popevillover: what is classical economics and the difference of classical economics from keynesian economics?
I have to do a project on Classical Economics and I am having the hardest time finding information on the subject and putting together what i read to a powerproject. it doesn’t help that i have the worst economics teacher =/
please help me!
Answers and Views:
Answer by Derek
Classical economics believes that there should be little to no government involvement in an economy. It is similar to the Laissez-Faire approach to Economics.
Keynesian economics believes that the federal government can intervene in a time of recession to increase aggregate demand to help stabilize output through fiscal (taxation and government spending) and monetary policy (control of money supply and interest rates).
John Maynard Keynes believed that an economy could operate at full employment if a certain level of spending (consumer and government) and private investment exists. In order to combat a recession, he advocated tax cuts for the middle class and lowering or keeping interest rates low to encourage borrowing which would lead to more spending and investment. He also encouraged more government spending on things such as infrastructure, education, healthcare, and public needs to create jobs which would also increase consumer spending.
Classical economics believes that recessions are a part of a normal business cycle and that the “free-market” should be left alone and allowed to operate without government interference.
Sorry about your economics teacher.
Answer by MikawberClassical Economics (1770-1870) Pioneered the study of economics.
For: Limited Government, Hard Money, Laissez-Faire economy, Free Trade, Free Immigration.
Keynesian Economics (1920-Present) Body of work of John Keynes.
For: Floating Currency, Central Bank, Extensive State Intervention, Government stimulus projects, Tax Cuts, Short-Term Emphasis.
Classical Economics is the original modern study of economics. They advocated a proto-libertarian position of limited government and hard money. They laid the groundwork for Chicago and Austrian Economics. Also emphasized saving and a long-term perspective, as well as the harmony of interests.
Keynesian Economics is a hodgepodge of ideas cobbled from various sources. When pushed to give a definition for his program, Keynes admitted that it required a deceitful, all-powerful state. He appeared to overturn the Laissez-Faire program of the Classicists by redefining Classicism as being all who came before him. Keynesianism is a gateway program for fascism–government control with nominal title being held by the business owner.
It promotes a short-term vision of the future by baiting people with tax cuts, lowering the interest rate, floating the currency, busywork programs, and spending your way out of a recession. Basically, Keynesianism is not a coherent idea, but a rationalization for all bad behavior. Please see Murray Rothbard’s “Economics 101” Lecture Series for a more scholarly refutation.
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