Review for the Second Examination

Review for the Second Examination - Review for the Second...

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Review for the Second Examination
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Thomas Malthus An Essay of the Principle of Population as It Affects the Future Improvement of Society Population growth tends to outstrip all possible means of subsistence – scarcity in the survival sense. Concerned with two problems affecting the long- run stability of society – uncontrollable population growth and general gluts (recessions)
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David Ricardo Principles of Political Economy Comparative advantage – was the first to argue the individuals and nations benefited when they specialized in areas where they possessed a comparative advantage Theory of Rent All landlords who own land that is more than minimally productive earn economic profits. These profits are undeserved because the landlords contribute nothing to secure these profits.
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The Legacy of Agriculture The solution to these mysteries lies in understanding the legacy of the discovery of agriculture Agriculture encouraged a more sedentary existence, specialization, urbanization and technological innovation Agriculture also caused the world to become more complex
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Population Growth and Economic Development Prior to 1800, economic development was restrained by population growth, as Malthus argued ‘France, by any standards a privileged country, is reckoned to have experienced 10 general famines during the 10th century; 26 in the 11th; 2 in the 12th; 4 in the 14th; 7 in the 15th; 13 in the 16th; 11 in the 17th and 16 in the 18th.’ Braudel (1979 )
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Complexity and Markets (North) The gains from specialization and trade are thwarted by complexity when institutions do not bridge the gaps between people of differing viewpoints Markets operate in a disordered and inefficient manner in this environment Agriculture created the potential for a better life that for a time was not realized
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Institutional Efficiency Institutional efficiency in dealing with the problem of complexity is essential to bridging the gaps in trust and differences
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Review for the Second Examination - Review for the Second...

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