Introduction to Economics and Economic Liberalism

What is Economics?

Economics, derived from the Greek words “oicos” (house) and “nomos” (law or treaty), is the management of household or family assets. In a broader sense, it refers to the administration of scarce resources.

Laws of Dialectics

What are the laws of dialectics, their stages, and the difference between Hegel’s and Marx’s dialectic?

The laws of dialectics include:

  • The law of unity and struggle of opposites
  • The transformation of quantitative to qualitative changes
  • The law of negation of negation

The stages of dialectics are thesis, antithesis, and synthesis.

Hegel’s Dialectic: Hegel believed that any change stems from dialectical thinking.

Marx’s Dialectic: Marx posited that change originates from the economic dialectic.

Mercantilism and Physiocracy

Define mercantilism and physiocracy.

Mercantilism: Mercantilism is an economic theory that emphasizes the accumulation of gold and precious metals as a measure of national wealth.

Physiocracy: Physiocracy is a school of economic thought that believes wealth is primarily derived from agriculture and land cultivation.

Antecedents and Impact of Mercantilism

What were the antecedents of mercantilism, their impact on society, and the causes that contributed to its emergence?

Mercantilism emerged in the 15th century, driven by bankers and traders.

Chrysohedonism: This is the belief that the accumulation of gold and precious metals makes a state strong.

Causes of Mercantilism:

  • The Great Geographical Discoveries: These discoveries brought large quantities of gold and silver to Europe.
  • The Renaissance: This period expanded education and culture, placing emphasis on humanism and societal concerns.
  • The Religious Reformation: This introduced the profit motive into economic activity.
  • The Emergence of the Modern State: This strengthened ideals of freedom and sovereignty, with states becoming architects of their own destiny.
  • The Colonial Regime: This implemented a feudal-like system, creating monopolies for colonial products and exploiting labor in the colonies.

The Protestant Reformation

Explain the importance of the Protestant Reformation of Martin Luther and John Calvin.

Martin Luther and John Calvin, particularly the latter as the true founder of Protestantism, reinterpreted the Bible, emphasizing individual effort and fostering the pursuit of unlimited profit. Jewish communities experienced reduced persecution, leading to increased influence and business practices that differed from Christian norms. Many scholars consider this reformation the starting point of capitalism, as it introduced the profit motive as a central driver of economic activity.

Origin of Political Terms

What is the origin of the terms “right” and “left”?

These terms originated during the French Revolution. They initially referred to the seating arrangements of different factions in French legislative bodies. The aristocracy sat to the president’s right (traditionally the place of honor), while the commoners (the Third Estate) sat to the left. This physical positioning gave rise to the terms “right” and “left.” Initially, the ideological spectrum was defined by the Ancien Régime. The right supported aristocratic or royal interests, while the left opposed it.

US Political Parties

Difference between the Republican and Democratic parties in the US.

Republican Party: Traditionally represents the interests of major corporations.

Democratic Party: Typically aligns with trade unions and the working class.

Quesnay’s Economic Picture

Explain the economic picture of Dr. Quesnay and his classification of social classes.

Quesnay’s economic model starts with the agricultural harvest. The farmer, representing the productive class, retains a portion of the harvest for their own consumption and sells the surplus to the landowning class and the “sterile” class (artisans, merchants). This initiates the flow of money. The landowners receive rent, and the sterile class receives payment for manufactured goods. The sterile class then uses this money to buy food and raw materials from the productive class. This cycle repeats with each new harvest.

Physiocratic Views on Taxes and Land Ownership

Explain the Physiocrats’ views on taxes, land ownership, and the concept of the “net product.”

Taxes: Physiocrats advocated for a single tax on land, as they believed land was the ultimate source of wealth.

Land Ownership: Physiocrats considered land ownership the foundation of the natural order, viewing it as a divine institution essential for the continuation of creation. Landowners had duties, including cultivating the land, acting in the collective interest, paying taxes to protect farmers and other factors of production, and not demanding more than the net product. They were also expected to provide free services to those in need.

Net Product: The net product is the difference between the total wealth produced and the wealth consumed in the production process. It represents the true increase in wealth generated by agriculture.

Precursors of Economic Liberalism

What is meant by a precursor of economic liberalism, and briefly explain the economic and political thought of Thomas Hobbes?

Precursors of economic liberalism are thinkers whose ideas on economic freedom paved the way for the emergence of this doctrine.

Thomas Hobbes: An English philosopher and political theorist known for his social contract theory. His major work, Leviathan, includes the following economic and political ideas:

  • He believed the state should refrain from intervening in economic matters.
  • He saw personal interest as the primary driver of human activity, a concept embraced by liberalism.
  • He emphasized that self-interest varies among individuals, leading to a lack of spontaneous solidarity.
  • He argued that individuals grant unlimited power to the state through a social contract, including the right to dispose of property. This implies that property rights can be shaped to achieve the common good.

Sovereignty and Economic Liberalism

What is meant by sovereignty, and in your opinion, who is sovereign in Mexico?
Explain the French philosophy of economic liberalism.
What is the difference between a state that favors economic liberalism and a socialist state?
Define the following terms: Laissez-faire, laissez-passer, Taxes, Revenue, Rights, Budget, Adam Smith, Division of Labor, Currency, Supply and Demand, Thomas Robert Malthus.

Sovereignty: Sovereignty refers to the supreme authority within a territory. In Mexico, sovereignty resides in the people, as enshrined in the Mexican Constitution. They exercise this sovereignty through democratic processes.

French Philosophy of Economic Liberalism: French economic liberalism, often associated with figures like Jean-Baptiste Say and Frédéric Bastiat, emphasized individual freedom, limited government intervention, and free markets.

Difference between a State Favoring Economic Liberalism and a Socialist State:

  • Economic Liberalism: Emphasizes individual freedom, private property, free markets, and limited government intervention in the economy.
  • Socialism: Advocates for social ownership or control of the means of production, greater equality, and government intervention to address social and economic issues.

Definitions:

  • Laissez-faire, laissez-passer: A French phrase meaning “let it be, let it pass,” advocating for minimal government intervention in economic affairs.
  • Taxes: Compulsory payments levied by the government to fund public services.
  • Revenue: Income generated by the government, primarily through taxation.
  • Rights: Entitlements or freedoms guaranteed to individuals.
  • Budget: A financial plan outlining government revenue and expenditure.
  • Adam Smith: A Scottish economist and philosopher considered the father of modern economics. His book, The Wealth of Nations, is a foundational text of classical economics.
  • Division of Labor: The specialization of tasks in the production process, leading to increased efficiency.
  • Currency: A system of money in general use in a particular country.
  • Supply and Demand: Economic forces that determine the price of goods and services in a market. Supply refers to the amount of a good or service available, while demand refers to the desire and ability to purchase it.
  • Thomas Robert Malthus: An English economist known for his theory that population growth tends to outstrip food supply, leading to potential social and economic crises.