Blind spots of free economy in the West with recommendations

An emeritus professor of economics delivered an insightful lecture in Taiwan:
1. Three assumptions:
1. Rational homosapiens for self interest to seek wealth as human nature and government should not interfere individuals at all.
2. Under perfect competition of raw materials and labor,the best and lowest cost can be attained.
3. Balance can be reached via the competition of free markets of imports and exports in the regions via supply and demand of commodities with natural adjustments.

Adam Smith was the father of classical economic studies. Actually,he accepted the ideas of Plato and Aristotle as the guiding philosophy. Smith accepted the thoughts of farming as the ideal but adding commerce and trade in his methodology to seek wealth. He is against the interference of the government. but advocate international free trade.

Malthus started "Population Theory" with agricultural labor on the land introducing production efficiency with reduction due to increase of population.

Mill's famous work on "Taxation Theory in Political Economy" (1848) is the endorsement of the classical school of economics. He was not satisfied with the Industrial Revolution in Europe resulting unfair distribution of income via the exploitation of labor with trend toward socialism. He advocated lowering tax to reduce the burden of the people and to promote education and the voting rights of women.

Marx noted market glut and to try to grab colonies to obtain source of wealth and to enslave natives of Africa to be sold to the continent of America resulting revolution of the class revolution of people without property. on the road toward international communism.

There are shortcomings in the logic of Marxism. Marshall cited the marginal efficiency of utilitarianism to explain supply and demand of consumers and producers with a few natural monopoly under the control of the government to care for livelihood of the people and to give reasonable profit according to the cost of production.

Marshall's "Principles of Economics" (1890) was intended to replace political economy to explain operations in economics with data and a pioneer of econometrics.

Say's Law recognized sufficient consumption from production as a kind of Darwin's evolution. "Survival of the fittest" seems to be incorporated into such thought.

From the end of the 19th century to the Great Depresson of 1929,the New Classical School has mantained the sphere of influence with authority. There have been challenges and revisions but the theory and policy of free economic principles in the West lasted without far distance.

To be continued...