Distributism (20TH CENTURY)

Theory of politics and economics of Anglo-French writer Hilaire Belloc (1870-1953). Since property is desirable, it should be distributed to all households, each of which should have enough on which to make a living. Distributism had more application to agricultural society, and was ill-adapted to an industrial one. Source: Rodney Barker, Political Ideas in Modern Britain (London, 1978)

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Diversification strategy

Diversification is a corporate strategy to enter into a new products or product lines, new services or new markets, involving substantially different skills, technology and knowledge. Diversification is one of the four main growth strategies defined by Igor Ansoff in the Ansoff Matrix:[1] Ansoff pointed out that a diversification strategy stands apart from the other three strategies. Whereas,

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Dual decision hypothesis (1969)

A refinement by ROBERT W. CLOWER of English economist John Maynard Keynes’s (1883-1946) unemployment equilibrium, dual decision hypothesis relates to initial and revised demand and supply plans. If planned demand (demand based on prices which reflect full employment) varies from actual demand (based on a fall in income due to unemployment), the consumer and trader

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Dual economy theory (1953)

Attributed to J H BOEKE from study of postwar Indonesia, dual economy theory refers to an economy in which rich, capital-intensive modern sectors exist in the same model as comparatively poor, traditional, labor intensive sectors. Economists have deliberated over whether an economy should achieve economic growth through its technically advanced sectors or whether resources

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Dual labor market theory (20TH CENTURY)

There are two distinct economic systems. The first is what is normally understood as the economic system, the second is the patriarchal system of producing goods and services in the household. The subordination of women is rooted in the latter, but will have consequences throughout the ‘conventional’ economic system as well. Source: Maggie Humm,

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Duopoly theory (1838)

First posited by French economist Antoine Augustin Cournot (1801-1877), duopoly theory examines the interaction of two firms in a market: each firm’s output and prices are determined by the decisions of the other. Cournot’s model examined the reactions of the firms based on their output decisions, concluding that if one firm altered its output the other

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Economic liberalism

Economic liberalism refers to the maximum role of markets and competitive forces in an economy. The state’s role is limited to the establishment of the necessary framework in which markets can operate and to the provision of services which private enterprise cannot provide. Also see: laissez-faire Origins Adam Smith was an early advocate for economic liberalism

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Economic methodology

As exampled by the work of Nassau William Senior (1790-1864), and English economists John Stuart Mill (1806-1873) and John Maynard Keynes (1883-1946), economic methodology is the process by which economics is explained: the philosophy of science applied to economics. In the 19th century, British economists examined the premises of economic theory, arguing that the verification of economic theory was hazardous

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Economic theory of politics (19TH CENTURY- )

Economic theory of politics is an analytical model which assumes that politicians are vote maximizers and voters are utility maximizers. Each voter is assumed to support the political party that will provide him with the highest degree of utility when it is elected. Politicians, motivated by self-interest and the desire for public office, formulate

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Economic theory of the state (19TH CENTURY- )

Economic theory of the state is an analytical framework for examining the role of institutions, taxation and law in the creation of economic models. Source: S de Brunhoff, The State, Capital, and Economic Policy (London, 1978) Economics (/ɛkəˈnɒmɪks, iːkə-/)[1][2][3] is the social science that studies how people interact with value; in particular, the production, distribution, and consumption of goods and services.[4] Economics focuses on

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Efficient market hypothesis (20TH CENTURY)

Dating back to work on the random walk hypothesis by French economist Louis Bachelier (1870-1946), efficient market hypothesis asserts that stock market prices are the best available estimates of the real value of shares since the market has taken account of all available information on an individual stock. Also see: rational expectations theory, adaptive expectations Source: H Roberts, ‘Stock Market

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Engel’s Law (1857)

Formulated by German-born statistician Ernst Engel (1821-1896), Engel’s Law states that as incomes increase, the proportion of income spent on food falls. Engel’s Law is accepted as a basic principle of income and consumption. SOURCE: E ENGEL, DIE PRODUCTIONS UND CONSUMPTIONS-VERHALTNISSE DES KÖNIGSREICHE SACHSEN (BERLIN, 1877) Engel’s law is an observation in economics stating that, as income rises, the proportion of

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Entitlement theorem

Entitlement theorem is a precept of distributive justice which maintains that individuals are entitled to their goods provided these were obtained by socially acceptable means such as sale, purchase, or as gifts. Also see: Rawls theory of justice Source: J Rawls, A Theory of Justice (Oxford, 1971) While an earned sense of entitlement is usually

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Envelope theorem (1931)

Originally proposed by Canadian economist Jacob Viner (1892-1970) and later developed by American economist Paul Samuelson (1915- ), envelope theorem refers to a curve that encloses an entire family of curves, each of which contributes at least one point to the envelope. The primary use of the envelope curve is in relating long-run to short-run cost curves. It

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Equal sacrifice theory

The surrender of equal measures of utility by taxpayers. Equal sacrifice theory has three sub-groups: 1. Equal absolute sacrifice (where each taxpayer surrenders the same absolute degree of utility that he obtains from his income). 2. Equal proportional sacrifice (where each sacrifices the same proportion of utility he receives from his income). 3. Equal marginal sacrifice (where

Equilibrium theory

Body of analysis examining the balance of interrelated variables of an economy and their tendency to resist change. Classical economic theory, outlined by Scottish economist Adam Smith (1723-1790) and English economist David Ricardo (1772-1823), regarded market prices as fluctuating around the natural price (which can be considered a central price towards which market prices tend). Another feature of

Euler’s theory (18TH CENTURY)

Devised by Swiss mathematician Leonhard Euler (1707-1783), Euler’s theory is a theory of distribution based on marginal productivity. Euler showed that under constant returns to scale, if each factor of production is paid the value of its marginal product, total output (income) will be completely exhausted. Also see: adding-up problem, marginal productivity theory of distribution, returns to scale Source: L

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Exploitation

Exploitation occurs where a person or institution systematically gives to another rewards or services or goods disproportionately smaller than that other person’s efforts or contribution would justify, and retains for them-self a correspondingly greater amount. Source: David Miller et al., eds, The Blackwell Encyclopaedia of Political Thought (Oxford, 1987) Exploitation may refer to: Exploitation of

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Externalities (20TH CENTURY)

Arthur Cecil Pigou (1877-1959) developed earlier work by fellow English economists HENRY SIDGWICK (1838-1900) and Alfred Marshall (1842-1924) into an important feature of modern economic theory. Economic activity generates costs and benefits, some of which are not incurred/enjoyed by the person performing the activity. When, for example, a company pollutes the environment, it may enjoy efficient production

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Factor price equalization theorem (20TH CENTURY)

Formulated by American economist Paul Samuelson (1915- ) on the basis of the Heckscher-Ohlin Trade Theory, factor price equalization theorem postulates that free trade in commodities will eliminate price differentials, thereby effecting an equalization of factor prices; especially wages and interest rates. Also see: comparative costs, absolute advantage theory, customs union theory, rybczynski theorem Source: A P Lerner, ‘Factor Prices and

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