Economics is the science which studies human behavior in selecting and creating prosperity. The core economic problem is the imbalance between human needs are not limited to the means of satisfying the needs of a limited number. The subject was then led to scarcity.
The word "economy" itself comes from the Greek word οἶκος (oikos), which means "family household" and νόμος (nomos), or "rules, rules, laws," and broadly defined as "home rule" or "management household. " While the definition of an economist or an economist is a person using economic concepts and data in the work.
In general, subjects in the economy can be divided in several ways, most notably the microeconomics vs macroeconomics. In addition, the economic subjects can also be divided into positive (descriptive) vs. normative, mainstream vs. heterodox, and others. Economics also functioned as the family of applied science in management, business, and government. Economic theory can also be used in areas other than monetary, such as the study of criminal behavior, scientific research, death, politics, health, education, family and others. This is possible because the economy is basically - as mentioned above - is the study of human choice. Many theories are studied in economics including the theory of free market economic theory circles, invisble hand, informatics economy, economic resilience, mercantilism, Britons woods, and so forth.
There is an increasing trend to apply the ideas and methods of economics in a broader context. The focus of economic analysis is "making decisions" in many areas where people faced in the options. such as education, marriage, health, law, crime, war, and religion. Gary Becker of the University of Chicago is a pioneer of this trend. In his articles he explained that the economy should not be confirmed by the subject matter, but should be defined as an approach to explaining human behavior. This opinion is sometimes described as economic imperialism by some critics.
Many mainstream economists feel that the combination of theory with existing data is sufficient to make us understand the phenomena that exist in the world. Economics will undergo major changes in ideas, concepts, and methods; although in the opinion of critics, sometimes even destroying the concept of change is correct so it does not correspond to reality. This raises the question "What should economists do?" The traditional Chicago School, with its emphasis on economics being an empirical science aimed at Explaining real-world phenomena, has insisted on the powerfulness of price theory as the tool of analysis. On the other hand, some economic theorists have formed the view That a consistent economic theory may be useful even if at present no real world economy bears out its prediction.
History of development economics
Adam Smith is often referred to as the first developing economics in the 18th century as a separate branch of science. Through his great work Wealth of Nations, Smith tried to find out the history of the countries in Europe. As an economist, Smith has not forgotten the roots of morality, especially that contained in The Theory of Moral Sentiments. The development history of economic thought and then went on to produce such figures as Alfred Marshall, JM Keynes, Karl Marx, to the winner of the Nobel Prize in Economics in 2006, Edmund Phelps.
Broadly speaking, developments in the economics school of thought initiated by the so-called classical flow. Flow is mainly pioneered by Adam Smith highlights the invisible hand in regulating the distribution of resources, and therefore the role of government to be very limited because it would interfere with this process. Invisble hand concept is then represented as the market through the price mechanism as the main instrument.
Classical flow experienced failure after the Great Depression of the 1930s which showed that the market is not able to react to the turmoil in the stock market. As penanding classical flow, Keynes proposed the theory in his book General Theory of Employment, Interest, and Money which states that markets are not always able to create a balance, and therefore government intervention should be done so that the distribution of resources to achieve goals. Two streams are then each "fight" in the world of economics and produce many variants of them such as: new classical, neo classical, new Keynesian, monetarist, and so forth.
However, developments in thinking is also developed in another direction, such as class conflict theory of Karl Marx and Friedrich Engels, as well as institutional flow of the first developed by Thorstein Veblen et al and later by the Nobel laureates Douglass C. North.
Methodology
Often referred to as the queen of social sciences, economics has developed a series of quantitative methods to analyze economic phenomena. January Tinbergen in the aftermath of World War II is one of the major pioneers of econometrics science, which combines mathematics, statistics and economic theory. Another stronghold of quantitative methods in economics is a model of general equilibrium (general equilibrium), which uses the concept of the flow of money in society, from one economic agent to another agent. Two quantitative methods are then developed rapidly until almost all the economic papers now use one of them in his analysis. On the other hand, qualitative methods as well as the development is mainly driven by the limitations of quantitative methods in describing the behavior of volatile agents.
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