Economic philosophies Essay

This physical composition will focus on the contributions of John Maynard Keynes and Milton Friedman to economical philosophies. Keynes is considered by numerous as the most famous and influential economist. Though having that veneration, a chip of economists had been in opposition to the Keynesian school of thought. Among the forefront oppositions to the Keynesian economic philosophy is Milton Friedman, along with his accounts on monetarism.In his General Theory of Employment, affair and Money, Keynes laid out the foundations of his theoretical account, which nearly all macroeconomists make use of today. This framework finds its basis on outlay and demand, the factors that determine the components of spending, the liquidity-preference theory of short-run interestingness rates, and the necessity of the authorities to make strategic but powerful interferences in the deliverance in order to keep it on balance and avoid the extremes of depression, as well as manic excess (D elong, 2006).Keynes theory was say to be incomplete as it only deals with interest employment and money. thither was no mention on the theory about prices. Friedman introduced the principles of prices and inflation to Keynes framework, establish on the idea that in that respect exists a natural rate of unemployment. Friedman in like manner made mention of the limitations of government policies have with regard to the stability of the economy, fetching into consideration the trend of its long-run growth.Friedman considered these as limits beyond which an intervention from the government would trigger an inflation of uncontrollable and destructive nature (Delong, 2006). The events that took place during the large depression made Keynes and his orthodox followers to underestimate the influence and fibre financial policies have in making a viable tooth root (Delong, 2006). Keynesians are inclined to prefer fiscal policy to monetary policies as a tool to influence production and employment.They believed that money has no put influence. Moreover, they question the power of monetary policies to influence employment and production (McCain, 2007). The prominent Depression was indeed considered to be a unique event in history, which called for explanation in terms of events rather than in pursuit for a new line of economic theory. One of the events that took place during the Great Depression was the failure of the money and banking system.Thus, the Great depression illustrates the influence of changing monetary conditions (McCain, 2007). Keynes and Friedman both agreed on the necessity of a superb macroeconomic management. The private economy, when on its own, might be subjected to unbearable instability and that there is a necessity for a powerful, strategic, but limited intervention coming from the government in order to maintain stability within the economy (Delong, 2006).Though having these ideas in agreement, Friedman had been a staunch opposition to so me of Keynes economic principles. According to Keynes, the key to maintaining economic stability is to keep government spending and private investments on stable grounds. Friedman, on the other hand, opined that the key to economic stability is keeping money supply, i. e. the amount of purchasing power, which are pronto available to be spent by businesses and households stable (Delong, 2006).