WPHECN #12 History of economic thought

http://en.wikipedia.org/wiki/History_of_economic_thought - be, but a criticism of what he saw it was. After Marx The first volume of Das Kapital was the only one Marx alone published. The second and third volumes were done with the help of Friedrich Engels and Karl Kautsky, who had become a friend of Engels, saw through the publication of volume four. When the World War I and then the Russian Revolution broke out, Kautsky opposed the course of both. He was a member of the Sozialdemokratische Partei Deutschlands and condemned Vladimir Lenin's vision for the Soviet Union. As he wrote in 1934 in Marxism and Bolshevism: Democracy and Dictatorship, "The Bolshevik s under Lenin***s leadership, however, succeeded in capturing control of the armed forces in Petrograd and later in Moscow and thus laid the foundation for a new dictatorship in place of the old Tsarist dictatorship."[55] Beatrice Webb h elped establish th e Lon don Sch ool of Econ omics. Marx had begun a tradition of economists who concentrated equally on political affairs. Also in Germany, Rosa Luxembourg was a member of the SPD, who later turned towards the Communist Party because of their stance against the First World War. Beatrice Webb in England was a socialist, who helped found both the London School of Economics (LSE) and the Fabian Society. She was married to Sidney Webb, who worked as a minister for Ramsay Macdonald's government. Her political support in Britain was for gradual change through Parliamentary democracy, rather than a Marxian revolution. Yet unlike Kautsky she supported Soviet Russia. Two more English theorists associated with the LSE were John A. Hobson (1858-1940) and Richard H. Tawney (1880-1963). Hobson argued for better social legislation, in terms of wider powers for trade unions, health and safety standards and a more egalitarian distribution of wealth. Tawney was primarily an economic historian, and was critical of the haphazard method of wealth allocation in the modern world. In his book The Acquisitive Society ( 1920) he wrote, "It is foolish to maintain property rights for which no service is performed... for payment without service is waste." In his later book, Equality (1931) he wrote "the pooling of surplus resources by means of taxation, and the use of the funds thus obtained to make accessible to all, irrespective of their income, occupation or social position, the conditions of civilization". The new classical assumptions See also: John Bates Clark, Irving Fisher, William Ashley, Enrico Barone, and Maffeo Pantaleoni In the years immediately following Karl Marx's publication of Das Kapital, a revolution took place in economics. Marx's development of a theory of exploitation from the labour theory of value, which had been taken as fundamental by economists since John Locke coincided with labour theory's abandonment. The new orthodoxy became the theory of marginal utility. Writing simultaneously and independently, a Frenchman, an Austrian and an Englishman were reviving the idea. Instead of the value of a good or service reflecting the labour that has produced it, it reflects the usefulness (utility) of the last purchase (before the "margin" at which people find things useful no longer). This meant that an equilibrium of people's preferences determined prices, including the price of labour, so there was no question of exploitation. In a competitive economy, said the marginalists, people get what they had paid, or worked for. This current of thought is not united, and there were three main schools working independently. The Lausanne school, whose two main representants were Walras and Pareto, developed the theories of general equilibrium and optimality. The main written work of this school was Walras' Elements of Pure Economics. The Cambridge school appeared with Jevons' Theory of Political Economy in 1871. This English school has developed the theories of the partial equilibrium and has insisted on markets' failures. The main representatives were Marshall, Jevonds and Pigou. The Vienna school was made up of Austrian economists Menger, Bohm-Bawerk and Von Wieser. They developed the theory of capital and has tried to explain the presence of economic crisis. It appeared in 1871 with Menger's Principles of Economics. The marginalist revolution Carl Menger (1840-1921) , an Austrian economist stated the basic principle of marginal utility in Grunds**tze der [56] (1871, Principles of Economics). Volkswirtschaftslehre Consumers act rationally by seeking to maximise satisfaction of all their preferences. People allocate their spending so that the last unit of a commodity bought creates no more satisfaction than a last unit bought of something else. Stanley Jevons (1835-1882) was his English counterpart, and worked at University College, London. He emphasised in the Theory of Political