In the 15 th century, the society conducted its activities based on the traditions governing them,
and they handled tasks from one generation to the other depending on usage and customs.
Practical affairs globally were based on social, political, and religious life. Nobody in the society
would sell the family, for it was a taboo. Later in the 17 th century selling a good more than its
worth was prohibited, and anybody found to have collected more profit from their customers
would be jailed. Coming up with a new idea that had never been heard was highly fined, and
economists were not found not until the 18 th century. In the 19 th century, there was a shift of
economists from macro to micro economists where they stopped working on getting national
wealth but personal wealth. They quitted unemployment growth and foreign trade, and they
wanted to focus on the allocation of resources. In the digital world, there are two types of
economic systems which are socialism and capitalism. In a capitalist society, people work for
personal achievements, for when individuals focus on their interests, the organization achieves
the best. The prices of goods, as well as money and labor, are guided by rules of the market
(Sherrade and Neil, 2016).
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On the other hand, socialism is carried out depending on personal needs. Society’s resources are
distributed according to the needs a person has and not their contribution. In this kind of
economic system, no one is entitled to own the means of production apart from the government.
Feudalism was a dominant economic system after the fall of the Western Roman Empire. There
comes a landlord who owned a serf in the land that resembled slavery and the property together
with the serf. There were also peasant farmers grazing in the common ground. The economic
activity carried out by this person revolved around the life of a manor, and a large self –satisfied
agricultural plantation took care of by a landlord. Serfs and peasant farmers cultivated it. In the
middle ages, small villages had come up near the manor. These small homes come as a result of
civilization experienced from a developed world. Scholars were eager to know the economic
behaviors that occur as a result of the Bible and Aristotle too. According to Aristotle, justice is
when things that are exchanged are comparable. Thus, he comes up with the idea of money,
where he said it is essential for exchange.
The Bible views the economic behavior was that people should not look for wealth for its own
sake. The Bible is the book of Matthew shows clearly that riches are not necessary while
looking for the kingdom of God for a camel can go through the eye of a needle that a reach
person to enter the country. It also warns people against serving God and money in the book of
Luke, for they will help one, master, and despise the other. St Augustine supports the bible
verses and says that when people prefer worldly things more than God, then they don't trust in
Him. People should not help others and expect a reward, and the rich should lend money to the
poor, and they should not ask for interest from them.
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Scholasticism view is that the value of food good should be fair or just. When determining the
only price of a good, Aquinas says that God ranked his creatures from the most superior to the
inferior ones. The first test for products and service exchange was if the transaction or not the
exchange challenged the class hierarchy. The price termed as just was that which supported the
seller's social status was. When the demand for the goods and services is high and the supply is
low, then the seller has the right to raise the prices of the goods and services. Thus the thought
of Aristotle mends that excellent use of money is when exchanging products and services.
Paying with interest or usury was cheating the borrower. inn many Islamic and Jewish
communities’ usury is illegal for it makes the financing party investment.
From 1500AD to 1750 AD, there was decay in religion, and the European Renaissance brought
a humanistic view. Just price during the Mercantilism was still a concern. Landlords fenced the
common land to raise flocks of sheep, for there was a rapid growth in the woolen industry.
Farmers who were grazing on the common land became proletarians. With the use of new
weapons, the government started governing people from feudal landlords. There were no market
systems for maintaining and sustaining the society until the 16 th century. The flow of silver and
gold through Portuguese and Spanish lands also caused the floating of market systems. Again
merchants become powerful and formed a good relationship with the government after the
collapsing of feudalism. Nation wealth was linked to its accumulation of silver and gold that was
used as money. The state was to discourage domestic consumption, keep wages and interests
low, prohibit or limit the export of silver and gold, and reduce imports by putting tariffs on them.
At that time, the value of a commodity was determined by the portion of quantity to the supply.
When the demand for a commodity is constant, then the supply will make the price of the
commodity fall. The rate of interest given reflects the amount and application of the product.
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When the interest's rate is kept low by the government, money lenders will use their money for
other activities, and those who urgently need the cash have to borrow it in a black market. Thus
they will be given a higher interest rate.
