Major schools of economics
Economics has several major schools of thought, each with distinct perspectives on markets, government intervention, and economic behavior. Here are the most influential ones:
- Classical Economics (Adam Smith, David Ricardo, John Stuart Mill) – Advocates for free markets, limited government, and the idea that supply creates its own demand (Say's Law).
- Marxist Economics (Karl Marx, Friedrich Engels) – Focuses on class struggle, critiques capitalism, and advocates for socialism and communism as alternatives.
- Neoclassical Economics (William Stanley Jevons, Alfred Marshall, Leon Walras, Carl Menger) – Builds on classical ideas but introduces marginal analysis, emphasizing individual decision-making and equilibrium in markets.
- Austrian School (Carl Menger, Ludwig von Mises, Friedrich Hayek, Murray Rothbard) – Stresses individual choice, spontaneous order, and skepticism of government intervention and central banking.
- Keynesian Economics (John Maynard Keynes, Paul Samuelson) – Argues that government spending and monetary policy can stabilize economic fluctuations and counter recessions.
- Monetarism (Milton Friedman, Anna Schwartz) – Emphasizes the role of money supply in economic stability, advocating for rules-based monetary policy rather than discretionary government intervention.
- New Classical Economics (Robert Lucas, Edward Prescott) – Focuses on rational expectations and argues that markets naturally correct themselves, making fiscal policy ineffective in the long run.
- New Keynesian Economics (Gregory Mankiw, David Romer, Stanley Fischer) – Incorporates rational expectations but acknowledges price and wage rigidities, justifying some government intervention.
- Behavioral Economics (Daniel Kahneman, Richard Thaler, Robert Shiller) – Challenges the assumption of rational decision-making, highlighting cognitive biases and psychological influences on economic behavior.
- Institutional Economics (Thorstein Veblen, John Commons, Douglass North) – Examines the role of institutions, social norms, and historical factors in shaping economic outcomes.
- Post-Keynesian Economics (Joan Robinson, Hyman Minsky, Nicholas Kaldor) – Extends Keynesian ideas, emphasizing uncertainty, income distribution, and the instability of financial markets.
- Supply-Side Economics (Arthur Laffer, Robert Mundell, Jude Wanniski) – Advocates for lower taxes, deregulation, and incentives for production to drive economic growth.
- Modern Monetary Theory (MMT) (Stephanie Kelton, Randall Wray, Warren Mosler) – Argues that sovereign governments issuing their own currency can finance deficits without risk of default and should prioritize full employment.
These schools often overlap, and modern economic thought integrates ideas from multiple perspectives.