Capitalism ''Founder of Economics''

CAPITALISM

          Some of authors said ''It wasn't born in UK first.'' They said '' It was emerged in medieval 17th Italy and Netherland.However, capitalism, as a whole, both economic and social processes and relations that lag behind the commercial and production for profit, came to the forefront in the 18th century in UK. Propulsive force of capitalism, expansion,exploitation,oligarchic management this three were the respond of search of systematic requirement.Capitalism will be possible by fulfilling these requirements - but only if and only if,as long as it strengthens and remains strong colonialism,industrialism,nationalism. If all of this fulfilled and the development of enough elements from its pioneer elements also gives life to capitalism.Politically, it is the system of laissez-faire (freedom).

          Economy, was born with capitalism. No doubt,the ''economic'' activities was also present before capitalism.But these activities: Ancient, medium, early, modern, in the ages, the social formations continued in whole of institutional and social values.They did not control the larger social processes.Adam Smith came up with an suggestion of "an economic system" that could be left it "its own" whose source is laissez-faire for the first time.

           What leaves the traditional economy theory vulnerable? I think '' Policy, comes before Theory.' Ideas and contributions in the development of theory, by theorist; seen,perceived,comprehended, perceivable of strain or effect socio-political problems and in the framework of possibilities,emerged.

           Priority generalizations,in their most obvious forms of 'mercantilist' are seen in the policy brochures of the 17th and 18th centuries.Actually these reports, related with about commercial or industrial branches for the start a policy,change or end, it addressed to state.

Generalities, it was visible much more depth and container theorists too.

           Different by each others, Adam Smith,Karl Marx and J.M Keynes,respectively,

theoreticians who said that ,capitalism wants to pay attention, they had to be need demolished and saved.

BIRTH:

ORIGIN OF CAPITALISM

           Meaning of capital, principal money,all commodities for convertible into money.Capital is concrete reality.It is constantly active and effective.it masses of tools that are easily recognizable.Capisalist, a person who oriented the capital in never-ending production process. But this for the be able to deserve the name it should join recurring production process.Unused money - in treasury money - it wasn't capital,at the same time unused forest too.

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Mercantilist Doctrine

MERCANTILISM

        In West Europe countries, with the end of the medieval and period between industrial revolution, it appears with collapse of feudalism and establishment of strong central states.Economically, this epoch was ,the conditions of the preparing capital accumulation and market economy, while commercial capitalism's the age of development.Mercantilism, reflecting the ideology of the new commercial capitalist class as '' Economic Policy'' , roughly it was determined the principles of ''Economic Policy'' of national countries for three centuries.

''Economic Policy'' phrase used first by Mercantilists.

Conditions That Prepare The Economic Infrastructure and Economic Thinking

        Towards the end of the medieval ages,Some of factors, it will be change the economic bases of western european society,emerged.Once, trade expanded with overseas explorations.Followed by gold flowing to Europe,it raised the prices and it enlarged the commercial capital and it opened profitable new business sectors, on the other hand immovable property revenues and living nobility. it made them poor.Secondly,changes in agricultural production techniques destroyed to subsistence traditional economy order.Agricultural production changed own ways to market,it became bound with market laws to commercial capital.With the possibilities of increased profit in commercial, it was effective to development in ''individualism'' ,the movement of Reformation in Religion and Renaissance and humanism.

        The commercial devolopments, it made conflicting the merchants interests,they started to need central guards to save them from opponents.Establishment of the Monarchy and Central countries,beside the development of commercial it made possible to apply Economy Policy.Mercantilists said ''The profit of Merchants was identical with national interests,it was form of strong of country.'' For the merchants have a identicals with national interests,mercantilist doctrine as '' Monarchy and newly developed countries '' approximately it was represented the ''Economic Thought''' for three hundreds centuries.

Economic Thought of Mercantilism

     Basic Principles

1. Mercantilists brought principle of love and loyalty to gold and valuable metals.
2. For them there was a only one important things its as large as possible to collect,save gold and silver.
3. They believed that Economy Policy had to be a protector and statist before everything else.
4. For their military interests they tried to encourage population growth.

       ''Residual'' known by Mercantilists, it can only be achieved with foreign commercial balance.

