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March 6, 2015

Government intervention is rooted in the mercantilism

Adam smith 1723-1790

Free market capitalism

el!-interest"societal #ood

$ivision o! la%or&speciali'ation

o (n la%or, there is partic)lar *ork

o Findin# +o)r niche

o rend toda+ special !orces mentalit+ .sniper %)t kno* other thin#s/

o e#ative side o! speciali'ation it is a limitin# !actor

o Application o! this principle %)siness and international trade

o peciali'ation principle in trade *e prod)ce *hat is o)r advanta#e

A%sol)te advanta#e

o Foc)s on ecienc+

o here is limited reso)rces

o (t *o)ld %e %enecial to a co)ntr+ in concentratin# *here the+ are

#ood ato peciali'e on certain crops and trade

o (n trade *e import *hat *e are not ecient

orn per he )#arcane per he4hilippines 100 sacks 50 sackshina 70 sacks 120 sacks

$avid icardo 1772-123

omparative advanta#e promotes trade %)t a modication to a%sol)teadvanta#e

ach co)ntr+ speciali'ed in prod)cin# #oods !or *hich it is %est s)ited and

trades its s)rpl)s, then all *o)ld %enet

orn ice4hilippines 90 80hina 100 160

onsider the mar#in o! dierence in ecienc+

he mar#in in corn is little compared to the rice o! china: o china %etter

concentrate on the rice prod)ction: hina %eneted in importin# corn in the

4hilippines tho)#h there is little mar#in in ecienc+:

vent)all+, the ecienc+ o! 4hilippines in corn prod)ction ma+ %e at par or

even s)rpass the ecienc+ o! china in corn prod)ction

homas Malth)s 1766-138

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he persistent tendenc+ r the rate o! pop)lation #ro*th to o)tstrip the rate

o! #ro*th in !ood prod)ction

;ther scholars cited thin#s that Malth)s !ailed to consider

o echnolo#+

s la* ?s)ppl+ creates its o*n demand@

he prod)ction o! #oods&services can %e epected to #enerate the national

income that is necessar+ to p)rchase those commodities

(t is a c+cle

A sample is the i4ad there is no demand !or ta%lets %ack then %)t the+

created the demand %+ prod)cin# it:

Bal)es o! #oods and services

o )ppl+ conditions are cr)cial in shapin# echan#e val)es

Cater and #old s)ppl+ conditions

o Da%o)r is the principal cost that determines the val)e commodities

o mphasis on the nat)ral price o! commodities $istri%)tion o! income&*ealth

o apitalist prot

einvestin# the prot as a capital to make the economic pie

#ro*o Dando*ners rent

o Corkers *a#es

conomic #ro*th

o $ivision o! la%or

o pansion o! trade

o Acc)m)lation o! capital