Classical Political Era

Politics begins at the time of the ancient Greeks more emphasis on the notion that the discussion focused on the country. The thinkers of this period was Socrates, Plato, and Aristotle.

Socrates introduced the term theoria is defined as knowledge at that time. According to the state's duty is to educate citizens with the principle of giving happiness to every community and make their lives as good as possible. Plato had the concept of the ideal state which is the philosophical implications of the doctrine concerning this idea.hal illustrated through obsession and the purpose of life in developing countries are organized and educated people. Furthermore, Aristotle dubbed as the father of empiricism in politics. he explained that the classification of the state should be done on the basis of the collection of facts that exist in a country.

In addition to the ancient Greek era, the classical political thought occurred in the Roman civilization which is divided into two periods, namely the period of the republic and empire. Post Ancient Greece is often the discussion and study of world politics is Roman. At this time considered to be the heir of thought Ancient Greek era, but this era is not too contribute to the development of thinking and significant. However, there are differences in the implementation of the theory of state at this time, in the Ancient Greece more emphasis on the concept of a small country, but at this time a very broader scope. Because at this time the state initiated empire, namely government more dominant and extensive berteritorial once, regardless of the differences between people.

Additionally at this time more focused on legal issues and administration as a condition for strengthening territorial governance system is very extensive and Rome as its center. Therefore, we can understand it that this Roman period over which a state has to be an institutional perspective rather than Ancient Greece.

The history of western thought is divided into three periods, namely classical, middle and modern. Classical age stems from Ancient Greece until the 5th century, medieval from the 6th century to the 15th century and the modern era of the 15th century until the 19th century. Two political events namely the collapse of the Western Roman (476 AD) and the collapse of the Eastern Roman (1453 AD) is considered as a milestone in the separation between classical times to the Middle Ages and modern times.

Background classic appearance, began when the French Revolution which makes the transfer of power from the state authorities, the kingdom and the church. Royal party no longer dominates, but switched to the merchant (merchant). This is because the era of inter-state trade, where countries that managed to have a surplus of gold, considered a rich and prosperous country. Later in the merchant's development cooperation with the government (state) resulted in fraudulent practices and make more profitable merchants and rulers. This era is often referred to as mercantilism. A small number of people such as farmers, fishermen, miners were oppressed as a result of the system in favor of the merchant. This is what underlies the emergence of the doctrine of liberalism where each individual has the freedom to enter the market either as producers or consumers. Besides the limitation of the role of government and politics into the market as it would result in such an era of mercantilism in which only certain parties and that have close relations with the authorities who benefited.

Among other influential figures James Steuart who published his work entitled An Inquiry into the Principles of Political Economy (1767) and Adam Smith who authored An Inquiry into the Nature and Causes of the Wealth of Nations (1776 Adam Smith's book is what underlies the emergence of teachings liberalism and the market economy. David Ricardo is one of the classic figures who also wrote The Principles of Political Economy and Taxation (1987).

This view sees the individual as a human being as a rational being, and will choose the best alternative for him. So it will try to get its business in order to maximize the fulfillment of personal interests.

Classical flow that develops is a classic liberal approach. See the market as a meeting place between producers and consumers. Each party to work for his personal interests but attempted to suppress the occurrence of conflict between them. So it will appear in the market price mechanism, where the invisible hand that regulates the process of supply and demand and will bring the market balance (equilibrium).

Understand classical view state should not interfere in the affairs of the market. State could be considered to disrupt the dominance of the market because often the government would only benefit certain parties only. Countries only play a role in protecting people when conflicts both internal and external conflicts. In addition, the country serves as a good service provider's infrastructure, as well as public facilities and infrastructure for the continuation of market mechanisms in the country.

The relationship between the state and strictly separated markets, although market senidir resides in the state system. Because the market is considered as a system that can regulate and run automatically with the invisible hand earlier.

The classical view has drawbacks in practice so difficult to separate the role of the state to politics. Then the market mechanism, invisible hand is a difficult thing because it is often not selamnya dijelaska buyers and sellers meet in a single market. Besides if there is a monopoly of the market, so when the government is forbidden to intervene in the market, the community also will be harmed.

