History of Economic Thought and Fundamental Economic Principles and Theoretical Framework

Origins and Foundational Concepts of Economic Science

The development of modern economic science as a formal discipline emerged during the XVIII century. However, economic thought traces its roots back to Antiquity, specifically originating in the Ancient East and Ancient Greece. One of the fundamental principles established early on is that the division of labor is fundamentally dependent upon the breadth or width of the market.

Several key figures shaped early economic terminology and philosophy. The term "economics" itself was provided by Xenophon. Protagoras is credited with the philosophical maxim stating that "Man is the measure of all things." In the realm of market structures, Aristotle was the first thinker to discuss the concept of a monopoly. Aristotle further distinguished between two distinct approaches to economic activity: Oikonomia (Икономия), which refers to the rational or reasonable management of a household, and Chrematistics (Хрематистика), which pertains to the accumulation of wealth. Additionally, Aristotle provided a dual classification for goods, distinguishing between their use-value (потребителна стойност) and their exchange-value (разменна стойност).

Economic Thought in Rome, the Middle Ages, and the Arab World

During the Roman period, thinkers such as Cato and Varro (Верон) addressed the institution of slavery, primarily recommending that slaves should receive better treatment. In the Middle Ages, the perspective on labor evolved; both Thomas Aquinas (Тома Аквински) and Saint Augustine (Августин Блажени) argued that physical and mental labor are both useful and worthy endeavors.

Regarding the theory of money, the scholar Ibn Khaldun (Ибн Халдун) identified three primary functions of money: as a measure of value, as a medium of exchange, and as a means of accumulation. Later economic developments expanded these functions of money to five distinct roles: a measure of value, a medium of exchange, a means for the accumulation of wealth, a means of payment, and world money.

Mercantilism and the Evolution of Political Economy

Mercantilism is characterized by four central principles: the belief that wealth consists of money, the necessity for exports to exceed imports, the requirement for active state intervention, and the focused development of foreign trade. Thomas Mun (Томас Мън) specifically emphasized the importance of an active foreign trade balance, recommending that exports must always exceed imports. It was Antoine de Montchretien (Антоан дьо Монкретиен) who introduced the formal term "political economy."

In terms of monetary and statistical advancements, Scaruffi (Скаруфи) introduced the idea of a unified monetary system. William Petty (Пети) utilized statistical methods in his analysis and explained the concept of rent through the labor theory of value. Petty clarified that in the context of land, the actual land itself is not what is bought and sold; rather, it is the income generated by the land, which is known as rent.

Factors of Production, Value Formulas, and National Economy

Economic production is driven by three primary factors, each associated with a specific type of income. Labor (труд) generates wages (работна заплата), land (земя) yields rent (рента), and capital (капитал) results in profit (печалба). In the context of international trade efficiency, it is noted that England saves $20$ workers while Portugal saves $10$ workers.

The logic of capitalist production and value can be expressed through specific formulas. New value is represented by the formula $V + M$. The total value of a produced commodity is expressed as $C + V + M$. Capitalist production costs are represented by $C + V$. Within these expressions, constant capital is denoted as $c$ and variable capital is denoted as $v$.

Modern economies are organized into different spheres. The budgetary sphere includes the state administration, the army, the police, education, and healthcare. The service sphere includes sectors such as tourism, legal services (lawyers), hairdressing, and SPA services. For a national economy to experience growth, it is essential that the society or its actors must save (СПЕСТИ).

Schools of Thought: Physiocracy and Institutionalism

Physiocracy (физократия) is a term derived from the Greek words "physis" (физис), meaning nature, and "kratis" (кратис), meaning power; thus, it translates to the "power of nature."

Institutionalism is categorized into three main directions, each associated with a primary thinker. The social-psychological direction is represented by Thorstein Veblen (Торстейн Веблен). The social-legal direction was developed by John Commons (Джон Комънс). Finally, the conjunctive-statistical (or empirical) direction is associated with Wesley Mitchell (Уесли Митчел).