Sociology Report

Sociology Report

John Maynard Keynes was a British economist who transformed the widely allowed traditional economic theories to make way for revolutionary economic theories. Keynes is the creator and initiator of the use of fiscal and monetary measures that are used to bring down the crisis situations brought about by economic recessions and depressions. Keynes’ thoughts and theories are followed and referred even today by economists and economy students. Keynesian ideas have been adopted by many political figures to bring positive changes in economic stability in nations around the world.

Some of the notable Keynesian economics adopters are Presidents George W. Bush and Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom. Capitalist nations and countries taking up the cause of social liberalism have strictly followed Keynes’ economic path to build their nations. It was after Keynes that the world started viewing the theory and practice of modern macroeconomics in a bigger and better manner. The much influential Keynesian economics have made way into several economic policies of governments.

John Maynard Keynes is regarded as the founding father of modern macroeconomics. John Maynard Keynes Childhood John Maynard Keynes was born on 5 June 1883 in Cambridge, England to a middle class family. Keynes was the eldest child in a family of three children born to father John Manville Keynes who was an economist and a lecturer in moral sciences at the University of Cambridge and mother Florence Dad Keynes who was a local social reformer. Keynes was given love and attention as a child by his parents.

Keynes received his primary education at home and in kindergarten. He went to SST Faith’s preparatory school as a day pupil from 1892-1897. Keynes was a brilliant student according to his teachers but had a careless nature and caked determination in studies. Education Keynes was enrolled in Eaton where he got an admission by earning a scholarship. He showed brilliance in mathematics, classics and history. In 1902 Keynes left Eaton to pursue broader studies in King’s College, Cambridge where he had earned a scholarship to pursue mathematics.

Keynes was urged by famous economist Alfred Marshall to become an economist but Keynes was more interested in philosophy. While studying in Cambridge, Keynes was influenced by English philosopher George Edward Moor’s analytic tradition in philosophy. Keynes also became a active ember of the semi-secretive Cambridge Apostles society, a debating club which was reserved for the brightest students of the college. Keynes was a great student and attended various other activities in college which made him the the President of the Cambridge University Liberal Club.

In May 1 904 he received a first class B. A. In mathematics. Keynes had maintained cordial relations with his alma mater throughout his life. In 1905 Keynes sat for his Tripods and in 1 906 he appeared for the Civil Service Exams. Career Keynes started his career as a civil servant which began in October 1906 when e joined as a clerk in the India Office. Initially Keynes loved what he was doing but by 1 908 he got bored and resigned from his office. He left for Cambridge to study and work on probability theory.

This mathematical project was initially started out by funding meted out by Keynes’ father and the economist Arthur Pig. In 1909 Keynes came out with his very first professional economics article which was published in the ‘Economics Journal’. It talked about the plausible effects the global economic downturn on India could have. In 1909 Keynes was invited to join Cambridge as a lecturer in economics. This was a course that was personally funded by Alfred Marshall. Keynes became richer with his growing earnings as a lecturer and also by giving private tuitions to his students.

Keynes also earned as a research fellow in Cambridge. In 191 1 Keynes became the editor of the ‘Economic Journal’. By 191 3 Keynes came out with his first published book, ‘Indian Currency and Finance’. It was in this year that Keynes got noticed and was appointed as a member of the ‘Royal Commission on Indian Currency and Finance’. Keynes’ expertise soon became popular making him get a call from the British Government to take up a role in the First World War. Formally Keynes had not resumed civil service in 1 914 but he traveled to London on governments’ request, days before the war.

Keynes played a key role in advising the Chancellor of the Exchequer (then Lloyd George) to not support the bankers’ demands of suspending specie payments by converting bank notes into gold. Keynes stated that the city’s reputation would be hurt if payments were stopped. In January 1915 Keynes was recruited as an official government position at the Treasury. Keynes designed British credit terms with its war lies and also laid down the plan Of collecting scarce currencies. Keynes was greatly appreciated for his role and tremendous contributions in governmental theory’ formulations.

According to economist Robert Leaching Keynes: “nerve and mastery became legendary’. It was the event of King’s Birthday Honors in 1 917 when Keynes was made the ‘Companion of the Order of the Bath’ as his appreciation for wartime contributions. This was a turning point in Keynes’ career and future life. In 191 9 Keynes moved forward by being appointed as the financial representative for the Treasury in he 19′ Versailles peace conference. Simultaneously Keynes was recruited as the Officer of the Belgian Order of Leopold.

