Human capital theory (1960s)

With its roots in the work of British economists Sir William Petty (1623-1687) and Adam Smith (1723-1790), human capital theory was extensively developed by American economists Gary Becker (1930- ) and THEODORE SCHULTZ (1902-1998). It postulates that expenditure on training and education is costly, and should be considered an investment since it is undertaken with a view to increasing personal

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Immanuel Wallerstein

Born in 1930, Immanuel Wallerstein has since 1976 been Distinguished Professor of Sociology at the State University of New York (SUNY) in Binghamton. He is the founder and director of the Fernand Braudel Center for the Study of Economies, Historical Systems, and Civilizations in Binghamton. Has published countless books and articles. Wallerstein’s so called

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Imperfect competition

Developed by English economist Joan Robinson (1903-1983), imperfect competition describes a market characterized by a large number of buyers and sellers, dealing with differentiated products, and in which there are no barriers to entry or exit. Imperfect competition differs from perfect competition principally in that its products are highly differentiated. Also see: monopolistic competition Source: J Robinson, The Economics

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Impossibility theorem (1966)

Formulated by American economist Kenneth Arrow (1921- ), impossibility theorem asserts that it is impossible to devise a constitution or voting system which offers more than two reasonable choices to the individual, or that will guarantee to produce a constant set of preferences for a group which correspond to the preferences of the individuals making up

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Input-output analysis (1941)

The Russian-born American economist Wassily Leontief (1906-1999) used matrix algebra and subsequently computer technology to trace the relationship between industries of the US economy. Every output in an economy can be analyzed in terms of final consumption and all the inputs necessary for its production. By developing a matrix of various production functions, it is possible

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Insider-outsider wage determination (1980S)

Wage determination can be achieved inside a firm when increased productivity permits higher pay for existing workers. It can also be determined externally by the forces operating in the broader labor market. Source: A Lindbeck and D J Snower, The Insider-Outsider Theory of Employment and Unemployment (Cambridge, Massachusetts, and London, 1989) The insider-outsider theory is a

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Institutional Theory

According to Scott (2008), institutional theory is “a widely accepted theoretical posture that emphasizes rational myths, isomorphism, and legitimacy.” Researchers building on this perspective emphasize that a key insight of institutional theory is imitation: rather than necessarily optimizing their decisions, practices, and structures, organizations look to their peers for cues to appropriate behavior. In defining institutions,

Internal and external balance

Economic analysis that attempts to balance full employment and price stability (the internal balance of an economy) with the balance of payments equilibrium (the external balance). Source: J E Meade, The Theory of International Economic Policy, vol. I (Oxford, 1951), ch. 10 Internal balance in economics is a state in which a country maintains full employment and price level stability.

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The Invisible hand theory of Adam Smith

The invisible hand theory describes the unintended social benefits of an individual’s self-interested actions, a concept that was first introduced by Adam Smith in The Theory of Moral Sentiments, written in 1759, invoking it in reference to income distribution. By the time he wrote The Wealth of Nations in 1776, Smith had studied the economic models of the French Physiocrats for

Iron law of wages (19TH CENTURY)

Iron law of wages has its roots in the work of classical economists, although the term was first used by German political economist FERDINAND LASSALLE (1825-1864). It postulates that wages will always revert to subsistence levels. A rise in wages triggers an increase in the population, prompting a fall in wages back to subsistence

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Irving Fisher

Irving Fisher was one of the earliest American neo-classicals of unusual mathematical sophistication. He made numerous important contributions to the Neo-classical Marginalist Revolution, of which the following are but a sample: (1) his contributions to the Walrasian theory of equilibrium price (he also invented the indifference curve device) in 1892; (2) his volumes on

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Isaiah Berlin (1909-1997)

Isaiah Berlin, a diplomat and political philosopher, developed the idea that there are two kinds of freedom: positive freedom and negative freedom. Positive freedom is characterized by being free to do things. Negative freedom, on the other hand, is characterized by being free from the interference of others, whether other people or the government.

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IS-LM model

Developed by English economist John Hicks (1904-1989) and American economist Alvin Hansen (1887-1975) to provide a framework for analyzing the factors determining the level of aggregate demand. IS-LM model (also known as the Hicks-Hansen model) was adopted as a universal framework in studying macroeconomics because it seemed to incorporate different views of the working of the economy. It

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Jacob Viner

Together with Knight, the Canadian-born Jacob Viner was the leading light of the Chicago School of the inter-war period. His work ranged all over economics, but it is perhaps his work on the history of economic thought and international trade theory that we find his remarkable strengths. Nonetheless, as Robbins characterized him, Jacob Viner

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Jakob Bernoulli

Jakob Bernoulli was born in Switzerland and received his degree in 1671 after studying philosophy and theology at the request of his father and mathematics and astronomy against the will of his father. His motto became Invito patre sidera verso (“Against my father’s will, I study the stars”) as he began to investigate mathematics

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James McGill Buchanan Jr.

James Buchanan is an economist most renowned for his work ‘Public Choice Theory’, and won the 1986 Nobel prize in Economic Science. He has long been a professor at George Mason University. His work in economics included rigorious analysis of the theory of logrolling. Major Works of James M. Buchanan – The Pure Theory

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James Tobin

James Tobin was born on March 5, 1918, in Champaign, Illinois, to a social worker mother and a father who became sports information director for the University of Illinois. Tobin grew into adulthood during the Depression. In a 1981 interview with The New York Times, he cited his experience growing up in that era

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Jean-Baptiste Say

Jean-Baptiste Say was born in Lyons to a family of textile merchants of Huguenot extraction. In 1787, after spending two years in England apprenticed to a merchant, Say took a job at an insurance company in Paris run by Claviere (later to become Minister of Finance). An ardent republican, Say was overjoyed by the

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Joan Robinson

One of the most prominent economists of the century, Joan Robinson incarnated the ‘Cambridge School’ in most of its guises in the 20th century: as a cutting-edge Marshallian before and after 1936; as one of the earliest and most ardent Keynesians and finally as one of the leaders of the Neo-Ricardian and Post Keynesian

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Johann von Thunen

North German landowner from the Mecklenberg area. Although educated at Göttingen, he spent most of his life managing his rural estate, Tellow. In the first volume of his treatise, The Isolated State (1826), he laid down the first serious treatment of spatial economics, connecting with the theory of rent. His second volume (1850) developed

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