Study Habits Essay example

2471 Words Dec 11th, 2015 10 Pages
Schools of Economic Thought
By: Lenore E. Hawkins
To be able to invest successfully, one must understand the major schools of economic thought and how they impact national and global economies. I like to break economic theory down into seven schools of thought: fascism, neoclassical economics, socialism,
Keynesianism,
monetarism, Austrianism, and supply-side economics. Economic theory is really just a set of beliefs concerning individual and group behavior. There is no consensus about which model is correct, but the one most used by governments is Keynesianism.
Schools
primarily teach neoclassical with a Keynesian slant, which is sometimes referred to as the neoclassical synthesis. The following is a very high level
…show more content…
Neoclassical economics was developed in the
18th and 19th centuries and is a very broad term, lacking agreement on what it encompasses. It includes the works of Adam Smith, David
Ricardo, Thomas Robert Malthus, John Stuart
Mill and Karl Marx. It holds that the value of a product depends on the costs involved in producing the product and according to E. Roy
Weintraub, rests on three assumptions:
1. People have rational preferences among outcomes that can be identified and associated with a value.
2. Individuals maximize utility and firms maximize profits.
3. People act independently on the basis of full and relevant information.
This approach focuses on the determination of prices, outputs and distributions through supply and demand.
Socialism believes that the free economy is inherently unfair and prone to disaster. Implicit in these assumptions is the belief that an individual or a group of people can and should decide what is more fair than would be without intervention and that manipulation to bring about a more fair state is a moral imperative. This also assumes that more fair is an objective truth, rather than a subjective opinion developed by those in power. This paradigm requires that masterminds control the
1|Page

www.MeritasAdvisors.com

Schools of Economic Thought
By: Lenore E. Hawkins money supply, interest rates, production,
employment,

Related Documents