Еconomic theory

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In this work I will consider the notion of economic theory. This is a very important and complex question. But I will try to analise it and answer this question more completely. In the process of all life people face creation, obtaining, consumption and the exchange of various goods and services.

Economics is an area of activities of people, as a res

ult they create, purchase, distribute and consume wealth for the diversified needs, as for themself, so for society.

An economic theory as science (systematized knowledge about the essence of economics) appeared in 17-18 centuries, in the period of the formation of capitalism.

1. The birth of economic theory and its development.

Theory of economics was created and is developed by the economists of different schools and directions. Its definition are very different. The most general definition: Economic theory is a science about the bases of the economic life of society. And economic life is an activity of people connected with ensuring of the material conditions of their life.

The theory of economics was born in a few stages:

- The scientific thought of ancientness (Platon, Aristotel and others);

- Stage of mercantilismes (the wealth of society is determined by the volumes of foreign trade);

- Stage of physiocratismes (the wealth of society is determined by the levels of development of agrucultures);

- Classic economics theory (Smith, Rikardo, Petti).

- Stage bourgeoisly-economics theory (Malkus, Sei, Bastiya).

- Marksists or proletarian economic theory (Marks, Engels, Lenin).

- The end of XIX - beginning of XX centuries is characteristed by the row of scientific economics schools.

Any society encounter by the limited quantity of economic resources. But the needs of people constantly grow. That is why there exists a matter of the rational using of these resources. The subject of studies of economics theory is on the first place in economics relations between people in the process of manufacturing, distributions, exchange and consumption.

Economics theory studies the sphere of manufacturing and the distributions of profits in limited resources.

Economics theory also studies the motion of economic life - tendencies in the development of prices, manufacturing, unemployment.

The purposes of economic theory: economic growth, complete employment, economic efficiency, economic disengagement, the fair distribution of incomes, economic ensuring, commercial balance and so on, and so on.

2.Main article: History of Economics

Although discussions about production and distribution have a long history, economics in its modern sense is conventionally dated from the publication of Adam Smith's The Wealth of Nations in 1776. Smith is also the founder of economics. In this work Smith defines the subject in practical terms:

Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to supply a plentiful revenue or product for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.

Smith referred to the subject as 'political economy', but that term was gradually replaced in general usage by 'economics' after 1870.

3.Areas of study.

Areas of economics may be divided or classified in various ways; however, an economy is usually analyzed in either of two ways:

Microeconomics examines the economic behavior of agents (including businesses and households) and their interactions through individual markets, given scarcity and government regulation. Within microeconomics, general equilibrium theory aggregates across all markets, including their movements and interactions toward equilibrium.

Macroeconomics examines an economy as a whole "top down" with a view to understanding interactions between the broadest aggregates such as national income and output, employment and inflation and broad aggregates like total consumption and investment spending and their components.

Since at least the 1960s, macroeconomics has been characterized by further micro-based modeling as to rationality of players and efficient use of market information, addressing a long-standing concern about inconsistent developments of the same subject.

The vast majority of economic theory is in terms of either macro or micro economics. However, a few authors (for example, Kurt Dopfer, Stuart Holland and Markos Mamalakis) also argue that 'mesoeconomics', which considers the intermediate level of economic organization such as markets and other institutional arrangements, should be considered an additional branch of economic study. Mamalakis claims that mesoeconomics "unifies and reconciles the macro and micro approaches and is a "richer" way of studying the dynamics of economics than the two traditional models.

Recent developments closer to microeconomics include behavioral economics and experimental economics. Fields bordering on other social sciences include economic history, law and economics, public choice, economic sociology, and cultural economics.

Financial economics has traditionally been considered a part of economics, as its body of results emerges naturally from microeconomics. Today, however, finance has established itself as a separate, though closely related, discipline.

Economics can also be divided into numerous sub-disciplines including: development economics, economic geography,environmental economics, industrial organization, information economics, institutional economics, international economics, labor economics, and public finance.

Another division of the subject distinguishes positive economics, which seeks to predict and explain economic phenomena ("what is"), from normative economics ("what ought to be"), which orders choices and actions by some criterion; such orderings necessarily involve value judgments, including selection from criteria.

Separate from mainstream or neoclassical economics, which underlies most of the assumptions and techniques described in this entry, is heterodox economics. Heterodox economics refers to approaches or schools of economic thought that do not conform to mainstream economics, which has largely developed from neoclassical economics in the late 19th century. While mainstream economics may be defined in terms of the "rationality-individualism-equilibrium nexus", heterodox economics may be defined in terms of a "institutions-history-social structure nexus".


Specialized techniques may be used in the subject. These include the following:

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