Neoclassical

Berkembangan neoclassical manakalah they feel there is a flaw in the classical liberal thought and no operation of the market mechanism masrxis teachings. Classical liberal illustrates that the presence of invisible Handa then automatically be run in accordance with the market mechanism when the market can not be left entirely to the market mechanism. While their views on the socialist market controlled by the government are also not approved by the neoclassical view. So neoclassical seeks to unify, where the market may be free, but there are times when there is a defect or negative mechanism in the market then the market intervention is needed to restore the functioning of the market.

One of which Alfred Marshall characters with some major works, among others, The Pure Theory of Foreign Trade (1829), The Principles of Economy (1890), Industry and Trade (1919) and Money, Credit and Commerce (1923). Gossen and JB Clark is also one of the developers of neoclassical economics. Karl Menger's work is primarily Grusatze der Volks Wirtschaftslehre (1817). Eugen von Böhm-Bawerk with his work is an Interest Capital (1884) and the Positive Theory of Capital (1889). Friedrich August von Hayek also made the book's Monetary Theory of The Trade Cycle (1929), Profit, Interest, Investment (1939) and The Pure Theory of Capital (1941).

Together with classical neoclassical see the individual as a free man and trying to get their needs met to the fullest. The difference with the classic look lies in the perspective of market mechanisms. That in the market when individuals are free to become producers and consumers will bring their monopoly of both collective and individual goods, it is what is called market failure. So the role of government is needed to prevent the occurrence of monopolistic practices in the market as well as the action of government bureaucrats in power function. With government intervention is expected to fix a problem that can not be solved in the market mechanism.

The forms of market failure:

Monopolistic, but when the seller many types of goods in circulation almost the same and similar. So that when the product is not there, it can be replaced with another product. This led producers can not menentapkan prices at will because of the many manufacturers that also offer competitive prices. Examples: soap, laundry soap, toothpaste, cosmetics and beauty products, clothing.

Oligopoly occurs when the number of producers slightly. Outstanding goods generally have some other differences but differentiated so that producers could also have the power to control prices. Examples such as cement, fertilizer, personal vehicle. Monopoly is unfair competition because there is only one manufacturer in the market. So the price can be determined in accordance with the wishes of the manufacturer. Examples such as petroleum, electricity, telephone. 

The relationship between the state and the market that the country is a party that can solve market failures such as the failure of the market mechanism preformance. However, the government's role was limited to resolve such market failures and remain prohibited intervene when market mechanisms taking place without any problems.

In development is often described as neoclassical economic development where economic-mathematical social sciences-humanities must release the identity humanisnya and calculate trade-offs in formulas and mathematical. Government intervention only in the correct market failures lead to public welfare is not a priority in the development of economics. Economics is defined the same as the individualist concept of making each individual will pursue profits alone. So neoclassical criticized due distanced justice and welfare.

Keynesian

Keynesian idea is similar to the Neoclassical where perkembngannya arising kegaglan of Liberal concept in the market mechanism. When the Great Depression (Great Depression) where the collapse of stock prices on Wall Street that makes convulsions of the world economy. Keynes saw that liberalism was not always able to cope with the market mechanism. The absence of regulations made by the government memgakibatkan market exploitation by certain parties. So the role of government is needed in emnagatasi market failure.

Figure book The General Theory Keynes (1936), Hayek Treatise on Money (one of the figures who also developed the Neoliberal). Keynesians see the individual as a whole society whose existence needs to be protected by the state.

Keynesians see in the market mechanism, that liberalism makes manufacturers will continue to create and produce the goods on an ongoing basis. This resulted in an increase in offers that are not accompanied by an increase in purchasing power in the purchase of goods. This is what led to the failure of the market, and market instability.

State role in maintaining the stability of the market mechanism. That is ketidaka market instability and the failure of the role of government is necessary to restore the market conditions. However, when the market mechanism was normal and stable, the government prohibited from intervening. Governments need to ensure the welfare of its people, so that when the economic shocks that threaten the prosperity of its people, the government needs to do the regulation. If there is a recession due to lower aggregate demand, the functions of the state to prevent and correct them. Interventions that could dilakukanuntuk conduct economic stabilization is to strengthen the financial sector, the stabilization of prices and take advantage of the government's fiscal policies.

Keynes which saw an increase in productivity accompanied by a rise in the demand for labor is one of the things that are generally rare because when production increases, generally the manufacturer will seek to improve the efficiency of the workforce so that the gains can be maximized. Can also contribute to improving the use of high-tech business production without the need for an increase in the workforce to be more efficient.