Machinery question (1695)

English merchant and writer John Cary (d.c.1720) first dealt with the impact of the introduction of machinery on employment, an issue later examined by classical economists such as the English economist David Ricardo (1772-1823). Ricardo saw increased mechanization as reducing the wages fund, although the English philosopher John Stuart Mill (1806-1873) argued that any fall in wages would be

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Malthusian population theory (1798)

Named after English economist the Reverend THOMAS ROBERT MALTHUS (1766-1834), who believed that population would increase at a geometric rate and the food supply at an arithmetic rate. This disharmony would lead to widespread poverty and starvation which would only be checked by natural occurrences such as disease, high infant mortality, famine, war or

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Managerial theories of the firm (1960S)

A range of theories suggesting that managements in large oligopolistic organizations have supplanted the traditional goal of profit maximization. (New goals may, for example, focus on sales or asset growth maximization.) Managerial theories of the firm also recognize that power within the organization has shifted away from shareholders to management. Also see: theory of the

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Marginal cost pricing

Marginal cost pricing is the pricing of a product so that it covers the cost of producing one extra unit of the product. Marginal cost pricing method is frequently used in public services and utilities where the aim is to maximize the economic welfare of the state. In reality, deficits can arise for a

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Marginal efficiency of capital (1936)

Developed by English economist John Maynard Keynes (1883-1946), marginal efficiency of capital describes the rate of discount which would make the present value of expected income from fixed capital assets equal to the present supply price of the asset. As investment increases, the rate of returns decreases because early investment was directed at the most lucrative

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Marginal productivity of distribution (1899)

First formulated by American economist John Bates Clark (1847-1938), marginal productivity theory of distribution shows how capital or labor will be sought until the marginal revenue from employing either is equal to its marginal cost. Marginal productivity theory of distribution deals principally with demand for factors of production and disregards the supply side. Also see: Euler’s theory, returns

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Marginal utility theory (1870S)

Proposed in the late 19th century by the Marginalist group of economists, who used differential calculus to study the impact of small changes in economic quantities, marginal utility refers to the additional satisfaction a consumer derives from the consumption of one extra unit of a product. Thus, an individual’s demand for a product is

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Mark-up pricing (20TH CENTURY)

Developed by Polish economist Michal Kalecki (1899-1970), mark-up pricing is an aspect of average cost pricing in which firms calculate the average cost of a product and add on a mark-up, or profit. Research conducted in 1939 showed that the mark-up often remains constant irrespective of supply and demand conditions. Mark-up pricing is considered an alternative to marginal cost

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Marshall-Lerner principle (1944)

Named after English political economist Alfred Marshall (1842-1924) and Romanian-born economist Abba Lerner (1905-1982), Marshall-Lerner principle states the conditions under which a change in a country’s exchange rate will improve its balance of payments. In its simplest form, Marshall-Lerner principle states that the price elasticity of demand for imports and exports must be greater than unity for improvements

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Market penetration strategy

Market penetration strategy refers to the successful selling of a product or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service. Market penetration is the key for a business growth strategy stemming from the Ansoff Matrix. H. Igor

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Market development strategy

Market development is a growth strategy, associated with the Ansoff Matrix, that identifies and develops new market segments for current products. A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments. A market development strategy entails expanding the potential market through new users or new uses. New users can

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Marxism

Theories derived from the work of Karl Marx (1818-1883). The influence of Marx and of Marxism may be judged from the fact that Marxism has been compared, in its enormous variety, to Christianity. Starting points, though not conclusions, for Marxism are an understanding of history as moved by class struggle; of economic classes as the principal components of society;

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Material balances principle (20TH CENTURY)

Developed in the early planning programs of the Soviet Union, material balances principle attempts to balance supply and demand for a given commodity. If an imbalance occurs, the planning process may require imports of additional raw materials or reductions in the amount of material used by other parts of the economy or organization. Source:

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Maurice Felix Charles Allais

An independent-minded French economist, Maurice Allais strove to carry the message of the original Lausanne School of Leon Walras and Vilfredo Pareto into the modern era, through what we have called the Paretian Revolution of the 1930s. Maurice Allais wrote two major treatises in the 1940s, Á la Recherche d’une discipline économique (1943, reprinted 1952) and Economique et

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Measure theory

Measure theory is a branch of mathematics dealing with the attribution of measure to subsets of a given set. In economics, measure theory is useful in analyzing the influence that individuals or groups have on market operations. It also underpins probability theory and the measure of the frequency of phenomena. Also see: information theory, uncertainty Source:

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Mercantilism (17TH CENTURY- )

Theory of the responsibility of the state to protect and promote national wealth by encouraging exports and limiting imports. Since wealth is limited, trade between nations is a zero-sum game, so one country can only benefit at the expense of another. Mercantilism was advocated by a number of English, French and German writers, many of whom were merchants.

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Michal Kalecki

In his lifetime, Michal Kalecki was one of the unsung heroes of macroeconomics – and a potent lesson in why, in economics, one should always publish in English. Although Kalecki claimed to have anticipated much of the principles stated in Keynes’s General Theory, his articles (1933, 1935) were published in Polish and French and thus went

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Milton Friedman

One of the most highly influential economists, political commentators and essayists of the century, Milton Friedman is one of the best known economists. An ardent opponent of the Keynesian economics, Friedman led the ‘Monetarist’ incarnation of the Chicago School against the Keynesian orthodoxy in the 1960s and early 1970s. Milton Friedman’s early contributions include

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Modigliani-Miller Theory of the Cost of Capital (1961)

Named after Italian-born American economist Franco Modigliani (1918-2003) and American economist MERTON MILLER (1923-2000), Modigliani-Miller theory of the cost of capital states that the overall cost of capital remains constant as the financial gearing of a firm increases. Critics have suggested that the theory ignores the risk of bankruptcy as a firm’s debt increases. Source: M

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Monetarism

A revival of the quantity theory of money, monetarism asserts that increases in the money supply cause inflation (‘too much money chasing too few goods’). Monetarism emerged as an important economic doctrine under the influence of American economist Milton Friedman (1912-1992). Its adherents challenged the Keynesian approach to macroeconomics, emphasizing the importance of monetary policy in stabilizing

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