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ronki23

Well-Known Member
I'm getting a bit confused here but I thought there were two main schools of economics :

NeoClassical Consensus: developed by Adam Smith and where the market is free from the government. Also known as economic liberalism?

Keynesianism: developed by John Maynard Keynes and where the goverment intervenes in the economy.

NeoClassical synthesis: NeoClassical economics applied to microeconomics i.e. consumer behaviour and the business' response. Macroeconomics is Keynesianism so various stimulus packages, tax increases, etc.

Monetarism: Developed by Milton Freidman. This is where I'm confused because Monetarism is supposed to be the opposite of Keynesianism but I thought the opposite of Keynesianism was the NeoClassical consensus?

I thought the 'answer' to the Keynesian vs Classical economics was the NeoClassical Synthesis so what's the reason for monetarism?
 

Pete in Panama

Active Member
I'm getting a bit confused here but I thought there were two main schools of economics :

NeoClassical Consensus: developed by Adam Smith and where the market is free from the government. Also known as economic liberalism?

Keynesianism: developed by John Maynard Keynes and where the goverment intervenes in the economy.

NeoClassical synthesis: NeoClassical economics applied to microeconomics i.e. consumer behaviour and the business' response. Macroeconomics is Keynesianism so various stimulus packages, tax increases, etc.

Monetarism: Developed by Milton Freidman. This is where I'm confused because Monetarism is supposed to be the opposite of Keynesianism but I thought the opposite of Keynesianism was the NeoClassical consensus?

I thought the 'answer' to the Keynesian vs Classical economics was the NeoClassical Synthesis so what's the reason for monetarism?
My experiance is that whenever you get 3 economists together you end up w/ 4 schools of thought.

These terms are played fast and lose and end up being defined any way you want. Meanwhile my tack is to decide what the evidence points to, agree w/ what is, find some doctrine that espouses my newly chosen view, and say "I'm that."
 

Shadow Wolf

Certified People sTabber
Monetarism: Developed by Milton Freidman. This is where I'm confused because Monetarism is supposed to be the opposite of Keynesianism but I thought the opposite of Keynesianism was the NeoClassical consensus?
Freidman takes what is basically a classic-liberal economic stance that is built on the Constitution (he basically ties government spending to the national GDP), while taking on a neo-liberal stance of promoting economic activity and growth above all else, going as far to claim economic liberties and social liberties are the different sides of the same coin. However, he does tend to be more generous in spending than many of his Randian-Libertarian counterparts who rally for even less spending than what Milton would allow for, just as long as the economy and GDP are doing well enough to justify it. We also see much of this idea of running the state budget like a business, or even a family budget, compared to Keynes who would make a policy during economic turmoil for the state to hire someone to dig some trenches and then hire someone to fill them just to get money out there and circulating.
 

Shadow Wolf

Certified People sTabber
Also keep in mind labels in fields such a economics (and philosophy in general) may not always be congruent. It's better to understand the ideas than the labels that define them, in my opinion. Due to things like unusual word usage, the nature of the beast trying to explain complex ideas on paper, and dated terms a dictionary is often ill equipped and will describe multiple words using the same words in a different order (many dictionaries do this with communism and socialism), making an encyclopedia the better tool.
And purists are also rare. Combining different ideas into new ideas is pretty common, and it's not unusual for debate to revolve around what an author really thought or expressed. Authors may have resemblances to multiple authors intentionally, or sometimes coincidentally.
Just understand the ideas and concepts and you'll be fine. We invented google to help us remember those labels and terms to use as communication tools to help us describe things.
 

Orbit

I'm a planet
I'm getting a bit confused here but I thought there were two main schools of economics :

NeoClassical Consensus: developed by Adam Smith and where the market is free from the government. Also known as economic liberalism?

Keynesianism: developed by John Maynard Keynes and where the goverment intervenes in the economy.

NeoClassical synthesis: NeoClassical economics applied to microeconomics i.e. consumer behaviour and the business' response. Macroeconomics is Keynesianism so various stimulus packages, tax increases, etc.

Monetarism: Developed by Milton Freidman. This is where I'm confused because Monetarism is supposed to be the opposite of Keynesianism but I thought the opposite of Keynesianism was the NeoClassical consensus?

I thought the 'answer' to the Keynesian vs Classical economics was the NeoClassical Synthesis so what's the reason for monetarism?

Adam Smith, if you read him, calls for a regulated market.
 

ronki23

Well-Known Member
Another thing:

There is often talks about a balanced budget but barely any country has a budget surplus and nearly all of them have debt: can you not run off of a deficit 'forever' ?
 

Kooky

Freedom from Sanity
Another thing:

There is often talks about a balanced budget but barely any country has a budget surplus and nearly all of them have debt: can you not run off of a deficit 'forever' ?
A very short and simplistic answer: Yes, but it usually depends on the debtors' trust in a government's hypothetical ability to eventually pay back those debts.

Where deficits tend to spin out of control is when governments lose their debtor's trust in their ability to do so, possibly creating a debt spiral where ever more expensive credit digs states deeper and deeper into debt that they become increasingly unable to escape.
 
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