        One country became rich while another country became poor. Mercantilists knew that so they confirmed, there was conflict of interest of countries.Protectionism in foreign commercial,it was became their 'foreign commercial policy.' This thought completely different from ''Liberal Economic Doctrine.''
        Mercantilists really care of with money,especially they regarded money as identical with capital,this situation needs to provide more by in foreign trade balance protection policy.In the related ages and countries currency was gold and silver metals.The banking system has not improved enough.Under these conditions,the only to increase the valuable mine supply - the related valuable mine as long as it is not produced in the country - thanks to foreign commercial balance, to country , to provide to valuable mine entry.

Mercantilists said ''The greatest treasure of a country, a well-nourished population.''

National Wealth Concept

          Mercantilism '' national wealth '' tended to keep the interests of merchants in the foreground.The countries power being in wealth.Wealth occurred from valuable metal mine.

The valuable metal mines obtained from foreign commercial surplus.

Countries Merkantilist Policy

Has become '' economic policy '' system that shows differences in every country of Europe.It has not been a ordinary system.

1. British-Holland School:This school's members directed theirs ways to free commercial and production. This school became ''Merchants' Thought.'' more than others.
2. French School(Colbertism):They supported state handed industrialization.
3. German School(Cameralists):They gave their importance to state finance and state management;their publications have written by public enterprise directors, university profs, government advisors.
4. Italian-Spain School:They focused on money subjects;Reason of being Catholic they couldn't get rid of medieval thoughts.

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Physiocracy

PHYSIOCRACY

 ''Capitalism In Agriculture''

What is the meaning of Physiocracy?

   

         Physiocracy is a school founded by  François Quesnay. Physio  meaning of ''nature'' , cracy meaning of ''rule'' . As a result that is all mean ''Rule of Nature.'' Actual members of this school didn't call themselves as a Physiocrat, they called themselves as an Economists.

         Liberal economic doctrine or laissez-faire*. In the eighteenth century Physiocracy emerged as a reaction to Mercantilism and emerged as the representative for the newborn industrial capitalism.

Initially, it was appropriate to France's economic structure; it was representativing agricultural capitalism.Later, it started to be a representative as a new industrial capitalism in France and England. New rising entrepreneur class,they all against the every limited activity of own in public. Mercantilism's monopoly, public inspections,privileges,the lands of the aristocrats, they were against of all but for their own benefits they were want fredom, personal initiative and audit.

          In fact, economic thought of the physiocrats who established a short effective economic theory system, '' In 1750 wasn't available. In 1756-70, everyone was talking about it but in 1780 everyone forgot it.''
         
        Physiocrats didn't see the money as only a 'sharing goods' , at the same time , they didn't forget to keep in mind the effect of on total economic activity. The following school, they watched different ways from schools of Classics and Neo-Classics, Physiocrats didn't see 'saving money' as beneficial.

Representatives of Physiocracy

Outlines of Physiocrat Doctrine

Natural Order

Net Income

Single Tax and Free Foreign Trade

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1-Natural Order

       Physiocrats's orders,It is a regularity desired by GOD for people's happiness. People should learn this order. People's personal interest shouldn't go against thsi order.

2-Net Income

        According to Physiocrats net income,roughly meaning of today's national income. According to Physiocrats net income can only be taken from agriculture. Because the only point of cooperation its agriculture.

3-Single Tax and Free Foreign Trade

        Single tax was result of net income theory.Physiocrats,for the successful execution of the single tax system,they also saw the need to increase net income.For this, They thought the small village agriculture should be equal with big capitalist agricultural businesses.

      

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François Quesnay ''Tableau Economique''

As a source of social surplus: Interclass circulation of ''Soil and Surplus''

           Quesnay, a medical doctor, in Tableau Economique, he tried to explain surplus of circulation and various social classes completely.His analysis, presence of land ownership,land owners have earned rent from agricultural producers, the producers had the capitals, they employed wage workers in agricultural production and they used themselves capitals, there was no foreign trade, there was a closed economy; social savings were only enough for the renew capital, and there wasn't net capital.

  Society occured only three clasess:

1. Land owners, they held the land ownership. ( landlords,king...)
2. Hirers in agriculture,they made agricultural production(farmers,workers...)

• They were the real productive class.Because, they made a produit net(net product), eveyone(lords,kings,queens,government,others....) needed themselves products.

      3. Steriles(artisans,merchants...)

• They didn't make produit net.

