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Jan 30

John Stuart Mill

John S. Mill was an English economist, (1806-1873), son of the also economist James Mill, who gave him a rigorous education. His “Principles of Political Economy”, which is considered one of the most important contributions made by the Classical school of economics, did not think of prices from a Theory of value perspective, but as a result of the intersection of supply and demand, with references to international trade concepts, such as reciprocal demand and the terms of international exchange, or as we know the term nowadays, terms of trade. In fact, it was Mill’s work on “International values” which made possible further graphical analysis by Francis Y. Edgeworth. Individualistic in the first part of his life, showed in the second a certain proclivity for socialist ideas without ever losing its high appreciation of freedom and even religious values.

He also made contributions to the quantity theory, by developing David Hume‘s work on the subject. In his book “Principles of Political Economy”, he explained the difference between money and price, often used for the same idea by other classical economists, and made clear the relation between money quantity and prices. However, it was Irving Fisher who finally stated the equation of exchange.

Jan 30

Lope Gallego

Thomas Robert Malthus

Malthus was an English reverend (1766-1843), who in his book “An Essay on the Principles of Population,” wrote an argument against his contemporary Mr. Godwin, who believed in unlimited population growth. Malthusian population theory warned of the possibility, that while the population grew geometrically, food resources grew only in arithmetical proportion, thus creating the conditions for a shortage in the long term that would require an adjustment in the birth rate. This law of Malthus’s population was severely criticized by Karl Marx, another heterodox economist from the Classical school of economics, who called the parish of Albury “advocate of the bourgeoisie.” The principles of Malthus had great influence on the thinking of Darwin and Wallace about the struggle for life as the source of the natural selection of the strongest.

In his “Principles of Political Economy”, Malthus explained how he was against Say’s Law, by considering demand as an aggregate. Thus, if wages were to be mantained at a subsistence level, aggregate demand would drop. Therefore there would be a production surplus, idea that would be used by J.M. Keynes in his “The General Theory of Employment, Interest and Money”.