Natural Law

Natural <em><strong>Law</strong></em>

Natural Law , in classical economics the embodiment of the belief that the natural order of economic matters is inherently simple, harmonious and beneficent. A free market, relieved of all monopolistic restraint, was conceived in the long rut' to serve the interests of all alike and therefore the greatest good of the greatest number. By what Adam Smith called the 'simple principle of natural liberty' the operations of the market were thought to produce prices as low as was consistent with maintaining the flow of goods and services and yet yielding enough return for the effort expended to ensure their continued production.

Negotiable Instruments, documents in which the property passes by delivery and/or endorsement, e.g. bills of exchange, cheques and promissory notes. The holder is not prejudiced if the title of the transferor or any previous holder is defective: he can sue them in his own name. Cheques are often crossed 'not negotiable' to protect the owner against loss by theft.

Net Advantages, the monetary and non-monetary attractions of competing employments, which tend to offset each other. It explains the structure of relative wages , why some jobs carry higher pay than others. If all employees are of equal efficiency and can move freely from job to job, an individual will take the job in which he sees the largest advantages and least disadvantages, where the net advantages are highest. The advantages and disadvantages will tend to cancel one another out. Work in dangerous or unpleasant conditions will be compensated by high pay; an employee may be willing to accept low wages because of the prestige or prospects attached to his job, or the large amount of leisure it offers, or the opportunity of open-air work, and so on. Wages will therefore differ, but the net advantages will tend to be equal in different jobs.

In the real world there is not equal efficiency or free movement. Employees do not move freely from job to job because of ignorance of employment opportunities, disinclination to move, trade union restrictions on entry. And there are differences in training, education, aptitude, age and efficiency. All these causes create barriers between jobs, and further reduce mobility of labour, so that differences in net advantages can remain for long periods. The more information about jobs can be spread, and mobility eased by removal of obstacles and encouragement, the more equal net advantages would tend to become. Information and mobility are therefore equalizers in the labour market.

ExamplesEconomic - Macro Economic

Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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