Treaty of Versailles was significant for Keynes as he had a leading role to play in it. Keynes aimed at decreasing Germany’s war reparation as he wanted to help the nation and her people to grow. However, Keynes was excluded from the Treasury as the 1 918 coupon election decided to keep out Keynes from taking part in high level talks concerning reparations. Keynes was unsuccessful in the Treaty which completely damaged his moral. Soon he resigned from the Treasury. In June 191 9 Keynes did not take the offer of a chairman of the British Bank of Northern Commerce which was a salaried job of EYE.

Keynes was highly disgusted with the damaging treaty. He analyses the treaty and worked upon its damaging impacts which later appeared in his book ‘The Economic Consequences of the Peace’ published in 1919. Keynes upheld his brilliance as an Economist in the book. His book not only portrayed economic analyses but also urged readers’ compassion for Germany. Keynes wrote, “l cannot leave this subject as though its just treatment wholly depended either on our win pledges or on economic facts.

The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,–abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life Of Europe. ” Keynes made superb predictions Of future (bringing out senses Of compassion from readers) “If we aim deliberately at the impoverishment of Central Europe, vengeance, dare predict, will not limp.

Nothing can then Ella for very long that final war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing’ All that Keynes had predicted came out real when Germany went through its hyperinflation in the Whimper Republic between 1921 and 1923 resulting in the downfall of the Republic which brought about the World War II. With his ‘The Economic Consequences of the Peace’ Keynes was looked upon as a world figure who talked about anti- establishment.

His world fame made Keynes being offered a directorship of a major British Bank. Rise Keynes completed his ‘A Treatise on probability’ and published it in 1 921. The book rejected and attacked the traditional classical theory of probability and proposed a “logical-relations” theory. The treatise was great book that combined fundamental philosophy along with extensive mathematical formulations. In the asses Keynes upheld his journalistic career besides pursuing his academic goals. He sold his work in the international market and simultaneously worked as a financial consultant in London.

In 1922 Keynes came out with his ‘A Revision of the Treaty which was a continuing work on is persistent quests on reduction of German reparations. In 1923 Keynes attacked the post World War I deflation policies by publishing ‘A Tract on Monetary Reform’. In 1924 Keynes wrote an obituary dedicated to his former tutor Alfred Marshall which Schumacher called “the most brilliant life of a man of science I have ever read. ” In the 1 sass itself Britain saw itself struggling greatly from unemployment which made Keynes propose depreciation of sterling in order to boost the job market by making British exports more affordable.

From 1924 Keynes started taking fiscal readings to help his overspent create jobs by spending on public works. The Great Depression saw Keynes coming up with great many theories, ideas and books to deal with the situation and come out with minimum losses. Keynes published his work ‘Treatise on Money in 1930 which stated that the cause of rise in unemployment lay in the amount of money being saved which when exceeds the amount being invested, happening due to very high interest rates leads to unemployment.

In the asses itself Keynes had started stating his theories on the relationship between unemployment, money and prices which made him come up with his books in the later years. In 1933 when the Great Depression was rising very high Keynes published The Means to Prosperity which talked about policy recommendations for tackling unemployment in a global recession and counter cyclical methods in public spending. In 1931 Keynes got massive support for his views on counter- cyclical public spending in Chicago which was America’s foremost centre for economic views alternative to the mainstream in those times.

In late 1 933 Keynes was persuaded by Felix Frankfurter to address President Roosevelt directly which he obliged to by sending letters and going face to face in 1934. Keynes’ great efforts started being adopted by America to formulate its economic policy post 1939. Several Keynesian policies were adopted by Sweden and Germany. Keynes greatest work the ‘General Theory of Employment, Interest and Money’ was published in 1936 which entirely challenged the previous neo-classical economic paradigm which believed that the market would naturally establish full employment equilibrium if it was not controlled by government interference.