Currently, neumercantalists still keep international relations as far as security and the economy
are concerned. They are concerned with states' gain and not absolute increase and thus
maintaining it, and the state should promote economic development by protectionism,
industrialization, and government intervention. Then can then support free trade when the
country has achieved supremacy in industries (Slater and Tom, 2017p.120). Economic activities
are run by human psychology, and thus, if there are psychological laws, then there are economic
laws. According to reductionism, psychological laws are based on biochemical laws that
regulate the brain activities of a human being, which are, in turn, based on fundamental laws.
The French revolution began in 1789 and ended in the 1790s where peasants were against
landlords after exploiting them for a year. The revolution seized French monarchy and
feudalism. It also leads to the promotion of equal opportunities, representative government, and
freedom of expression. Unlike Mercantilism, physiocrates see trade and industries as
unproductive activities and examine farming as the only productive activity. In sectors,
manufacturer's competition will keep profits equal to wages with a capital return of zero. In
agriculture, the farmers get surplus over the cost of production, which they circulate through the
economy, and landlords get the excess as rent. In a society, three classes are: the income flow of
these classes determines landlords, farmers, and manufacturers and their success. Physiocrates
terms capital as a series of advances where farmers invest their money in seeds and industries
invest in raw materials.
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Revolution of industries took place from the 18 th to the 19 th century. It was the period in which
rural societies in America and Europe transformed into urban and industrial areas. It indicated a
shift of individual machines, power, mass production, and numerous factories. There was an
improvement in the means of communication and transportation. The living standard of the
upper-middle classes was also improved while the lives of the poor and working classes
worsened. Wages were low, and the working conditions were tedious and dangerous. Unskilled
workers would be terminated, making their lives difficult. There was child labor where children
were forced to work for long hours, and yet the tasks were too difficult for them. Due to the
invention of machines, some of the workers were replaced by robots as they perform similar
functions as people.
The industrialized areas could not keep pace with the flow of new workers leading to inadequate
housing and pollution, and thus, the condition was hampering diseases. In the 19 th century, the
working-class terms started improving due to the trade unions formed and the formulation of
laws that protected the worker. The market price of a commodity is equal to the actual price at
which the good is commonly sold. The demand and supply of merchandise determine market
prices. When the application of products is too high, and the supply is low, the market price
rises, and when the order is small, and the amount is high, and the market price goes down.
When the government decides to drop the gold many and use paper currency, excessive paper
money will lead to inflation. Thus the remedy is to request the central bank to change the paper
money into gold. The total output is equivalent to the cost of production. To get the cost of
production is gotten when one adds up wages, profit, and rent. According to a commodity model,
as the numbers of laborers, as well as the total, fees grow, the lease also increases, but the profit
rectangle decreases. The model thus implies that the interest of the landlord is opposed to that of
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capitalists. When there are rules that wages and rent cannot be increased, then profit increase can
be gotten through importing the commodity at a cheap cost than it is sold in the local market and
improving the agriculture sector. When the population grows in the cultivation land, the land
under cultivation will be used; rent will go back to their original price. Profits will, therefore, be
higher, and thus, more capital will be achieved. The cultivation margins are extended to the less
fertile land of another crop rather than the previous one. The rent would, therefore, shoot to a
higher price than their original levels. When importation is prohibited, the lead would be
elevated than the reasonable price while profits achieved would be low. For accumulation will
depend on benefits, stopping importation will be responsible for dormant progress in wealth and
also growth in population.
The main difference between the classical economists and their successors is that their former
engages on wage funds. Wage funds are part of the capital that capitalists use to hire workers.
When labor is the commodity, several workers and wages are subject to demand and supply.
The value of a good or service is similar to the energy applied to its production. However,
according to classical economics, the value of a commodity is identical to its cost, which is
similar to rent, wage and profit combined (Vergara‐Camus and Cristobel Kay, 2017 p.240).
