General Competing Theorists
Economic theories are theories that define how the market forces are related in the business world. They people who stipulate these theories are called economic theorists and they play an important rule in ensuring that economic level is achieved and raised (Adelman, 2003). When these economic theories are applied, they may lead to a large amount of profit for the organization or a country at large (Caravale, NisticoÌ & Tosato, 2006).
The main theorists known in the world are many but the major three include Adam Smith, also Karl Marx and the last is John Maynard Keynes. They all played an important role as first people to think of economic theories that are employed or put into use to date. Modern economists who received the nobel prizes for their work include Elinor Ostrom, Paul Kraugman, Daniel Kahneman, a group of philosophers Harsanyi, Nash Jr and Reinhard Selten, James Buchanan and Robert Merton (Mackie, 2008).
Adam Smith founded one of the classical economic theories in the society which was known as, “the invisible hand of capitalism”. Smith tried to explain the importance of individuals in the society who produce goods and are purchased by others. This theory opened up thoughts for other philosophers to think about the market and expand the knowledge they got. In his theory after examining world business affairs showed that indeed there is an invisible hand that is self regulatory and is hard to proof (Adelman, 2003).
Karl Marx, on the other hand didn’t see any growth in the market as exposed to the opinions of Adam. Marx came up with a theory that exposed the level of exploitation that is in the economy (Mackie, 2008). In his explanation he saw that in the society there is the capitalist who has capital and uses it to create a company and also there is the employee who is employed under low pay. The capitalist uses the labor of his lowly paid employees to advance his wealth while the employees stagnate in their economy. This therefore resulted in having two classes of people in the society. In his view, Marx sees it as that it has great impact on the societies (Nonz, 2009).
Keynes, a British genius thought that the economy was no longer running as it had been stated by Adam Smith and the invisible hand was no longer employing, also the was need to intervene on the role of the capitalist as suggested by Karl, in his view he proposed that the government should intervene by spending money that will help the economy and help the demand of good and also services to rise and be running again (Mackie, 2008).
Elinor Ostrom a modern economic theorist showed his interest in studying economics and came up with a theory that suggested that the economy of communities can be raised by a group of individuals coming together to manage the their resources. In her explanation, she said that in order for the society to get use of their resources, they should come together and gather resources and manage themselves (Nonz, 2009). She explained that the resources will be effectively managed because they are close as opposed to the government.
Paul Kraugman, an American economist, professor and a Nobel Prize winner came up with theories that mainly go hand in hand with his works on international economics. Paul came up with three theories which are trade theory, second economic geography and lastly international finance. Trade theory is one that emphasized on the advantage that different countries had on the others and aimed in showing how this profited them (Adelman, 2003). Also, other countries would produce different goods they produced best and exchanged for what they don’t have. For example, a country best in producing agricultural products would exchange with those best in industrial products (Nonz, 2009).
In his theory economic geography, as an advancement of the trade theory he said that as the countries trade with other countries, the economy will not be evenly distributed and as a result it will be concentrated in regions that he called economic regions. Though the countries become densely populated, they are also high in economic outcome. His theory international finance, Paul explained that an economy with a misaligned had a possibility of attack and downfall in its currency. In that case he showed how to easily control the currency (Caravale, NisticoÌ & Tosato, 2006).
Economic theorists support their work by explanations and creation of economic models. They aim in explaining and giving proofs to be understood properly. They give clear illustrations and model the work in the best way possible (Nonz, 2009).
In conclusion, we have seen that economic theorists played a major role in defining the mechanisms that are very important in the market. These theories have assisted greatly in showing the market demand forces and creation formulas. Countries employ these theories majorly to see a balanced and a healthy economy. Most importantly is to see that its citizens get the best of all live standards.
Adelman, I. (2003). Theories of economic growth and development. Stanford, Calif.: Stanford University Press.
Caravale, G., NisticoÌ€, S., & Tosato, D. A. (2006). Competing economic theories: essays in memory of Giovanni Caravale. London: Routledge.
Mackie, C. D. (2008). Canonizing economic theory how theories and ideas are selected in economics. London, England: M.E. Sharpe.
nonz, f. (2009). Competing Economic Theories. Abington, Oxon: Taylor & Francis Ltd. / Books..
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