II World War In 1 940 Keynes came out with his “How to Pay for the War” which discussed about the methods and techniques like taxation, compulsory saving essentially workers loaning money to the government), rather than deficit spending that could well save nations from war losses. His book was all about war efforts that were to be taken in order to ensure financial stabilities. Keynes was invited to join as one of the Court of Directors of the Bank of England in September 1941 which he served till April 1942.

In June 1942 Keynes got rewarded for his services with a hereditary peerage in the King’s Birthday Honors. On 7 July Keynes was upgraded on his title, being gazettes as Baron Keynes, of Tilting in the County of Sussex. Keynesian Economics Keynes is regarded as a man having the greatest impact on 20th century economy around the world. Though Keynes’ economics were rejected by the British government many of his theories have been combined with neo- classical economics to produce Neo-Keynesian economics.

Several nations adopted Keynesian economics to formulate their country’s economic and governmental laws. Since the end of the Great Depression till the mid-asses, Keynes inspired many economic policy makers in Europe, America and much of the rest of the world. Renowned economist like John Kenneth Calibrating, John Hicks, Franco Midmorning, and Paul Samuelsson have been greatly influenced by Keynesian theories and ideas which led them to interpret Keynes’ theories and form new age modern economic theories.

Personal Life Keynes was to known to have several romantic and sexual relationships with men. Keynes had been in love with artist Duncan Grant, whom he met in 1908. According to other records Keynes was also involved with writer Layton Strachey. Keynes had been open about his homosexual affairs. In the period between 1901 tool 915 he maintained separate diaries in which he tabulated his many homosexual encounters. In 1921 Keynes fell in love with Lydia Lollipop, a well-known Russian ballerina, and one of the stars of Serge Dishabille’s Ballets Reuses with whom he got married in 1925.

Death Keynes was a hardworking individual and did not think about health during his work, whether for the public nor for his friends and family. Keynes was attacked by a series of heart attacks which turned fatal. Keynes died due to a heart attack which took place at Tilting, his farmhouse home near Fire, East Sussex, I-J, on 21 April 1946. 2. Adam Smith Early Years While his exact date of birth isn’t known, Adam Smith’s baptism was recorded n June 5, 1 723, in Kirkland, Scotland. He attended the Burgh School, where he studied Latin, mathematics, history and writing.

Smith entered the University of Glasgow when he was 14 and in 1740 went to Oxford. Professional Life In 1 748, Adam Smith began giving a series of public lectures at the University of Edinburgh. Through these lectures, in 1750 he met and became lifelong friends with Scottish philosopher and economist David Home. This relationship led to Smith’s appointment to the Glasgow University faculty in 1751. In 1 759 Smith published The Theory of Moral Sentiments, a book whose main contention is that human morality depends on sympathy between the individual and other members of society.

On the heels of the book, he became the tutor of the future Duke of Buckled (1763-1766) and traveled with him to France, where Smith met with other eminent thinkers of his day, such as Benjamin Franklin French economist Turbot. In his book “Wealth of Nations”, Adam Smith puts his ideas of free market and examines the conditions, which lead to an industrial revolution. Two hundred fifty years before he raised a question that still remains central in today’s world. Why do residents in one nation have higher incomes then those in other?

Why do those incomes persistently rise in some countries and fluctuate around in others? According to him, in a free market a Government should have a limited proper well defined role in the society. Government should provide national defense, the administration of justice and public goods. In other words Government should provide only those goods and services which a free market cannot provide. In “Wealth of Nations”, Smith talks about two important aspects of the economy, which are division of labor and Invisible hand. According to Smith division and specialization labor is very important.

Unlike the modern approaches to technical advances linked to the capital investment process, Smith emphasizes the importance of the organization of production as representing the source of technical progress. The division of labor refers to the fresh forms of specialization separating the production process into compartments, each one performing different tasks with varying rates Of profits for comparative advantages in the trade. Income level of any country depends on the level of degree of division of labor they have attained.

The method to run a free economy is competition, buyers and sellers striving against each other to gain more customers and profits. When sellers compete, they lower prices improve their products and offer specialized deals to gain more customers. The sellers are motivated by the self interest, they think about what is in there for me? The factor of self interest comes into play. Instead of being motivated by the fixed prices by the government, the sellers choose prices and run businesses to make as much profit as possible. Any product people demand will be supplied by someone ready to earn profit.

