The Schools of Economic Thought - Essay Example

The school of economic thought is very rich in terms of details and outstanding personalities who are considered esteemedmembers of this school of thought. The school of economics changed economic thought to say the least. The current world owes the economic revolutions that have occurred bovver the past and even presently to the highly esteemed members of the school of economic thought. The school of economic theory is not a concept that came into materialization in recent times. The school of economic theory dates back to ancient times. This is because matters finance have been a pressing issue for mainstream society and for the human race as a whole from time immemorial. It therefore follows that brilliant men and women have been emerging over the years and rising above all their peers in terms of formulating revolutionary economic ideas that tend to change national finance and also personal finance and how people manage their money and use their money and resources. The school of economics can be dated as far back as the ancient Greek empire where Plato and Aristotle stood out as the most informed and revolutionary citizens of their time as far as economics is concerned. Other economists who followed came up with revolutionary concepts of economics but all these concepts can be traced back or rather have their roots in the concepts formulated by Plato and Aristotle. The following essay focuses primarily on David Hume. David Hume is one of the most esteemed members of the school of economic thought. The following essay delves deep into the economics of David Hume and exactly what David Hume proposed and advocated. It focuses on his ideas and analyzes their relevance both in current times and the historic period in which David Hume lived and came up with these ideas (Samuels, 2003). In order to fully understand economics from the perspective of David Hume it is primarily very important to understand who David Hume was. Understanding the historical period in which David Hume lived is pivotal in unde3rstanding exactly what motivated his frame of thought as far as economics is concerned and what factors informed his insight and ideas. David Hume was born in 1711.he was born in Edinburg in Scotland. His place of birth is very significant in understanding the man and by extension the thinking of the man into economics and his contribution to the school of economic thought. The time period in which David Hume lived was the time of the agrarian and industrial revolutions. This means that economics was an integral part of mainstream society at the time. The impact of the industrial revolution was highest in Europe where Hume was born. This means that if there was an individual who could fully understand the economy and come up with revolutionary economic ideas back at the time the person had to most definitely come from Europe. Thus David Hume was placed just perfectly in terms of proximity to economic action which would fuel his interests in economics and make him one of the leading and highest esteemed economists of all time. David Hume attended the University of Edinburgh at the unique and unusual tender age of twelve. At the onset of his higher learning David Hume considered a career in law. Later in life he changed his interests and aspirations from inclinations towards law to inclinations towards philosophy and especially towards economics. This is because economics are a very large part of philosophy. A good understanding of the economy can lead to a philosophical revelation and enlightenment about a given society. Matters economy can also act towards shaping the philosophical ideas of a given people in a given place. Thus the close relationship that exists between economics and philosophy drove David Hume to pursue both and stand out among his peers as the foremost intellectual in the two fields with expertise unmatched by anyone who lived at the time and very few who came afterwards (Hume, 2005). In the historical period when David Hume lived demand was very high. This demand was the demand of a stable economic system that would bring balance and stability to the continent of Europe and to the world at the height of the industrial revolution. People needed a stable system of economics that would leave them at ease with concern to the state of their investments as well as the state of their assets. The time in which David Hume lived was also a time of heated political thought and political insight. Politics was becoming an integral part of society as a whole and people became more and more interested in politics. The interesting thing about politics is that it is directly related to matters economics. The two topics are intertwined. Politics always affects economics and the reverse is also true in that more often than not economics has a more than mild effect on politics. In fact economics is one of the main aspects or rather factors that affect politics directly and dictate the political direction which a given society will take in relation to given issues that are directly under the influence of the economics of the place. Society therefore needed someone to draw the line between politics and economics. There was a demand by the general public for an individual who would clearly outline the role that politics plays in economics and the roles that economics plays in politics. This time period also saw a great rise and increase in militarization all over Europe. There was a growing demand by the general public for an individual or rather a class of individuals who would explain to the people the effect that militarization has on the economics of their country and how it affects their personal finances either directly or indirectly. With increasing militarization there was also increased worry in terms of economic stability and the future state of the economy. Thus there was a demand by the public for the breakdown of the state of safety of the economy in light of the increasing militarization and how this militarization would affect the economy right from the state level all the way down to the very grass root level to the local citizens. The school of economic thought met all the demands of their society in terms of insight into economics and revolutionary economic ideas. The school of economic thought more than stood