Sunday, April 29, 2012

14 - Economic Schools of Thought

.Economic Schools of Thought - CrCo > .

Wealth of Nations (1776) ..

Economic theories are constantly being proven, disproven and revised. The problem is, when these theories are wrong, millions of people can be adversely affected.
1) The founder of modern economics was a Scottish philosopher, named Adam Smith. In 1776 his book "An Inquiry into the Nature and Causes of the Wealth of Nations" was published. It was an organized discussion about economic theory.
a. When both focus on what they're best at and then trade, everyone benefits.
2) In 1890 was published a book, called "Principles of Economics" by Alfred Marshall
(supply and demand). It embodied classical economics.
2) The Austrian School of economics was founded by Friedrich Hayek and Ludwig von Mises and rejected nearly all forms of fiscal and monetary policy. They argued that,
a) heavy state involvement had never produced the results it promised, and that,
b) regulation and government tinkering is actually a problem, not a solution.
2B) The Austrian School's argument against government intervention was carried forward in the US by Milton Friedman (Chicago school of economics), who advocated privatization of many functions that have been assumed by government, famously proposing school vouchers and deregulation of the economy. Friedman also concluded that the Great Depression could be blamed on botched monetary policy, rather than some inherent fault of capitalism [like unregulated greed].
4) In 1936 John Maynard Keynes published a book "The General Theory of Employment, Interest and Money" which launched a field of macroeconomics.
a. Keynesians claimed that during recessions it is necessary for the government to get involved by using monetary and fiscal policy to increase output and decrease unemployment.
5) Socialism - system where the means of producing and distributing goods is owned collectively or by a centralized government.
6) Monetarism - focused on price stability and argue the money supply should be increased slowly and predictably to allow for steady growth. (Monetarism ..)
7) Supply side economics (trickle down economics) - advocated deregulation and cutting taxes, especially corporate taxes.
8) New neoclassical synthesis - synthesis of classical economic theories and Keynesian economics.

Monetarism ..

Austrian School of economics .
Chicago school of economics .
Demurrage (currency) .
Fiscalism (usually contrasted to monetarism)
Inflation targeting .
Market monetarism .
Modern Monetary Theory .

American.
Austrian.
Chartalism
Chicago.

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