Thus everything people need is fulfilled without Government getting involved in the business. This system was called “free market” by Smiths, which is run by an “Invisible Hand”. The self – interest is the invisible hand that runs the free – market, which means the markets are self regulated. Even though Smith realized that free markets are not perfect, he understood that generally speaking, more than any other alternatives available free market concept is able to advance wealth and welfare. Instead of gains for both parties arising from each transaction, citizens must pay whatever service s offered in return.

This leads to poorer lives. The simple truth is that, when free to do so, individual and families look after themselves than distant, too powerful government. In Smith’s view of the workings of the market system, any short-run deviation of the market price from the long-run price would trigger the forces of competition-?by which Smith meant profit-seeking entry and loss-avoiding exit-?which would eventually take the market price to its long-run level. Smith ‘s theory of wages was a form of the Iron Law of Wages which held that ages are by and large equal to the subsistence level of wages. If wages exceed the level that is just enough to keep the worker and his dependents alive, there will be an increase in population that will drive wages down to the subsistence level. If wages fall below what the workers need to stay alive, population will fall and wages will rise to the subsistence level. ) This meant that any increase in total output went not to the workers but to capitalists who would save and invest in machinery that would make possible further division of labor and technological progress.

Smith thought of rent as a residual that is leftover after wages and profits had been paid out of total output. Wages would be reduced to the subsistence level, as I said before. Competition will gradually reduce the rate of profit to a low level that would also be uniform across all industries. Therefore, only those who earn rent income would benefit from progress. In his book “the Theory of Moral Sentiments”, Smith argued that as people are able to imagine what others are going through, they are able to empathic with the sufferings of others.

When the experiences of others are felt as our win experience, our instinctive pursuit of self-interest can lead us to pursue the interests of those others. So, it is perfectly consistent to believe that human beings pursue self-interest and are generous towards others. Moreover, apart from the human ability to empathic with the sorrows of others, the sheer practicality of peace-?the fact that we realize that it is necessary for prosperity-?may be enough to encourage good behavior. As one might expect from Smith’s conviction that markets were extremely efficient, he was in favor Of a government that did not hamper the working Of he market.

However, Smith emphasized the fact that the government should maintain law and order, ensure the defense of the nation from foreign enemies, erect and maintain public works that private citizens will not build, and subsidize the education of those who could not afford it. 3. DAVID RICHARD David Richard (April 18, 1772 – September 11, 1823), was a British economist, a successful businessman, financier, and speculator, and amassed a considerable fortune. He is credited with systematizing economics in the nineteenth century, and was one of the most influential of the classical economists.

Despite his relatively short career, Orchard’s work in economics was foundational to many later developments in the field. Both those who favored his laissez-fairer capitalism, and those who opposed it, drew on his work despite their abstract formulation. As a politician, albeit briefly, Richard was able to present his opinions regarding various issues, and his stature in the newly emerging field of economics caused them to be received with respect and acted upon. His promotion of free trade supported the growth of British industry.

While Orchard’s theories have been modified and pressured, his foundational role in the development of economics remains, as does much of Britain ‘s economic success and influence in the world during the nineteenth century. Biography Born in London, ‘David Richard was the third of 17 children in a Shepherds Jewish family (from Portugal) that emigrated from the Netherlands to England just prior to his birth. At age 14, Richard joined his father at the London Stock Exchange, where he began to learn about the workings of finance. This beginning set the stage for Orchard’s later success in the stock market and real estate.

Richard rejected the orthodox Jewish beliefs of his family and eloped with a Squeakers, Priscilla Anne Wilkinson, when he was 21 . He later became a Unitarian, and was disinherited by his family. It is likely that his mother never spoke to him again. Richard became interested in economics after reading Adam Smith’s The Wealth of Nations in 1 799 on a vacation to the English resort of Bath. His work with the stock exchange made Richard quite wealthy, which allowed him to retire from business in 1814 at the age of 42. He then purchased and moved to Catacomb Park, an estate in

Clotheshorse. In 181 9, Richard purchased a seat in the British parliament as a representative of Prolongation, a borough in Ireland. He held the post until the year of his death in 1823. As a member of parliament, Richard advocated free trade and the repeal of the Corn Laws. Richard was a close friend of James Mill, who encouraged him in his political ambitions and writings about economics. Other notable friends included Jeremy Beneath and Thomas Robert Malthusian, with whom Richard had a considerable debate (in correspondence) over such things as the role Of land owners in society.

