Economics (McConnell) AP Edition, 19th Edition

Joan Robinson (1903-1983) developed the monopsony model. While others in the field of imperfect competition were focusing on the monopoly power of sellers, Robinson developed the model for a single buyer. She developed the graphical textbook model of how a single hirer of labor could pay a lower-than-competitive-wage and still attract the profit-maximizing quantity of labor.

As an economist, Robinson had an eclectic career. Not only did she address a wide variety of issues, her philosophical approach to economics changed dramatically. Robinson started her professional life as a neoclassical economist, studying under Alfred Marshall at Cambridge University. As her career progressed, she became a contributor to the more liberal Keynesian economics and ultimately to the somewhat radical post-Keynesian economics.

In addition to her theoretical contributions, Robinson actively engaged in the formation of public policy. In order to combat low wages and lack of bargaining power in monopsony markets, Robinson and her theories supported a number of laws friendly to labor. Three of particular significance was the Wagner Act (1935), which promoted the growth of labor unions; the Robinson-Patman Act (1936), which protected small sellers from the monopsony power of large buyers; and the Fair Labor Standards Act (1938), which established the minimum wage.

This knowledge and skill are in great part the product of investment and, combined with other human investment, predominantly account for the productive superiority of the technically advanced countries. To omit them in studying growth is like trying to explain Soviet ideology without Marx.⁽¹⁾

Another contributor to human capital theory was Gary Becker (b. 1930). Born in Pottstown, Pennsylvania, he received his undergraduate education from Princeton and his Ph.D. from the University of Chicago. He taught for 12 years at Columbia University before returning to the University of Chicago in 1970 to become a professor of economics and sociology. Becker's contributions are varied, often reaching outside the areas economists usually explore. He has developed theories of discrimination, marriage, divorce, fertility, and altruism, to name a few. For his efforts Becker was rewarded with the Nobel Prize in economics in 1992.

Born in Kirkcaldy, Scotland, Smith attended Glasgow College at age 14, and later studied moral and political science and languages at Balliol College, Oxford. After serving as a lecturer on rhetoric and literature in Edinburgh, Glasgow College, in 1751, elected Smith to be professor of logic and, a year later, the chair of moral philosophy.

Smith left Glasgow College 12 years later to serve as a private tutor. In the course of his travels as a tutor, Smith spent time in France, where he befriended Francois Quesnay and Anne Turgot. The two physiocrate economists helped shape Smith's thinking, as evidenced by his use of the French term, laissez-faire.

Before focusing his attention on political economy (the old term for economics), Smith published The Theory of Moral Sentiments in 1759. This work concentrated primarily on philosophy and ethics, and in particular the moral forces which guide behavior. Smith's best known work, the work that clearly defines Smith as an economist, was An Inquiry into the Nature and Causes of the Wealth of Nations (often referred to simply as Wealth of Nations), published in 1776. The 900 pages of Wealth of Nations contain not only the articulation of many time-tested concepts in economics, but also a refutation of the economic philosophy known as mercantilism. Mercantilists believed that nations should enact trade barriers with other countries so as to reduce imports and achieve a trade surplus. Their belief was that the wealth of a nation was in the gold and silver (bullion) it possessed, and that trade surpluses were a primary means to accumulating bullion. Smith argued that the wealth of a nation was the real goods it produced, not the money it possessed.