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Smith, Hayek, Keynes, and Friedman

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on 14 November 2016

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Transcript of Smith, Hayek, Keynes, and Friedman

Adam Smith
Smith founded what is known as classical economics. The key doctrine of classical economics is that a laissez-faire attitude by government toward the marketplace will allow the “invisible hand” to guide everyone in their economic endeavors, create the greatest good for the greatest number of people, and generate economic growth. Smith also delved into the dynamics of the labor market, wealth accumulation, and productivity growth. His work gave generations of economists plenty to think about and expand upon.

Friedrich August Hayek
Hayek had observed Germany very closely in the 1920s and early 1930s. After he moved to Britain, he noticed that many British socialists were advocating some of the same policies for government control of people’s lives that he had seen advocated in Germany in the 1920s. He had also seen that the Nazis really were National Socialists; that is, they were nationalists and socialists. So Hayek wrote The Road to Serfdom to warn his fellow British citizens of the dangers of socialism. His basic argument was that government control of our economic lives amounts to totalitarianism. “Economic control is not merely control of a sector of human life which can be separated from the rest,” he wrote, “it is the control of the means for all our ends.”
Milton Friedman
The Friedman theory is a restatement of classical economic theory that supply creates its own demand.In the long run there will not be lack of effective demand.The economy gets corrected automatically.With this keynesian theory is only for short run. Friedman disagreed with the Keynes, and Galbraith theories in vogue from the 1930's, which favored government intervention in times of recession. Friedman is considered the most influential monetarists of modern times, and theorized about a natural level of unemployment.
John Maynard Keynes
The philosophy of Keynesianism economics consists on the idea that during the short run, the total spending in economy or aggregate demand strongly influence GDP. This point of view applies especially for recessions. The philosophy was developed during the 1930's by the British economist Maynard Keynes to understand the Great Depression. Keynesian economics defend the increase of government expenditures and lower taxes to stimulate demand. If aggregate demand in the economy fell, this would create a weakness in jobs and production that would lead to a decline in prices and wages.
Smith, Hayek, Keynes, and Friedman
In my opinion, the economic philosophy that i really got to agree to is Adam Smiths' philosophy. If there is less interference by the government, the economy and our environment will be free of challenge, we will be able to do what we decide without anybody telling us what is possible and what is not. The other three economists seem like they have very similar ideas that just build over each other.I don;t like Hyeks plan because he supports government control. I don't support Keynes' philosophy because he claims that if demand decreased, there will be a weaker government which i don't believe to be true. Finally, I do not agree with Mr. Friedman's philosophy because he follows the idea of a lack of effective demand. Without monetarist of modern times, there will be a high number of unemployment which is not something i believe would happen.
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