INTRODUCTION TO ECONOMICS
INTRODUCTION TO
ECONOMICS
In Turkish, this scientific knowledge of fortune and the scientific wealth of the world have been used, but they have been replaced by the theory of economics.
Today, the term of economics are used.
In Greek, the word oikonomia describes the rules for house and farm administration.
This word consists of the combination of oikos and nomos.
Nevertheless, Greek philosophers have expressed the activity carried out in order to gain wealth and profits with the word "khêmet", not oikonomia.
Oikos; a person's prisoners, his wife and children together with all the assets of the goods.
Nomos; means management.
In the term of economy, European authors have broader meanings.
The French writer De Monchrêtien used the phrase Economie Politique in 1615, combining the words economy and politics.
When it comes to the eighteenth century, the French intellectuals who put forth new theses on the prosperity and wealth of the country were called Economiste.
History of Economic Terms
Definition and Concept of Economics
Classical economists have seen economics as wealth and prosperity.
Some of the various human activities have been trying to determine the issue of economics by considering economic activity.
They have looked at whether these activities are related to material well-being in order to distinguish those that are not economic ones.
According to Classics, economics is a science that examines human initiatives related to wealth creation and use.
It is difficult to pinpoint exactly which of the human activities are made to reach material prosperity.
In fact, even the separation of human activities into economic and non-economic aspects has an economic aspect.
The second view on the definition and subject of economic science is based on the idea that all human activities can have an economic aspect.
Principles of this view can be summarized as;
Human requirements are varied and endless.
However, the presence resources to meet these requirements are scarce.
The main reason why people try to maintain their daily lives is that they are faced with the reality of scarcity.
In a world where resources are scarce, these resources can be used in a variety of ways. For example; water can be drunk, can be used for cooking or can be separated for cleaning.
Human labor, natural resources and capital can be used for various purposes.
It is the subject of the economy to investigate how these scarce resources will be distributed to various fields of use.
In the scope of these explanations, the subject of economics can be defined as follows;
Economics is a science that examines the human behavior of how production factors such as labor, capital, natural resources, which are scarce in the
world, are used in the production of goods and services necessary to meet the infinite needs of
people among various options.
Classification of Economics
The main subject of the economy is economic life with the main line, but particularly economic life of the society.
However, the economy, which has evolved over time, has also been interested in individual economic initiatives.
Therefore, two main branches of the economy, namely General Economy
(Community Economy, National Economy) and Business Economy have emerged.
General Economy works with the aim of investigating and explaining the common problems of all economic elements and the reasons of the occurrence of various economic events and their relations with each other and putting forward the economic laws on these issues.
On the other hand, business economics establishes, organizes and operates the businesses, their technical, financial and administrative activities, the relationship
between the business and the internal and external environment with methodological and planned way.
There is a close relationship between the general economy and the business economy.
General Economics is examined in two parts as Theoretical Economics and Applied Economics.
Theoretical economics examines economic events regardless of a specific time and place, tries to uncover the laws and determine the main elements that play a role in economic life.
Applied economics examines the implications of the laws of the theoretical economy in various fields of economic activity in different times and places.
Applied economic science is also called Economic Policy. As an example for economic policy; agriculture, animal husbandry, industry, trade, transportation policies and so on can be given.
Relationship between Economics and Other Sciences
ECONOMICS ECONOMICS
MATHS
MATHS STATISTICSSTATISTICS SOCIOLOGYSOCIOLOGY
LOGIC
LOGIC LAWLAW
PSYCHOLOGY
PSYCHOLOGY SOCIAL ANTHROPOLOGY
SOCIAL
ANTHROPOLOGY HISTORYHISTORY
Emergence and Historical Development of Economics
Economic thought and economic relations have been evolved to this day. This evolution can be addressed in four stages.
