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The Development of Publc Finance

This document discusses the development of public finance from different economic perspectives including capitalism, Marxism, and socialism. It outlines the key contributions of thinkers such as Adam Smith, David Ricardo, John Maynard Keynes, John Stuart Mill, Adolf Wagner, and Karl Marx to theories of public finance and fiscal policy. The document also examines the impact of Western institutions and classical/Keynesian economic theories on public finance practices in less developed countries.

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113 views14 pages

The Development of Publc Finance

This document discusses the development of public finance from different economic perspectives including capitalism, Marxism, and socialism. It outlines the key contributions of thinkers such as Adam Smith, David Ricardo, John Maynard Keynes, John Stuart Mill, Adolf Wagner, and Karl Marx to theories of public finance and fiscal policy. The document also examines the impact of Western institutions and classical/Keynesian economic theories on public finance practices in less developed countries.

Uploaded by

EDITHA QUITO
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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The

Development of Public
Finance
Presented by: Cindy R. Balingit
III. Capitalism:
Public Finance & Free Enterprise

1. Adam Smith
2. David Ricardo
3. Adolf Wagner
4. John Stuart Mill
Capitalism:
-is an economic system where the
means of production are owned by
private individuals.
Adam Smith
(1723-1790)
▪ He was the initiator of “Classical
economics”.
▪ He advocated the policy of minimum
government control on business
activities (laissez-faire).
▪ Government should limit its expenditures; while private
sector should provide the needs of society.
David Ricardo
(1772-1823)

▪ He was credited for his theory of


comparative advantage.
▪ His concepts became one of the
bases for the institution of equality
and uniformity in modern taxation
and the progressive tax structure.
Adolf Wagner
(1835-1917)

▪ He emphasized that the state should


eliminate the inequalities of wealth
through fiscal policy.

▪ The use of fiscal policies for distributive goals in


modern times partly originated from his theory
John Stuart Mill
(1806-1873)

▪ He is well known for his work,


“Principles of Political Economy”.

▪ He was a strong believer in freedom, especially of


speech and of thought.
IV. The Crisis of Capitalism: Keynesian
Public Finance
John Maynard Keynes (1883-1946)

▪ He developed the concept of fiscal policy


as a tool for correcting imbalances in the
economy.
▪ He introduced the concept of government fiscal
management within the context of capitalism.
▪ The concept of mixed economies served as basic tool in
both industrialized or developing countries.
V. Marxism
Karl Marx (1818-1883)

▪ LABOR was the key instrument of


productive capacity.

▪ Marx claimed that capitalist


exploited the working class by
trying to get the largest possible
amount of “surplus value”.
Basic Features of Socialist
Public Finance
▪ The Primacy of Central Planning: Planning plays a
crucial role in socialist public finance, while
classical capitalist theory relies on market
mechanism. Since there is only one sector in
socialism –the state sector- so central planning is
feasible. That is why socialist economies are named
as Centrally Planned Economies.
Basic Features of Socialist
Public Finance
▪ Role of Taxation in Revenue-Raising: Unlike the
mixed economies where taxation accounts for most
of government revenue, taxation plays a role in
socialist public finance. Revenue of state came
mostly from state enterprises.
▪ No Budget Deficits: Socialist countries do not have
deficits but have surpluses of revenue over
expenditure.
VI. The Impact of Public
Western
Finance Institutions on LDCs

A. Classical Public Finance


▪ Adam Smith’s ideas on his book are still quoted in the
LDCs.
▪ Smith’s progressive taxation is enshrined in the Philippine
Constitution.
▪ Smith’s views on the balanced budget were upheld in the
Philippines until 1972
B. Keynesian Public Finance

▪ John Keynes had the most impact on public


finance practices of LDCs.

▪ Keynes’ view that government should play a


dominant role in running economy was reechoed
by LDC fiscal policy makers.
Thank you for
listening!

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