William Petty ( ), Political Arithmetick, 1690 (post-humus pub.). a Grand Tour.

Transcription

1 Theory of Finance ( ) (Wed) & 18(Thu): TF: FKK 0. What Is Theory of Finance? ( ) etymology finance: etymology ( ) (etymon = true (ancient Greek)) from (OED)) finire, finus (Latin) = finish, end, settle a debt, pay ransom finir (French), finance financier ( : a public farmer) Cf. fine (English: ) In 15c, started to be used in England. * History * One Hundred Years War ( )=La Guerre de Cent Ans, Jeanne d Arc( ) England lost the territories in France, needed agricultural products. Reconquista completed in Spain, 1492: expulsion of Muslims and Jews. * the Commonwealth ( ) after the Civil War ( ), Oliver Cromwell( ): the Lord Protector ( ), navy strengthened Act Parlt. 19 May, Be it Declared and Enacted by this present Parliament, and by the authority of the same, That the People of England and of all the Dominions and Territories thereunto belonging are, and shall be, and are hereby Constituted, Made, Established, and Confirmed to be a Commonwealth and Free State; and shall henceforward be Governed as a Commonwealth and Free State by the Supreme Authority of this Nation, the Representatives of the People in Parliament, and by such as they shall appoint and constitute as Officers and Ministers for the good of the People, and that without any King or House of Lords. (OED: Oxford Eng. Dic.) William Petty ( ), Political Arithmetick, 1690 (post-humus pub.). a Grand Tour Isaac Newton ( ), by patron s support * the Restoration (1660): Charles II, James II (the House of Stuart), the Pretenders. J.-J. Rousseau A. Smith * the Glorious Revolution (1689)=the Bloodless Revolution ( the House of Hanover) Parliamentary Democracy established: MP s needed theories to impose tax & how to distribute expenditures. the 1st Jacobite Rebellion (1715): James Edward Francis Stuart(the Old P.) the 2nd Jacobite Rebellion (1745): Charles Edward Stuart(the Young Pretender)

2 * the American Revolution ( ): the Declaration of Independence (1776) Jean-Jacques Rousseau ( ), Du Contrat Social, See Wikipedia. (Eng.transl) Adam Smith ( ), the Wealth of Nations, a Grand Tour * the French Revolution ( ): Napoleon Bonaparte ( ), Code (1804) the end of Medieval Era: bourgeois vs. workers Theory of Finance Objects: Households, Firms, Governments Our Study: Object = Governments(central & local), Theory of Public Finance. Revenues and Expenditures; Justice( ) & Equity( ) Taxes and Subsidies; Equity( ) & Efficiency( ); Optimal System Question: (Who should pay the construction costs of roads?) Question: (Poverty should be left as it is, or relieved?) We need, among other things, philosophy as well as mathematics. I. Brief History of Theory of Public Finance? ( ) ( Aristotle (384BC-322BC): management of slaves in a household. a tutor to Alexander the Great (356BC-323BC) A Tratise on Government, ) William Petty ( ): consumption tax; in proportion to their respective abilities. Adam Smith ( ): 4 maxims (in Book 5 of his book, the Wealth of Nations). (1) in proportion to their respective abilities ( ) ; (2) clearness ( ); (3) convenience ( ); (4) minimum cost of collecting tax ( ). Laissez-Faire Jeremy Bentham ( ): utilitarianism and a political & social reformer David Ricardo ( ): Anti-Corn Law, comparative advantage: Laissez-Faire On the Principles of Political Economy and Taxation, John Ramsay McCulloch ( ): The Principles of Political Economy, Lorenz von Stein ( ): an advisor( ) to Meiji period Japan. See Wikipedia. Social reform by monarchy down to common people. His advice that universal suffrage and party politics should be avoided. Adolf H. Wagner ( ): 9 principles. See MR(p.225). Kathedrale. Adam Smith + administrative requirements (, ). Francis Ysidro Edgeworth ( : Irish): equal marginal utility loss. Mathematical Psychics, Kegan Paul, London, Arthur Cecil Pigou ( ): Welfare Economics, utilitarianism( ).

3 John Maynard Keynes ( ): Keynesian Revolution, macro models. More employment by spending more. The General Theory of Employment, Interest and Money, Macmillan, London, Hugh Dalton ( ): attacks on the rich. Labour Party. Theory of Public Finance, Routledge & Kegan Paul, London, Richard Abel Musgrave ( ): 6 principles. See MR(p.227). The Theory of Public Finance, McGraw-Hill, New York, Adam Smith + neutrality( = ) + stability( ) & growth( ). Paul Samuelson (1915- ) Nobel Prize(1970): public goods. Foundation of Economic Analysis, Harvard Univ Press, Cambridge, John Rawls ( ): maxmin principle. Theory of Justice, Harvard Univ Press, Cambridge, James A. Mirrlees (1936- ) Nobel Prize(1996): optimal taxation. (incentives). An Exploration in the Theory of Optimum Income Taxation, Review of Economic Studies, vol.38, 1971, pp Joseph Eugene Stiglitz (1943- ) Nobel Prize(2001): public economics. Economics of the Public Sector, 3rd ed., Norton, New York, Anthony Barnes Atkinson (1944- ) Anthony B. Atkinson and Joseph E. Stiglitz, Lectures on Public Economics, McGraw-Hill, New York, John Rawls Tony Atkinson

4 Main Reference (MR): 1997 Red Herring: Lewis Henry Morgan ( ): Ancient Society, Macmillan, London, League of Iroquios (North American peoples) Friedrich Engels ( ): The Origin of the Family, Private Property and the State, The first German edition in Online Version: Marx/Engels Internet Archive ( Friedrich Engels * Ancient Greece ( ) Isaac Newton [Athens] The class opposition on which the social and political institutions rested was no longer that of nobility and common people, but of slaves and free men, of protected persons and citizens. At the time of their greatest prosperity, the entire free-citizen population of Athens, women and children included, numbered about ninety thousand; besides them there were three hundred and sixty-five thousand slaves of both sexes and forty-five thousand protected persons-aliens and freedmen. There were therefore at least eighteen slaves and more than two protected persons to every adult male citizen. (Chap.5 in: The Origin of the Family, Private Property and the State) *Population of slaves: Athens 365,000 (free citizens 90,000); Corinth 450,000; Aegina 470,000 (10 times that of free citizens). needed Aristocratic public force & police force, necessary to impose taxes; state debts.

5 *Women s suffrage ( ): Wyoming(USA: )1869; New Zealand ( ) 1893 ( ) ( : ( )),