Pre-scientific period up to XVIII century,
The rise period of economics,
The discovery and regulation of basic theoretical principles (Reactions to Classical School)
Contemporary deepening and expansion (Modern Economy) period
Pre-scientific period up to XVIII century
Mercantilist School
The central occupation of the mercantilists was to find ideas and proposals that show how the principals of that age, the dominant form of society, could
accumulate more wealth, in which way they could become rich.
They accepted gold and silver as their main source of wealth.
The biggest mistake of mercantilist thought is that it neglected agricultural production.
Due to the inadequate means of transport in foreign trade, more emphasis was placed on light goods and heavy goods at the expense of food production, leaving food production in the background.
Mercantilist's suggestion was that the foreign trade balance sheets were
redundant. To this end, they have adopted measures such as supporting exports, taking protective measures in imports, and developing a trade fleet.
In the countries where mercantilism is applied, the increase in the presence of precious metals disturbed the balance between cash flows and real flows; this has led to inflation.
Emergence of Economics
Physiocrates
The founder is Dr. François Quesnay.
While Mercantilists neglect agriculture, the Physiocrats aimed at increasing agricultural production and rural economic development.
Dr. Quesnay likened a country's economy to the physiological events that took place in the human body.
He explained this view in his Economic Table book which published in 1758.
According to the physiocratic doctrine, there is a natural order in the world. If the state does not intervene in economic affairs, everything works in harmony.
According to Quesnay et al., The only productive class in a country, the cultivating class, and the only factor that creates a surplus of real value is the land.
According to the Physiocrats, each society has three distinct classes:
Soil cultivators, namely tenants in agriculture Landowners
Trade and industrial class (Vicious class).
Classical Economists
The most prominent representative of the classics was the English philosophy professor Adam Smith (1723-1790).
His book, The Wealth of the Nations, published in 1776, is considered to be one of the basic works that made the economy become a science.
Classical economists examined the economic conditions of the thought of industrial revolution and tried to link them to scientific rules.
A. Smith acknowledges that labor is the main source of wealth, but also emphasizes the importance of other production factors, like land and capital. Thus, he became the first economist who explains the thesis that this production is based on three important factors.
According to him, a good has two prices; natural price and market price.
For Smith, the market mechanism and free competition would provide the welfare of society as a secret hand.
J.Babtiste SAY explained the inadequacy of state intervention by the Law of Mahreç.
According to him, every produced product creates its own demand.
Ricardo's contribution to the classical theory is the Labor-Value Theory. According to him, the value of a good is determined by the effort made for the production of that good.
Reaction to Classical School
Some of them criticize the view of the liberal economic policy of the classical school is called; Protectionism Thesis or Intervention School,
some of which criticize the scientific methods used by classics called; History School
and some of them who strongly criticize the capitalist order advocated by the classics and its consequences that contradict social justice is called ;Socialist Thought Movements
Intrusive School (Frederick List. 1789-1846) According to List, the wealth of a nation depends on its own venture power. F. List has always been in favor of a protective policy to protect the emerging German industry against the competition of the developed British industry.
The Historian School has proposed to use the method of history instead of the abstraction method in economic science.
Scientific Socialism; The founder was Karl Marx (1818-1883). Marx has put forward the Theory of Labor Value and, consequently, the Theory of Residual Value. In Marxism, human element and welfare are at the forefront.
Modern Economy
Marginalists; Neoclassical or marginalist school members have developed the thesis that consumption, demand and benefit are the main issues in classical economics by pushing back the issues of production, supply and cost. They have developed the concept of marginal utility in economic literature.
J.Maynard KEYNES (1883-1946)
Unlike his predecessors, Keynes tryied to explain the theory of imbalance, instead of balance. He argued that it would not be possible to provide full employment
automatically in the capitalist system.
Modern Growth Theories
Concepts of Growth and Development
What is at stake in development is not only economic growth, but also the
development of society in terms of institutional, social, cultural and political aspects.
Therefore, it requires structural changes.
