Economic philosophies Essay

This paper will focus on the contributions of John Maynard Keynes and Milton Friedman to economic philosophies. Keynes is considered by many as the most famous and influential economist. Though having that veneration, a number of economists had been in opposition to the Keynesian take aim 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, amour and Money, Keynes laid out the foundations of his framework, which nearly all macroeconomists make use of today. This framework finds its basis on using up and demand, the factors that determine the components of spending, the liquidity-preference theory of short-run bear on rates, and the necessity of the government activity to make strategic but reigning interferences in the economy in order to persist it on balance and avoid the extremes of depression, as well up as manic excess (Delong, 2006).Keynes theory wa s said to be incomplete as it only deals with interest practice and money. There was no mention on the theory about prices. Friedman introduced the principles of prices and inflation to Keynes framework, based on the idea that there exists a natural rate of unemployment. Friedman also made mention of the limitations of government policies cast with regard to the stableness of the economy, taking into consideration the trend of its long-run growth.Friedman considered these as limits beyond which an hindrance from the government would trigger an inflation of uncontrollable and destructive nature (Delong, 2006). The events that took place during the Great Depression made Keynes and his Orthodox followers to underestimate the influence and role monetary policies have in making a operable solution (Delong, 2006). Keynesians are inclined to prefer fiscal policy to monetary policies as a hawkshaw to influence production and employment.They believed that money has no direct influence. Moreover, they question the power of monetary policies to influence employment and production (McCain, 2007). The Great Depression was indeed considered to be a unique event in history, which called for translation in terms of events rather than in pursuit for a new line of economic theory. i 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, strength 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 some of Keynes economic principles. According to Keynes, the ke y 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 readily available to be spent by businesses and households stable (Delong, 2006).