On a marginal land, capital and output are low while on fertile soil, the money and production
are high. Due to the competition, profit and wealth will be similar. According to Ricardo, rising
in wage cannot raise the prices; thus, profit will be left unchanged, or it would instead lower the
benefits. When a piece of land has an alternative use, the farmer ought to pay the landlord some
amount to compensate the amount the landlord would earn a forgone opportunity. Less labor is
used to produce the same amount of infertile commodity land, and thus, due to this difference,
the cost of rent shoots. The higher the difference in fertility levels of two different farms, the
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more significant the difference in rent. More profit can be incurred when doing the business of
the commodities locally than the cost made abroad.
Taxation on wages will raise the payments, but it should be raised to a certain level, and thus, the
profits will go down. When taxing rent, there will be no rise in rent experienced because the
landlord pays the tax. Capitalists pay tax on profits, but the wages should remain at the same
level. When levying taxes on commodities, the benefits will go down for they are necessities,
and customers will pay them if they are luxury commodities.
Marx developed the theory of dialect materialism, and it is bound on culture, law, politics, and
art. The main impact of political movements and social changes in the mode of production. They
include property laws, organization production, technology, and resources. In capitalism,
struggles are between workers and capitalists. These struggles lead to a change in the mode of
production, which causes variation in all human cultures. Due to the competition for jobs by
workers, wages are kept equal to the subsistence. To get profits, employers give labors less price
in fees than their work. Thus when they sell their products, they can sell them at their desired
prices and still get profits.
Savings give room to loan funds used for investment. When the savings are high, there will be
more investments, and thus employment rate is high too; whenever an increase in interest occurs,
saving levels increase, and therefore, the employment rate increases. An increase in savings will
reduce the long term interest rate, but it will encourage more investments. The free labor market
achieves full employment with no help from the government. But the government has the
capabilities of increasing the short term interest to get more savings and thus increase the level of
investments (Ehrenberg and Robert, 2017).
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According to Keynes, work had no value in itself; people only worked for consumption. The
significant difference between neoclassicism and criticism is that savings in neoclassicism are
leased for investments, and lowering interest rates will increase the investment levels.
Investments are from savings, and the government needs to improve people's income to get more
savings. Thus the government should increase investments in the private sector. Lowering the
rate of interest may make some people use their savings for investments, but there might be a
reduction of consumption to saving more. Thus income level determines the investment or
consumption levels as well. No relationship is witnessed between investment level and interest
rate. The investment level will depend on the profit incurred in the business and does not rely on
the interest rate. Income levels are the critical determiners of consumption or investment level.
Nation income level and employment level is determined by the intersection of aggregate supply
and demand.
Keynes argued that unemployment and inflation had a negative correlation. High wages were
equated to less unemployment. However, in the 1970s, inflation and unemployment rate
increased. An increase in the money supply increases the demand for goods and services, and
thus, the will be equal to the boom in price. When the real wage is maintained, unemployment
will not be price levels will rise immediately. When people expect prices to rise, the demand for
rates and services shoot higher. To meet the increased demand, manufacturers should do more
works that they may produce more commodities for increased customers. The decrease in
employment is a short term impact and, thus, any inflation in wages experienced. The money
supply is increased through in- bank systems as well as out- bank systems. Inside the banks,
some of the deposit is loaned to customers while in the outside bank system's the government
can give bonds to central banks which they lend to commercial banks. Therefore, wealth, prices,
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wages, land, and investment have relationships. The rise of one will depend on either the fall or
rise of another, and one commodity can lead to the other.
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Work cited
Ehrenberg, Ronald G., and Robert S. Smith. Modern labor economics: Theory and public policy.
Routledge, 2017.
Sherraden, Michael, and Neil Gilbert. Assets and the Poor: New American welfare policy. Routledge,
2016.
Slater, Tom. "Planetary rent gaps." Antipode 49 (2017): 114-137.
Vergara‐Camus, Leandro, and Cristóbal Kay. "Agribusiness, peasants, left‐wing governments, and the
state in Latin America: An overview and theoretical reflections." Journal of Agrarian
Change 17.2 (2017): 239-257.