Questions

1. What degree do undergraduate students study for?

1. What is a second, more specialized degree in economics?

2. What kind of degree is MBA? What is the aim of MBA program?

3. What is the PhD program designed for?

4. What field of activity would you choose: economics or business administration? Give your arguments.

Text 3

Outstanding Economists

Work in groups of three. Look at the outline after the text. Each person should scan one of the articles and take notes in the appropriate section of the outline. Then share information so that you and your partner have the same data and can fill in the outline completely.

A.

The Founder of Economics

Adam Smith was born in Kirkcaldy located to the north of Edinburgh in 1723. In 1740, at the age of seventeen, Smith was sent off to Oxford on scholarship. In 1751 Adam Smith became a professor of Logic at Glasgow. It was his first academic appointment. As a teacher in public he wrote almost nothing, and though at the beginning of a lecture he often hesitated, and seemed not to be sufficiently possessed of the subject, yet in a minute or two he became fluent, and poured out an interesting series of animated arguments. His students loved him, and he acquired a great reputation as a lecturer.

Smith was a curious human being. He treasured his library, and was continually absorbed in abstractions. He was notoriously absent-minded. Smith led a quiet and sheltered life; he lived with his mother and remained a bachelor all his life.

Smith devoted his life to scientific research. An Inquiry into the Nature and Causes of the Wealth of Nations is his magnum opus. Published with great success in 1776 it became the foundation of the science of economics. In his book Smith considered how individual prices are set, studied the determination of prices for land, labor, and capital, and examined the strengths and weaknesses of the free market mechanism.

Adam Smith introduced the term of “invisible hand” that is economic forces that regulate supply and demand of goods in the market. Using his now famous “invisible hand” analogy, Smith argued that the self-interested actions of individuals actually guide market outcomes to yield great economic benefits for the broader society.

Adam Smith became the first political economist the world had ever known. He took his place at the head of the first school of economics, one that continues and is known as the “classical school”.

B.

David Ricardo (1772–1823)

David Ricardo was born on 19 April 1772 in London. He was the third son (out of seventeen!) of a Dutch Jew who had made a fortune on the London Stock Exchange. At the age of fourteen, after a brief schooling in Holland, Ricardo’s father employed him full-time at the London Stock Exchange, where he quickly acquired a knack for the trade. At 21, Ricardo broke with his family and his orthodox Jewish faith when he decided to marry a Quaker called Priscilla Anne Wilkinson; Ricardo then converted to Christianity. His family disinherited him for marrying outside his Jewish faith.

Ricardo had to establish his own business. He continued as a member of the stock exchange. He did so well that in a few years he acquired a fortune. This enabled him to pursue his interests in literature and science, particularly in mathematics, chemistry, and geology.

He became rich in a very short time. When he died, his estate was worth over $100 million in today’s dollars.

In 1799 he read Adam Smith’s Wealth of Nations and got excited about economics. So for the next ten years he studied economics. In 1809 he wrote that England’s inflation was the result of the Bank of England’s propensity to issue excess bank notes. In short, Ricardo was an early believer in the quantity theory of money, or what is known today as monetarism.

In 1819 he became Member of Parliament. His free-trade views were received with respect, although they opposed the economic thinking of the day. In 1817, Ricardo published Principles of Political Economy and Taxation in which he developed the principle of comparative advantage – the main principle of international trade as we know it today.

He died on 11 September 1823 at the age of 51.

C.

John Maynard Keynes (1883–1946)

The English economist John Maynard Keynes is regarded as the originator of modern macroeconomics.

The son of an eminent English economist, Keynes was educated at Eton and Cambridge. While his early interests were in mathematics and probably theory, Keynes ultimately turned to economics.

In 1935 George Bernard Shaw received a letter from John Maynard Keynes in which Keynes wrote, “I believe myself to be writing a book on economic theory, which will largely revolutionize… the way the world thinks about economic problem”. And, in fact, Keynes’s The General Theory of Employment, Interest and Money (1936) did revolutionize economic analysis and established Keynes as one of the most influential economists of all time. The General Theory attacked the classical economists’ contention that recession will automatically cure itself. Keynes analysis suggested that recession could easily spiral downward into a depression. Keynes claimed that modern capitalism contained no automatic mechanism that would propel the economy back towards full employment. The economy might languish for many years in depression of the 1930s seemed to provide sufficient evidence that Keynes was right. His basic policy recommendation for government in these circumstances was to increase its spending to include more production and put the unemployed back to work.

	Adam Smith	David Ricardo	John Maynard Keynes
Date of Birth (DOB)
Place of Birth (POB)
Education
Scientific Activity
Works
Impact on Economics

WRITING

Study the biographical data of Michael Del and Ingvar Kamprad, find the information about other famous businessmen and write it down as in the examples.

Examples: