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Famous business economists and their contributions

By Prof. Dr. Khawaja Amjad Saeed
FCA; FCMA
E.mail: icmalhr@brain.net.pk

Oct 16 - 22, 2000

Philosophy dominated the world for a very long time. Thoughts of Philosophers continued to serve as guidelines for several generations to shape their course of actions. However, later, Economics developed as a very powerful subject and several Economists made significant contributions in the areas of micro-economics, macro economics, development economics, industrial economics, agricultural economics, managerial economics etc. The list of celebrated Economists is very long. However, this piece reviews significant contributions by famous business Economists on a global dimension. Ideas contributed by them have positively affected the role of management and it is very important that every student of management must study the work contributed by the famous business Economists.

Schools of thought: In respect of the above aspects, the world has been dominated by two schools of thoughts. Their views are briefly summarised below:

Chicago and MIT: The first school of thought is dominated by Chicago and Massachusetts Institute of Technology (MIT). Their great emphasis has been on developing classical text books of economics. These text books have been very popular all over the world. Readers from developing and developed part of the world have been great beneficiaries. Text books are still being used for study by the students pursuing various courses in Schools/Universities offering courses in Business Administration/Management. These books provide basic framework and business students pursuing the above courses develop broader perspective in economic analysis for effective and dynamic decision-making.

Harvard and Darden: The second school of thought has emphasis on applied basis. The stress is on integrating the thoughts of Economists into international study courses in business for efficient management. This school of thought focuses attention on applied economics. The rise of managerial economics can also be attributed to this school of thought.

Famous business economists: While all economists who made contributions in the area of economics deserve full appreciation, this piece briefly presents major thoughts of famous business economists.

1. Jhon Maynard Keynes (Cambridge, U.K.)

His famous treatises include The General Theory of Employment, Interest and Money (year 1936). He wrote during depression years of the World Economy. However, he strongly believed that Government intervention could significantly improve the operations of the economy of a country.

2. Milton Friedman

As against Keynes, he wrote during the boom years. He belonged to the University of Chicago (USA). He strongly believed in the power of the market to heal itself. In his view, free market economies are the best in the long run.

3. Adam Smith (1776 — Scotland)

He is generally known as the father of Capitalism. His major emphasis in his world renowned book namely, The Wealth of Nations, was on division of labour and invisible hand of competition.

4. Joseph Schumpeter

He was originally from Austria but became a famous business economist from Harvard. He became very prominent due to his view point which stressed that entrepreneurship is the crucial factor in economic life. Entrepreneures create new industries that displace others in a painful and disquieting way. The crying need of the 21st Century is entrepreneurial revolution which will ensure social stability, result in innovative initiatives and add to the prosperity chapter in the world by alleviating poverty.

5. Jhon Kenneth Galbraith

He hails from Harvard. His three celebrated books namely, American Capitalism (1951), The Affluent Society (1958) and The New Industrial State (1967) have been very popular. His rousing lectures created lot of market for his publications. He de-emphasised production in favour of public services.

6. Arthur Okun

He belonged to Yales. He carefully studied co-relation of economic growth and unemployment. According to him, if GNP increases by 2.2%, unemployment decreases by 1.1%. His emphasis was on sustained economic growth.

7. Arthur Laffer

He was known as the supply side economist of 1980s. He was associated with the University of Southern California. He explained that"Supply" increase in productivity increases level of "Supply" and produces more wealth and economic growth. His thoughts dominated the world scene during Reagon administration. He is the author of the famous concept of Laffer's Curve. According to this curve, tax revenues will increase if the rate of tax decreases.

Dr. Mehboobul Haq

He was educated at Oxford and Yale and had nice exposure and interaction in Harvard. Hailing from Pakistan, he championed the cause of human resource development and developed Human Development Index (HDI). Under the auspices of UNDP, he regularly published one work namely, Human Development on Global Basis. Similar initiative was undertaken by him in respect of South Asia. His moving thoughts on Human Resource Development (HRD) have been instrumental in motivating the world to give special attention in developing human capital as an accelerator for socio-economic development and for ensuring prosperity on wider basis.

Phillip Kotler and Michael E. Porter

In recent times, Phillip Kotler (North-West University, Kellog), and Michael Porter (Harvard) have made considerable mark due to their contributions in the area of marketing. The whole world acknowledges their innovative publications which have awakened the business community on industry analysis and competitive spirit. Phillip Kotler's books on marketing have benefitted the readers all over the world. Porter's Five Force Model have introduced innovative approach on competitive form in the world. This includes the following:

a) The threat of new competitors entering the industry.

b) The intensity of rivalry among existing competitors.

c) The threat of substitute products or services.

d) The bargaining power of buyers.

e) The bargaining power of suppliers.

Conclusion

Students in business management courses and managers in practical field ought to study the great works developed by the foregoing Economists to improve decision making and ensure increase in profitability, productivity, growth, market penetration and provide strong leadership to enterprises. Indeed businesses will be revolutionized in terms of improved operations due to comprehension and implementation of thoughts contributed by the above celebrated business economists.

*Former Pro Vice-Chancellor of the University of the Punjab and Founder Director, Institute of Business Administration, University of the Punjab, Lahore.