2012-03-19 12:03:25
May 08 2010 | Filed Under Economics , Financial Theory , Students
There is an old joke that is often told about economists: Three economists are
hunting ducks. The first shoots 20 meters ahead of the ducks, the second shoots
20 meters behind the ducks, and the third says, "Great job! We got them!"
All jokes aside, there are many economists that do incredible jobs and there
are some who have made contributions in financial history that crossed over
into many aspects of social history as well. In this article, we'll show you
five of these economists and explain their impact on society.
1. Adam Smith (1723 to 1790)
Adam Smith was a Scottish philosopher who became a political economist in the
midst of the Scottish Enlightenment. He is best known for writing "The Theory
of Moral Sentiments" (1759) and "An Inquiry into the Nature and Causes of the
Wealth of Nations" (1776). The latter, mostly known now as "The Wealth of
Nations", is one of the earliest and the most famous pieces that discussed
industry and commerce, and this is believed to be one of the major contributors
to modern academic discipline economics.
Smith's arguments against mercantilism and in favor of free trade were a stark
challenge to much of the protectionism, tariffs and gold-hoarding that
prevailed at the time. He entered the University of Glasgow at the age of 15,
and studied moral philosophy. His original interest in Christianity has been
recorded as one that was ultimately rejected as that of a Deist, although this
has been challenged. Adam Smith is sometimes called the father of modern trade
in a world gone global. Imagine how much slower life would be had free trade
not been encouraged and if hoarding of hard assets was the theme: economic life
would be fairly bleak. At the end of his life, Smith had most of his
manuscripts destroyed, and while some survived, the world never learned of all
his final notes. (For related reading, see What Are Economies Of Scale? and
Economics Basics.)
2. David Ricardo (1772 to 1823)
A large family could have contributed to Ricardo's drive - he was the third
child of seventeen children from a Portuguese Jewish family.
His contributions to the study of economics were more hands-on than Adam
Smith's; Ricardo joined his father to work on the London Stock Exchange at the
age of 14, and quickly became successful at speculating on stocks and real
estate.
After reading Smith's "The Wealth of Nations" in 1799 he took an interest in
economics, although his first economics article was published nearly 10 years
later. Ricardo was best known for the belief that nations should specialize for
the greater good. He was also vocal in carrying forward the argument against
protectionism, but he may have made his greatest mark on rents, taxation, wages
and profits by showing that landlords seizing wealth at the expense of labor
and renting were not good for the greater society.
He became a member of British Parliament representing a borough of Ireland in
1819, but he is one of the shorter-lived of the great economists because he
died at age 51 in 1823. His greatest work "Essay on the Influence of a Low
Price of Corn on the Profits of Stock" (1815) argued to repeal the corn laws at
the time to better spread the wealth, and he followed it with "Principles of
Political Economy and Taxation" (1817).
3. Alfred Marshall (1842 to 1924)
Marshall was born in London, and while he originally wanted to be in the
clergy, his success at Cambridge led him into academia. Marshall may be the
least recognized of the great economists, as he did not champion any radical
theories, but he is credited with attempting to apply rigorous mathematics to
economics in an attempt to turn economics into more of a science than a
philosophy.
Despite his emphasis on math, Marshall strove to make his work accessible to
regular people; his "Economics of Industry" (1879) became widely used in
England as curriculum. He also spent almost 10 years working on the more
scientific "Principles of Economics" (1890), which proved to be his most
important work. He is most credited with perpetuating supply and demand curves,
marginal utility and marginal production costs into a unified model.
4. John Maynard Keynes (1883 to 1946)
Historians sometimes refer to John Maynard Keynes as the "giant economist". The
six-foot-six Brit accepted a lectureship at Cambridge that was personally
funded by Alfred Marshall, whose supply and demand curves were the basis for
much of Keynes' work. He is particularly remembered for advocating government
intervention and monetary policy to mitigate the adverse effects of economic
recessions, depressions and booms. During World War I he worked on the credit
terms between Britain and its allies, and was a representative at the peace
treaty signed in Versailles. (To read more about his theories, see
Understanding Supply-Side Economics and Formulating Monetary Policy.)
Keynes was almost wiped out by the crash of 1929, but he was able to reaffirm
his personal fortune. Keynes wrote the "General Theory of Employment, Interest
and Money" in 1936 as the answer to the Great Depression to encourage
government spending to promote consumption and investing. This has been deemed
as the launch of modern macroeconomics. (To read more, see Macroeconomic
Analysis.)
5. Milton Friedman (1912 to 2006)
Milton Friedman was the last of four children born to Jewish immigrants from
Austria-Hungary. After getting his Bachelor of Arts degree at Rutgers and his
master's at the University of Chicago, he went to work for the New Deal, a
series of programs designed by U.S. President Franklin D. Roosevelt to provide
relief to and recovery from the effects of the Great Depression. While Friedman
was in favor of the New Deal overall, he was opposed to most government
programs and price controls.
Milton Friedman was more of a laissez faire economist. He was for minimizing
the role of government in a free market as the means of creating political and
social freedom. These ideas formed the basis of his book "Capitalism and
Freedom" (1962). He is perhaps best known for promoting free markets and
credited with modern currency markets. His flotation in unregulated and
unpegged markets was to the tune of "money is worth what people think it is
worth." His works were even circulated underground during the Cold War, and
were the basis for a consumption-tax based economy rather than an income tax or
wealth tax. (To find out more about Friedman's ideas, see What Is the Quantity
Theory of Money?)
Friedman believed that introducing capitalism to totalitarian countries would
lead to the betterment of society and increased political freedom. Friedman won
the Nobel Memorial Prize in Economic Sciences in 1976, and was adamant about
the link between money supply and inflation. He gave a speech in 1988 to
Chinese students and scholars in San Francisco that was deemed to be part of
the Chinese economic reform in which he referred to Hong Kong as the best
example of laissez-faire policies.
From Here On
Many economists work very hard to produce theories and ideas that they feel
will help create a better society for all involved. Where these ideas are
picked up and adopted into the everyday is how you divide the wheat from the
chaff.
All of the men we covered had a profound effect on the world, but only time
will tell how they impacted our current economists as they develop and shape
where we head next.
To continue reading on this subject, see Hairline Fractures: Exploring The
Dismal Science.
by Jon Ogg