Income and Employment Theory

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Income and Employment Theory
2013-10-14 23:21:43

Mid-term exam
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  1. Q1. Explain  J.R. "It is foolish to refuse to learn from the ideas of an economist whose ideology we dislike. It is equally unwise to rely upon the theories of one whose ideology we approve."
    Give examples
    What is lost?
    • We all have bias's that influence our assumptions, the logic and reason of an argument are more important than what assumptions a theorist starts with.
    • Examples:
  2. Q2. Discuss ways that ideology and science are intermingled in Marx, Marshall and Keynes
    Marx's belief that capitalism is self destructive is rooted in the Laissez-faire capitalism of his time.
  3. Q3. State a Proposition that my Econ 101 teacher said that I would argue is scientific and one that is ideological, justify.
    • Scientific statement:
    • Ideological Statement:
  4. Q4. Discuss the similarities and differences in approach to Growth taken by Malthus and Marx
    • Both Marx and Malthus see no long-run gain for the majority of the pop. in capitalist growth.
    • Both see conflict as an essential part, Malthus between pop. growth and food prod. and Marx between classes, feuds and capital, capital and proletariat
    • Malthus sees a constant oscillation, Marx sees an overthrow of capitalism.
    • Malthus sees wages falling as a result of pop. growth Marx sees exploitation of workers
  5. Q5+6. What is Principle of Pop? What are Malthus's Postulata and how do they lead to Principle of Pop?
    • 2 Postulata: 1."food is necessary to the existence of man" 2. "The passion between the sexes is necessary and will remain nearly in its present state"
    • Principle of Pop: "The power of population to multiply exceeds the power in the earth to provide subsistence for man"
    • When workers are tolerably comfortable pop. grows, when pop grows GDP/N declines, Wages declines, P of food grows > severe distress >checks on pop > pop at stand still > low wages and high profits, farmers bring new land into cultivation, cycle starts over again.
  6. Q7. Describe Preventive checks and positive checks
    which of these is misery and which vice
    • Preventive checks: delayed marriage, sex that isn't procreative, vicious behavior like prostitution, contraception and abortion.
    • Positive checks: high infant morality, higher death rates due to poor nutrition, and famine.
    • all positive checks are misery.
    • all preventive checks, except delayed marriage are vice.
    • Later Malthus added moral restraint to his ideas thus allowing for a delay of marriage that did not necessarily lead to vice.
  7. Q8.Explain Malthus's passage "though human Inst.....
    even if a "frugal" and "virtuous" society shared everything equally this would lead to pop. growth which would eventually outpace food production and cause misery which would reestablish property rights.
  8. Q9. similarity and differences of Malthus and Condorcet on oscillations.
    • Malthus sees these oscillations as inevitable, no matter what we do any attempt to make people comfortable will lead to pop. growth which will lead to misery.
    • Condorcet sees hope that people want to give others happiness not just numbers, thinks technology will solve problems
  9. Q10. How does Condorcet's view of "giving happiness" as opposed to "giving life" contradict Malthus.
    Is Condorcet's claim empirical generalization or ideological proposition.
    Malthus would argue that when people are happy or "tolerably comfortable" that they have children. Also any attempt for individuals to prevent children would be a vice.
  10. Q11. Malthusian Growth Equation, define terms
    • N(t) = N(0)*e^rt
    • where N(t) is the pop at a given time t
    • N(0) is the pop at starting point
    • e is Euler's #
    • r is the rate of growth
    • t is the time elapsed since o
  11. Q13. What does it mean "think about history like an economist" use Smith and Marx
    • Both Smith and Marx saw history as a series of stages based on economic modes of production.
    • Smith thought in terms of factors of production. Hunting, Pasturage, Farming and Commerce.
    • Marx thought in terms of the social relations of production. Primitive Communism, Barbarism (slave societies), Feudalism, Capitalism and eventually Socialism.
    • While he does not explicitly say it Smith seems to view commerce as the final factor of production while Marx certainly sees socialism as final social relation beginning of history not the end.
  12. Q14. What does all of history a class struggle mean.
    Marx and Engels where talking about the social relations of production when they referred to class. Class to them meant a group with shared economic ideas and priorities e.g. The Aristocracy, The bourgeois and the proletariat. The modern conception of class is based on amount of income not the relation to production.
  13. Q15. Transition from feudalism to capitalism
    • Bourgeois in conflict with the Aristocracy
    • Bourgeois can put social surplus to more efficient use.
    • Bourgeois are revolutionary class in this struggle
    • Quantitative: Efficiency of Bourgeois allow for greater production, more employment and increased output due to tech.
    • Qualitative: Lords lose power and right to property, Bourgeois is empowered and distribution of social surplus changes political structures (democracy) and cultural norms (luxury)
    • Marxian economy changes through contradictions in the mode of production, within conflicts in the social relations of production and between the rop + fop bourgeois could use tech to make money but lavish lifestyles of aristocracy inhibited them.