded as a set of laws according to which not only the domestic economy, but the entire public economy as a whole develops.

The physiocrats (Quene and Turgot) made their contribution to the foundations of economic theory, considering agriculture as a source of the main and undeniable income. The classical school studied political economy on the basis that this science is based on the foundation laid by the theory of labor value. At the same time, its founders (Smith and Ricardo) saw the main source of enrichment in production and free market relations.

Of course, figures of such a movement as Marxist political economy played a huge role in the development of the foundations of economic theory. Its most prominent representatives and founders - Marx and Engels - argued that the flourishing of society is in socialism, in the complete renunciation of capitalist habits and in the rule of state power, freely and legitimately chosen by the people.

The term "economy" was introduced by Marshall, a representative of the neoclassical school. It was he who began to consider and study the principle of formation of the market price and the factors influencing it. Adherents of this theory analyzed the interaction of supply and demand as the relationship between the seller and the buyer, their behavior and psychological factors influencing their choice.

Keynes(founder of the Keynesian school) amends the principles of economic theory founded by the neoclassicists, believing that the market mechanism cannot be self-regulating - for its he althy growth and development, government intervention in the form of budgetary and monetary policy is necessary. The follower of this trend was the institutional direction, which developed the theory of post-industrial society.

It is safe to say that any school considers the economy from one side that is more convenient for them, therefore idealistic aspirations are present in their teachings, which cannot exist without being separated from other significant components. No doctrine can be fully adapted to current conditions, therefore, modern economic theory is a combination of all views, supplemented by a variety of facts, theories and axioms.