The main directions of economic theory

Among the main directions of economic theory, we distinguish three: classical, Marxist and Keynesian.

Classical economic theory developed in the XVIII century in England. Its first representative was Adam Smith. He was born in Scotland in the family of a customs official. He was educated at two universities – in Glasgow and in Oxford – and studied philosophy first. Then, in order to determine where the wealth comes from, where its source is, what it is, I have been working on this problem for a long time. As a result, his main work “A Study on the Nature and Causes of the Wealth of Nations” was published.

Scientific research in this direction was continued by David Ricardo, who in 1817 published a scientific work entitled “The Principles of Political Economy and Taxation”. Together with Adam Smith, they represent the classical direction of economic theory.

The main results of the classics, which made up the largest “diamonds” of economic theory, are reduced to the following provisions:

the wealth of society and its value are created by labor, and not in any one sphere of activity, but by labor as such, labor in all branches of the economy; the law of economic activity is the law of labor value; the main motivator for economic activity is interest; the private interest of people (entrepreneurs) by the “invisible hand” is directed in the direction of general (public) interests, moreover, this “hand” is independently, spontaneously acting economic laws; the main economic law that invisibly guides the economic activity of people and society is the law of value; the value of goods is the basis of income – wages, profits, interest and rent; there is an inversely proportional relationship between wages and profits, which is a natural economic law.

It was the classical direction that was the origin of modern economic theory. It put forward such theoretical requirements and propositions that are still in the center of attention of economic thought.

The next of the main directions of economic theory should be called Marxist. This direction made a recognized contribution to the arsenal of economic theory. It was Marxist economic thought that substantiated that the content of economic theory is the doctrine of the system of socio-economic relations between people. In addition, the main provisions of Marxist doctrine can be formulated as follows:

creation of the theory of surplus value; development of the theory of profit as a transformed form of surplus value; development of the theory of the dual nature of labor that creates value, and the development of the theory of value; disclosure of the basic laws of capitalist reproduction and the inevitability of its economic crises.

Another of the main directions of economic theory is Keynesianism. Its founder is John Keynes, an English economist, whose main work “The General Theory of Employment, Interest and Money” was published in 1936.

The main ideas of Keynesianism are:

disclosure of the causes of crisis phenomena and unemployment in the lack of “effective demand”; the principle of “effective demand” means the need for a comprehensive increase in the effective demand of market entities in the conditions of a system of monopolistically high prices; development of the theory of the multiplier (multiplier process) in the field of investment, employment and income; creation of a theory of state regulation of the economy in the conditions of loss of actions of the mechanism of automatic market regulation with imperfect competition.

It is with these three main directions (“trunks”) of economic theory that its other “branches” and “branches” are associated, which are studied in detail in the course “History of Economic Doctrines”.