He also was a member of Loon’s intellectuals, later becoming a member of Malthusian’ Political Economy Club, and a member of the King of Clubs. He died at Catacomb Park at 51 years-of-age. WORK Richard first gained notice among economists over the “bullion controversy. ” In 1 809 he wrote that England’s inflation was the result of the Bank of England’s propensity to issue excess bank notes. In short, Richard was an early believer in the quantity theory of money, or what is known today as monetarism. His law of rent was probably Orchard’s most notable and influential discovery.

It was based on the observation that the differing fertility of land yielded unequal profits compared to the capital and labor applied to it. His other great contribution, the law of comparative cost, or comparative advantage, demonstrated the benefits of international specialization of the commodity composition of international trade. Law of Rent Richard formulate the “law of rent’ around 1809. It was the first clear exposition of the source and magnitude of land rents, and is among the most important and firmly established principles of economics.

The Law of Rent tastes that the rent of a land site is equal to the economic advantage obtained by using the site in its most productive use, relative to the advantage obtained by using marginal (the best rent-free) land for the same purpose, given the same inputs of labor and capital. To see how competition generates rent and, therefore, determines the magnitudes of the two remaining shares, we follow Orchard’s original logic. He began by noting that if land is not scarce, then it generates no rent.

If all land had the same properties, if it were unlimited in quantity, and uniform in quality, no charge could be made for its use. Richard 1821, 71) But, of course, land is scarce and of differing qualities. As population increases, it becomes necessary to cultivate less quality land. Given competition among farmers, and assuming, for example, that there is a difference of ten units of corn in profits between the highest quality land and a low quality land, the farmer on the lower quality land would bid up to ten units in order to farm on the highest quality land.

As Richard tells the story, the landowner of the higher quality land would insist on a ten unit rent and if the original tenant refused, some other person would be found willing to vie all which exceeded that rate of profit to the owner of the land from which he derived it. (Richard 1821 , 72) With this simple model, Richard could explain how the two remaining shares, rent and profits, were determined. The logic is crystal clear: 1 . A given population requires a certain amount of food. 2. The lowest quality land called into cultivation generates some profit (total revenue-?wages). 3.

This profit becomes the prevailing profit through competition among farmers-?any difference between the profit generated by higher quality land and the profit generated by the lowest quality land accrues to the landowner as rent. This law has a number of important implications, perhaps the most important being its implication for wages. The law of rent implies that wages bear no systematic relationship to the productivity of labor, and are instead determined solely by its productivity ‘ion marginal as all production in excess of that amount will be appropriated by landowners in rent.

The law of rent makes it clear that the landowner has no role in setting land rents: he simply appropriates the additional production his more advantageous site makes possible, compared to marginal sites. The law also implies that the landowner cannot pass on the burden of any cost such as land taxes to his tenants, as long as such costs do not affect the relative productivity of his land and marginal land.

Theory of Comparative Advantage In his 1815 work, Essay on the Influence of a Low Price of Corn on the Profits of Stock, Richard articulated what came to be known as the “law of diminishing returns. ” One of the most famous laws of economics, it holds that as more and more resources are combined in production with a fixed resource-?for example, as more labor and machinery are used on a fixed mount of land-?the additions to output will diminish. Richard also opposed the protectionist Corn Laws, which restricted imports of wheat.

In arguing for free trade, Richard formulated the idea of comparative costs, today called “comparative advantage. ” Comparative advantage, a very subtle idea, is the main basis for most economists’ belief in free trade today. The idea is this: A country that trades for products that it can get at lower cost from another country is better off than if it had made the products at home. Richard illustrated this by means of a comparison of the productivity of two imaginary Mounties, “Richland” and “Portland. ; The gains in foreign trade for both of his imaginary countries come, Richard observed, because each country specializes in producing the goods for which its comparative cost is lower (Richard 1815). In his example, both countries produce wine and bread, but “Richland” workers are more productive, requiring fewer hours Of labor to produce each item: One might think at first that because Richland requires fewer labor hours to produce either of the goods, it has nothing to gain from trade. Think again.

Please follow and like us:
Haven’t found the essay you want?