           When we came to the circulation and re-creation of the net income, social classes:In here,there was a yearly environemtal trend both goods and money stock.At the end of the harvest,in producers stocks with all net product, there was presumed like they stocked the money stocks too.

In his work, he showed how the total product that is created in agriculture is divided between the existing social classes.

          He likened the ''Tableau Economique'' to blood circulation because he was a doctor.

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Macro Economics"Self-balancing" model: QUESNAY

What did Quesnay do?      

   

           The works of Physiocrats with  ''Natural Order'' to understndn all economic order, in a reasonable and consistent thought line it was the 'first try' to way of explain.This first try, at time same time beginning of economy theory. Although they are laissez-faire originates from the understanding of natural order, the physiocrats made a great contribution to the development of economic analysis and theory.


            Physiocrats,like mercantilist they were searcing ''Source of Wealth.'' but diffreent from mercantilist, they said ''Weatlh wasn't born from barter, it was born from agricultural production.''Their analysis, for the 'make wealth' and necessity of accumulation 'surplus', which led to the investigation of what was born of the production activity.This is the birth of the surplus,while examining the circulation among various classes of society,they consistently succeed in abstraction and model building.



We will continue with the Quesnay's ''Economic Table.''

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Adam Smith

      

Adam Smith 

''The Wealth of Nations''

           

              Firstly,We need to know who is Adam Smith? Some of us know him as ''Father of Economics''but a lot of people know him as a professor of philosophy(moral). Mr.Smith was born in Kirkcaldy,Scotland in 1723. Mr.Smith has a fantastic life of his whole life. It wasn't a very ordinary life that is why his perspective was changed. At the age of four Mr.Smith was kipnapped....A few months later,Mr.Smith was found by his uncle. 

             Mr.Smith had an early educational life. At the age of fourteen Mr.Smith  started education as a student about moral philosophy in Glasgow University*. At the relevant university, Mr.Smith have the thoughts of Fredoom,Law.... His family was religious. Mr.Smith thougt like '' Religions is blocking Economics.'' So Mr.Smith's Economic thoughts are on atheism.At the relevant university Mr.Smith became professor. Mr.Smith attended more than fifteen conference whole of his professor life. Mr.Smith wrote a book about some of his conference in Glasgow name of ''The Theory of Moral Sentiments.'' With that book his fame started to known by others.The other book of him name of ''An Inquiry into the Nature and Causes of the Wealth of Nations.'' with this book Mr.Smith became famous.

          Mr.Smith died in 1790 in Edinburgh,Scotland. His testament was fulfilled by his friends. Mr.Smith left many notes and unpublished writings behind him, but instructed him to destroy everything that was not suitable for publication.

Signature of Adam Smith

The Wealth of Nations

         The main theme of this book ''Economic Growth''  We could call the book as a ''Handbook of Classical Economy.'' 

         One of the main points of the books is that although the free market seems complex and uncontrollable, it is actually directed by a "invisible hand" to produce the right amount and variety.

Mr.Smith knows the reasons why people move into action, because they were *selfish and greedy.*

The positive reasons of that competition in the free market, it showed to helpful all society by keeping prices down. For Mr.Smith at the same time this competition encouraged him to produce more various goods and services. Mr.Smith destroyed with his all power to get rid of state restrictions.As a matter of fact,some of the affections of government interventions,including the custom tax, caused inefficiency and in the long run(long-term) it caused high prices. Laissez-faire theory meaning of ' Let it go ' ,in next times, especially 19. Century affected the government laws.

The Main Topics of What The Book Mentioned

• Full competition
• Capital
• Invisible hand
• Division of Labour
• Labor
• Price
• Money

Theories

• Price Theory
• Labour Value Theory
• Rant Theory

Price Theory

         According to Adam Smith There is real price and nominal price.Real price is the cost of obtaining the goods,depends on labor, in the long run(long term) the real price applies to all goods.The nominal price is the price arising from short-term fluctuations in supply and demand balance or changes in market conditions.

Labour Value Theory

         According to Adam Smith one goods has  two kind of value. First one is benefit,second one is barter value with other goods.The first value usually varies from person to person, depending on the value of each person, and is difficult to calculate from a society perspective.

Rant Theory

Adam Smith talks about five kinds of rant.

• Net income
• The price paid to soil owner to make production from the soil rent.
• The profits that soil owners earn because of their monopolistic situation.
• The market of distance rant.
• Rarity rant.

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