up to the expectations of their societies in terms of insight provision and revolution in thinking and managing economics. The reasons for the apparent success of the school of economic theory was primarily their environment these extraordinary people had the conducive environment for bringing forward and nurturing their revolutionary frame of thought with reference to economics. The primary environmental factor or rather sociological factor that led to the flourishing of the economic school of thought was demand. A good example is David Hume. He lived in a society which greatly needed someone exactly like him. The society needed someone to bring insight into economics and change the way ordinary people perceived economics. This demand leads to motivation of individual. The members of the economic school of thought were motivated primarily by the demands of their society for people exactly like them to rise up and change the economic state of the society. This demand led to an increase in supply in terms of economic intellectuals who saw the economy in a frame that no other person at the time did. This thus explains the supply factor with reference to the economic school of thought. The rampant demand led to an increase in supply and thus we have renowned economists like David Hume who changed economics of their time and even the current times. David Hume came up with the monetary theory. This theory is very important as far as money and by extension economics is concerned. This theory is especially important because it outlines the importance of money and the significance of money both at the time of the formulation of the theory by David Hume and at current times where money is beyond the shadow of a doubt the main driving force of world economies. The theory states the main purpose of money. According to the theory the primary purpose of money is exchange. This purpose stands out irrespective of value. This means that irrespective of the value of a given form of money or a given form of currency the primary role of money is exchange. This is the bottom line as far as money is concerned. An example I current times would be the currency of first world countries and the currencies of third world countries. The currencies of first world countries far outweigh the currencies of third world countries in terms of value. Irrespective of these very large disparities in terms of value all currencies are still used for exchange. This means that currencies in third world countries and currencies in first world countries are all used for exchange irrespective of their value or the disparities in value when compared to other world currencies. As a result of this fact currency has direct effects on the prices of commodities be they basic or otherwise in a given country. Increase in currency in a given country would lead to increase in the prices of commodities within the country. As prices of commodities increase within a given country this would have little effects on neighboring markets and neighboring countries. This is because more money in the country will drop the prices of the products that lead to a less impact on the other markets in neighboring countries o in locations under a different financial jurisdiction from the country in play (Marshall, 2004). In general Hume talks about market stability with reference to imports and exports and the role that money or rather currency plays in all this. Hume asserts that any surplus with reference to exports that might be encountered or in other words achieved would in turn be paid for by imports mainly imports involving gold and silver. This would greatly affect the supply of money and as a result it would cause prices of commodities to rise. The rise in prices of commodities would be inversely proportional to exports. This means that as the prices of basic commodities rise the exports would reduce until such a time that there is a perfect balance between the imports and the exports. These ideas by David Hume are very relevant especially in the current markets. This is because the current markets are more inclined towards globalization. Globalization means that there is more interaction between countries in terms of trade. International markets are thus an integral part of mainstream economics and commerce. The increasing the quantity of money in one country could lead to the collapse of international markets because it would lead to collapsing of the exportation sector and encourage the importation of much cheaper goods from neighboring countries. The importation of cheaper goods will also affect the quality of goods and material being brought into a particular country. As a result citizens of this given country might end up mot getting their money’s worth in terms of imported goods which their country may be unable to produce or manufacture. This will in turn affect the economy of the given country very negatively and might lead to wastage of a lot of money. The school of economic thought is very relevant in world economics. Though some of the theories in application in the school were made up decades or even centuries ago they still apply even in today’s economy. References Chappell, V. C. (2009). The philosophy of David Hume. New York: Modern Library. Greig, J. Y. (2010). The letters of David Hume. Oxford: Clarendon Press. Hume, D. (2003). The history of England: from the invasion of Julius Caesar to the Revolution in 1688. Indianapolis, Ind.: Liberty Classics. Hume, D. (2005). The history of Great Britain Vol. II. Containing the Commonwealth, and the reigns of Charles II. and James II. By David Hume, Esq.. London: Printed for A. Millar. Marshall, H. D. (2004). The great economists; a history of economic thought,. New York: Pitman Pub. Corp.. Parkin, M. (2001). Economics. Reading, Mass.: Addison-Wesley Pub. Co.. Samuels, W. J. (2003). A history of economic thought: the LSE lectures. Princeton, N.J.: Princeton University Press. Spiegel, H. W. (2004). The growth of economic thought. Englewood Cliffs, N.J.: Prentice-Hall. Spiegel, H. W. (2007). The development of economic thought; great economists in perspective.. New York: J. Wiley. Stiglitz, J. E. (2002). Economics. New York: W.W. Norton. Taylor, J. B. (2004). Economics. Boston: Houghton Mifflin. Wessels, W. J. (2000). Economics (3rd ed.). Hauppauge, NY: Barrons. Read More