Politica economica - Appunti

Inglese e attività economica

Most people work to earn a living, and produce goods like maize and milk or services like education, medicine and commerce. Some people provide both goods and services (For example, in the same garage a man can buy a car or some service which helps him to maintain his car).

The work people do is called economic activity; all economic activities together make up the economic system of a town, a city, or country. Most people hope to earn enough money to buy commodities and services which are non-essential but which give some particular satisfaction.

The science of economics

The science of economics and the economists study and try to describe the acts of the economy in which we live, and to explain how it all works. So for this reason, the science of economics is concerned with all our material needs (like the necessity to have radio as well as the basic necessity of having enough food).

Social formations and economic systems

There are different kinds of economy that work in different ways. Like in an engine where different forms of energy can turn the wheels of a car, in an economy there has to be some motive force which generates the production and distribution of goods and services.

But isn’t it true in a few places where it is possible for people to lie under the trees and pick up the falling coconuts and bananas, and so where human energy has to be expended to get a living? So for this reason historians have distinguished different social formations and economic systems according to the tools that men and women used and have at their disposal.

The market model: with competition on national scale

The market model is based on very simple assumptions. There are millions of producers and millions of consumers all in competition with each other. The market performs three essential functions: it fixes a price which clears the market; it encourages producers to reduce their costs; and it allocates resources.

The profit motive and the search for a good bargain are supposed to ensure that what is produced is what is wanted. “Isn’t true”, said Adam Smith; according to him all are obliged to bring the results of their efforts into a common stock and so every man, not violating the laws of justice, is left free to pursue his own interests, and to bring both his industry and capital into competition with other men or order of men. It was free competition that Smith looked to as the guarantee of welfare.

Capitalism as a world system

In the last hundred years we have seen the concentration of production in larger plants and the centralization of capital in larger companies. Today there are only a few hundred companies that dominate the world's markets like the oil companies that we call monopolies. So where is the competition of producers that Adam Smith has left to us?

They don’t always compete in price; in fact, the oil-producing countries - OPEC - decide together the oil price. But there is the same competition: they want to expand their sales, if necessary at the expense of the others, but not by price-cutting, which is a dangerous game. Such companies may then form a cartel and meet regularly to divide up the world's markets between them.

The Keynesian model

John Maynard Keynes began and ended his life in the employment of the British Treasury. He was also an economist called Michel Kalecki, and developed the model of a capitalist economy.

He was concerned with the negotiation of reparations that were to be paid by Germany to the victorious Allies at the end of the First World War. According to Keynes, these reparations would only harm the Allies; in fact, Germany would use much of the earnings from her exports to pay Allied but in this way their industries suffered.

So the capitalist market model suffered for the unavailable capacity to produce goods. Keynes should have continued to work when markets collapsed and this fact created a sort of downward spiral of world trade with the collapse of banks and markets, millions of unemployed, etc. Keynes’s aim was to rescue the capitalist system.