THOMAS MALTHUS (1766-1834) JOHN STUART MILL (1806 – 1873)

- A demographer, scholar, and influential in Political Economy - A british philosopher, political economist and civil servant.

Theory of Population Growth UTILITARIANISM

- Population multiplies geometrically and food grows - Right action (happiness for everyone)
arithmetically
- Economy will be trapped (Malthusian Trap) DAVID RICARDO (1772 – 1823)

Malthusian Trap – “When population already stop increasing” - British political economist and businessman.
where excess population would stop growing due to shortage of INTERNATIONAL TRADE
food supply leading to (Malthusian Catastrophe)
- Based on Comparative Advantage
Malthusian Catastrophe – happens when population increase
because of Malthusian Trap. Starvation will occur and people LABOR THEORY OF VALUE
will die
- The value of good is determined by the labor you put into it.
2 Checks to Reduce Population
Ex.
Kailan gagawin ang population check? – Before ma-reach ng
food supply ang subsistence level. One table can be produced for two hours. 1 chair can be
produced in one hour also. The value of one table is two chairs
1. Preventive Check – Abstinence & Family Planning
2. Natural Check – Natural disasters and war COMPARATIVE ADVANTAGE

Poor Law - When the A.A. of one good is bigger than the A.A in
producing good.
- Law legislated by British Monarchy
- Gives relief to the poor A B
- Law that was removed by Thomas Malthus which leads to X/LH 6 1
death and starvation of the poor. Y/LH 4 2
Comparative Advantage
Corn Law
Comparative Disadvantage
- Ban the imports of corn if it is enough. Since the decrease of
domestic supply will lead to the increase in price which will Pattern of trade – Export on Comparative Advantage, Import on
lead to import so the price won’t go up. Comparative Disadvantage
- NO TO IMPORT, give more effort if needed to have more
production domestically
COMPARATIVE COST ADVANTAGE
DAVID HUME (1711-1776)
- Cost of labor
- Philosopher, historian, and economist - Produce more output with lesser hour (x labor hour/unit)
- He opposed mercantilism

PRICE-SPECIE FLOW MECHANISM A B

X 6lh /1 unit 1 lh/ 1 unit
Y 4lh / 1 unit

1. Trade Surplus will lead to Trade Deficit THEORY OF WAGE

2. Trade Deficit will lead to Trade Surplus
- Subsistence level of wages (Poverty Thresholds)
QUANTITATIVE THEORY OF MONEY - Based on Malthusian Theory of Population

MV = PQ

M – Money Supply P - Price

V – Velocity Q – Volume of Output

1. Positive Statement (is) – Describe based on statistics and facts

2. Normative Economics (ought/ano ang dapat) – Prescribe
 IRON LAW OF WAGES THEORY OF ALIENATION
- The laborer can’t go away Workers become alienated/exploited from:
- Babalik at babalik ang wages sa subsistence level
- Increase in wage is just temporary 1. The product – They don’t own the product they made,
they can’t afford, and can’t decide what and how to
VOLUNTARY EXPORT RESTRAINT
produce.
- To protect the industry inside 2. The process of production – Nothing to do but to follow
- Non-Tariff barriers because they sell their labor for wages. It is the capitalists
o Layoff who decides.
o Decrease Wages 3. Himself – Forgets the capabilities of oneself because
THEORY OF RENT capitalists decide what you are going to be.
4. Other laborers – Competition will occur because of wages.
- Rent is on surplus
- Rent is the portion of the output that the farmer 5 Types of Social System where
pays to the landlord using the land
Development of Historical Society can be seen
- Land is not homogenous
1. Primitive Communism – No stratification
Economic Surplus/Rent
2. Slavery – Concept of Household Management (Masters & Slaves)
• Difference of Fertile Land (Good Quality) and Non-Fertile 3. Feudalism – Landlords and Serfs
Land 4. Capitalism – Bourgeois, where surplus labor go to capitalists
• Portion of output that farmers give in the production of land 5. Socialism – Government and Workers
• Indestructible power of land Communism – Classless society, no owners of production. There
o Fertility is oppressed and there’s an oppressor
o Scarcity of Land
DAS KAPITAL
LAW OF DIMINISHING MARGINAL RETURNS
- Introduced two classes on Capitalism
- Adding an additional factor of production results 1. Proletariat (Laborers)
in smaller increases in output. 2. Bourgeois (Owners)
- If these two are present, Class Tension will occur which
JOHN BAPTISTE SAY (1767-1832) will lead to Class Struggle

SAY’S LAW OF MARKETS

“Supply creates its own demand” using Keynes words

- No overproduction, since supplies of each

suppliers circle the economy since the income of
one supplier is used to buy another good
- Glut will happen when one didn’t agreed to supply

KARL MARX

- Sociologist, 19th Century writer, viewed labor as

commodity
- Two Famous works:
o DAS KAPITAL (1867)
o THE COMMUNIST MANIFESTO (1848)
- Considered labor as commodity and exchange it
for wages
- Capitalism Socialism Communism