Marx, Keynes, Hayek and Friedman: The Power of Ideas

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Economics, commerce, money theory, production, business cycles, government intervention, credit/debit and many other things were paved with a heavy foundation involving these four economists. Each had their very own opinions in light to each other, which only gave way to new findings about our economies in whole. Along with ideas came great contributions to nations as well. Karl Marx was sort of the founder of modern communism, by merging politics and economics he gave way to new ideas involving the working class owning part of what they create. John Maynard Keynes emphasized the idea that government should intervene with fiscal and monetary policy to save economic downturns and recessions. Friedrich Hayek was an advocate of classical liberalism and free market capitalism; this basically meant a limited government and individual liberties. Milton Friedman believed in the macroeconomic policy know now as Monetarism which included many government limitations and the emphasis of free market economics. These four economists shaped the society that we live in today, without their contributions to economics, there would be so much left undiscovered and unlearned. The world today would not be the same economically if they had not contributed to the science. Although, before these four, came Adam Smith; better known as the father of Economics. Adam Smith had a basic belief that people would act in their own self-interest and produce the goods and services required by society as a whole (www.thewallstreetpsychologist.com). He often used what is referred to now a days as “the invisible hand theory”. This theory is essentially, a natural phenomenon that guides free markets and capitalism through competition for scarce resources (www.investo... ... middle of paper ... ... to actually work for a change. This is where you see the inflation rate increase tremendously on the Phillips Curve as unemployment nears that threshold. He also predicted that the Phillips Curve was not stable and would ultimately end up causing stagflation (an increase in inflation and unemployment at the same time). Friedman disliked the idea of the Federal Reserve System but worked around the fact that it wasn’t going away anytime soon. He incorporated it into his theories stating that the only good policy would be to steadily increase the money supply. The largest alternative macroeconomic policy Friedman is known for is called “Monetarism”. During the 1960s he promoted an alternative macroeconomic policy known as "monetarism". Works Cited • http://www.thewallstreetpsychologist.com • http://www.econlib.org • http://www.wikipedia.org • http://www.fee.org

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