Commanding Heights is a documentary about the world economy and two of the most influential people to steer it, John Maynard Keynes and Friedrich Von Hayek. They are both economist, but their idea differ. Keynes thought that the government needed to step in when the economy was in rough times. Hayek thought that the economy would eventually correct itself. The film starts off covering the beginning of globalization in the 1910’s and the start of World War One. Hayek served in Austrian artillery and was stationed in the Austrian Alps after the things he went through, he decided that would try to make the world a better place. Keynes on the other hand, spend his time advising the british government on their wartime economy. After the War, the …show more content…
As the stock market began to dive, everyone tried to pull all of their money out to try and save it, and that only made things worse. As the US’s economy fell, the rest of the world fell with it. In Germany, the saw it as the end of capitalism and the start of Fascism. This is where Keynes idea came into play. The American economy was falling and the unemployment was the highest it's ever been. Roosevelt had to save what was left, so he started all of these programs to put people back to work. He built national parks and railroads. This was exactly what Keynes thought the economy would need, and he became the most influential economist the world has ever seen. Hayek's ideas came into play In 1979, when Jimmy Carter was losing control of the inflation, and he was using Keynesian economic plans that were not working. The American people needed something that would work, they needed Hayek. Hayek’s ideas, although unexpected and quite old by this time, were that the government should not interfere with the market, because the market will correct itself. Margaret Thatcher and Ronald Reagan were the ones who brought Hayek’s ideas to the people. They cut government spending and gave businesses tax cuts, although a large amount of unemployment
Franklin D. Roosevelt, president of the united states from 1933 to 1945 (and the distant cousin of Theodore Roosevelt), was the first to convert to Keynes’s theories. He implemented massive public works programs to put people to work. Called the “New Deal”, an echo of Theodore Roosevelt’s square deal, it consisted of a series of programs from 1933 to 1938. As well as providing employment through massive works projects such as the Tennessee valley authority, which built dams to generate electricity. New deal programs provided emergency relief, reformed the banking system, and tried to invigorate agriculture and the economy. Many other programs were also put into place with were used to attemp...
Comparing Keynesian Economics and Supply Side Economic Theories Two controversial economic policies are Keynesian economics and Supply Side economics. They represent opposite sides of the economic policy spectrum and were introduced at opposite ends of the 20th century, yet still are the most famous for their effects on the economy of the United States when they were used. The founder of Keynesian economic theory was John Maynard Keynes.
Let’s get started with Adam Smith and his second coming. Adam smith was one of the greatest economics minds that have ever existed, teaching us that our wealth is not just in gold and silver but in the products that we produce and commerce we engage in! Much like today we can understand the idea of Gross National Product and how we can better adjust our habits and ourselves. Smith unlike most economists of that age understood the value in hard work and social aspect behind our decisions.
Keynes and Hayek represent different options. Should we steer markets or set them free? “Which way should we choose, More bottom up or more top down?” (Fight of the Century). These questions reflect the opposite ways Keynes and Hayek address the economy. Keynes wants to “steer” the economy from the “top down.” From his understanding of the economy, Keynes theorizes that the market can be directed by those with the power to do so to accomplish goals leading to a prosperous economy. This is the basis in his approach to dealing with recessions where the government or central bank manipulates the economy. The other side is a free market from the “bottom up” on which Hayek stakes his claim. Instead of steering the economy, Hayek proposes to leave it alone. Do not try to control it, but let the market determine the interest rate and price level, as it eventually will, through supply and demand. In this way, control is not exerted downward, but reality is expressed from basic economic forces. Fundamentally, Keynes’s model focuses more on the spending and consumption aspects of GDP, and Hayek’s approach focuses more on the investing aspect which flows from saving. These are the options from which to choose. Keynes vs. Hayek, Short run vs. long run, controlled vs. free, top down vs. bottom up, each possibility has its negatives and positives. This debate is not wrapped up
John Maynard Keynes, British economist, journalist, was born on June 5th 1883, in Cambridge, England. His father, Dr. John Neville Keynes, was an economist and a philosopher. Keynes attended Eton and then Cambridge University. At first he studied Mathematics but then turned his attention to Economics when he was offered the job at the British treasurer after the First World War when the British economy was at pressure. A man who gained a modicum amount of wealth during 1919 to 1938, married to Lydia Lopokova in 1926 and passed away in April 21st, 1946. Keynes believed that price level has to be stabled in order to have a stabled economy, and that is only possible if interest rates go down when prices rise. He also believed that the market forces alone will not deliver full employment but boosting government spending (main force of the economy in Keynes theory) will aim in his theory full employment or close to that. He believes by Governments intervening and spending will finally stop recession, unemployment and most importantly depression. For spending will increase the aggregate demand of the economy.
John Maynard Keynes classical approach to economics and the business cycle has dominated society, especially the United States. His idea was that government intervention was necessary in a properly functioning economy. One economic author, John Edward King, claimed of the theory that:
I believe that it's’ important to use our constitution as a guiding tool to help appoint the correct people for the job.John Maynard Keynes was a British economist where he fundamentally changed the theory and practices of macroeconomics and economic policies of government. Although he was revolutionary most of his policies were controversial and used Keynesianism economic to get people to stay away from them . His approach to macroeconomic management was different since the previous traditional laissez-faire economists believed that an economy would automatically correct its imbalances and move toward a state of equilibrium, They expected the dynamics of supply and demand to help the economy adjust to recession and inflation without government action. Laissez-faire economics thus regarded layoffs, bankruptcies and downturns in the economy not as something to be avoided but as elements of a natural process that would eventually improve. However that was not the case for the great depression. Keynes also believed that a given level of demand in an economy would produce employment however he insisted that low employment during the depression resulted from inadequate
Regardless, in regards to applying Keynesian economic policies toward the Great Depression, Former Federal Reserve Governor Ben S. Bernanke said “You 're right, we did it. We 're very sorry. … we won 't do it again” (Federal Reserve Board, 2002). Other economic theory must be developed to address some of the shortcomings of the Keynesian economic
Friedrich August Von Hayek Many famous philosophers throughout history have helped shape the politics, social norms, and economic practices of today’s modern world. One of the greatest of these philosophers is perhaps the Austrian economic theorist, Friedrich August Von Hayek. Hayek is most famously known for his book, The Road to Serfdom, in which he outlines the consequences of government control over the economy, and liberty in the form of market competition. Bibliography Friedrich Hayek was born in Austria-Hungary, on May 8th, 1899, to a wealthy Aristocratic family.
In this paper, I will argue either Donald Trump is a Keynesian or not. these two personalities have a significant difference but some similarities could be visible as well. John Maynard Keynes was a political economist of remarkable optimism and vision. He strongly believed that governments in their hands have a power to solve some of the most significant diseases of capitalism. Keynes denied a possibility to accept the communism or unlimited free market.
My research in Classical Economics and Keynesian Economics has given me the opportunity to form an opinion on this greatly debated topic in economics. After researching this topic to great lengths, I have determined the Keynesian Economics far exceeds greatness for America compared to that of Classical Economics. I will begin my paper by first addressing my understanding of both economic theories, I will then compare and contrast both theories, and end my paper with my opinions on why I believe Keynesian Economics is what is best for America. Classical Economics is a theory that suggests that by leaving the free market alone without human intervention equilibrium will be obtained. This theory was the first school of thought for economists, and one of the major theorists and founders of Classical Economics was Adam Smith.