The Capitalist's Bible - Edited by Gretchen Moregenson
[This book provide you all types of economic theories and then go over the US's great Capitalists; followed by list of great ref. books for further research.]
Classical Economic Theory:
Classical economics emphasized individual liberty and the ability of each person to determine his own best interests and therefore the good sand services that prove most prosperous will be the ones that benefits the most people. Declaration of independence refer tot eh inalienable rights of life, liberty (social freedom)and pursuit of happiness. Industrialization brought weakness of classical economic theory. Un checked greed can actually restrict economic liberty for the common man, leading to monopolies and collision which are harmful to consumers. Competition can lead to wages that fall below the subsistence level, esp. if workers don't have other options or are kept in debt to their employers (as with sharecropping)
Neoclassical Economic Theory:
This is based on marginal utility which is a subjective theory of value - one that focuses on the value of a thing to consumers, not the cost that producers put into it.Neoclassical economist began to look at the cost and value of any good or services in terms of supply and demand: when demand goes up or supply goes down, the value rises, even though the item has not changed. Neoclassical economics as practices and taught for most of the 20th century, because a theory of static resource allocation. Capital and population are treated as given parameters. It is not that neoclassical economist are uninterested in growth and development; it's just that the mathematical methods developed because of the marginal revolution are so good at what they do that people limited their subject matter.
Marxian Economic Theory:
This is based on the labor theory of value. Marx contended that competition to save on labor costs and increase profits. the new technology makes more money for the company, at the expense of other capitalists, since their composition of capital - or the ratio of dead elements (tool) to living elements(workers)-rises. At the same time, using the new technique lowers the value of the commodity by reducing the amount of necessary labor. The under-consumptionist theories suggests that workers only receive a fraction of the value produced, leaving excess supply on the market. Marx's dynamic analsyis of accumulation and argue that disproportional growth between various interdependednt sectors of economy would result in capitalist breakdown.
Concepts of Capitalism:
Supply is one of the most fundamental concepts of economics. In microeconomic theory (the study of how individuals, firms, and certain market sectors make economic decisions), supply refers to the production of markets and is function of prices and costs of production. In macroeconomics(the study of the performance, behavior and structure of national or regional economics), aggregate supply refers to the production of whole economics and is depending on macroevconomic theoy, thought to depend factos such as howsehold savings, cptal stock, labor force and technology. Since good and services are - with the exception of household production- supplied by businessm the supply side is often synonmous with business sector.
One of the pillars of microeconomic price theory is the law of supply; all things being equal, the quantity of a good rises as the market price rises and falls as the price falls.
Economics and Game Theory:
Game theory is branch of mathematics that analysis the structure of game in terms of basic elements - players, rules, strategies, timing, outcomes and payoffs and while it studies real games - board games, computer games, card games- many of the 'games' it studies are real-world scenarios examined from a game-theorist point of view in order to distill a complicated whole into those constitute parts.
It is first came to prominence after the publication of 'the Theory of games and Economic Behavior' by mathematician Jon Von Neuman & economist Oskar Morgenstern . There are two distinctive ways of describing game mathematically. The extensive form and normal or strategic form which is less detailed than the extensive form. Extensive form describers play by means of a game tree that explicitly indicate when players move which moves are available and what they kknow about the moves of other players and the 'state of nature' when they move. Most importantly. it specifies the payoffs that players receive at the end of game.
A zero-sum game is one in which the total payoffs to all palyers in the game adds to zero. In other words, each player benefits only at the expense of others. Chess & Poker are zero-sum games because one wins exactly he amount one's opponents lose. Bz. and politics are non-zero-sum games because some outcomes are good for all players or bad for all players.
A cooperative game is one in which the players may freely communicate among themselves before making game decisions and may make bargains to influence those decisions. Monopoly is a cooperative game and so are most board games.
Prisoner's dilemma a thought experiment in which two prisoners are segregated from each other, each of them given a choice with an outcome determined by the other's choice, is not a cooperative game.
A complete information game is a game in which each player has the same game-relevant info as every other player. Chess is a complete information game, while Poker is not.
The theory suggests that Economics is based on the assumption hat human begins and institution they create, are absolutely rational in their economic choices. Specifically the assumption is that each person or institution maximizes their rewards - profits, incomes or subjective benefits - in the circumstances that they face. The game theory framework is ideal for this and theorist like Augustan Cournot have devised famous application of ti. Market failures such as over-exploitations of fisheries, global warming and inadequate committed to research are additional examples of games. In this realm, the individual pursuing self-interest is pitted against the broader goals of society.
Absolute Advantage: a situation that occurs when better natural endowments or production-related experience equip one nation with the ability to produce more of good than another nation, even though both nations have equal quanitites of resources.
Books/sites to read for additional materials from this book:
The Wealth of Nation - by Adam Smith
Capitalism and Freedom - Milton Freedman & Rose D. Friedman.