Which School of Economic Thought is Best?

Posted by: Parksterthejenkins

There are several schools of economic thought that try to explain how the world works, and what methods should or should't be done to improve our economies. Which of these schools of economics, in your opinion, is the most accurate?

16 Total Votes

Austrian School

The Austrian School is a school of economic thought that is based on methodological individualism. It originated in late-19th and early-20th century Vienna with the work of Carl Menger, Eugen von Böhm-Bawerk, Friedrich von Wieser, and others. Curren... t-day economists working in this tradition are located in many different countries, but their work is referred to as Austrian economics.Among the theoretical contributions of the early years of the Austrian School are the subjective theory of value, marginalism in price theory, and the formulation of the economic calculation problem, each of which has become an accepted part of mainstream economics.Many economists are critical of the current-day Austrian School and consider its rejection of econometrics and aggregate macroeconomic analysis to be outside of mainstream economic theory, or "heterodox." Austrians are likewise critical of mainstream economics. Although the Austrian School has been considered heterodox since the late 1930s, it began to attract renewed academic and public interest starting in the 1970s   more
8 votes
1 comment

Keynesian economics

Keynesian economics is the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the econom... y; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.The theories forming the basis of Keynesian economics were first presented by the British economist John Maynard Keynes in his book, The General Theory of Employment, Interest and Money, published in 1936, during the Great Depression. Keynes contrasted his approach to the aggregate supply-focused 'classical' economics that preceded his book. The interpretations of Keynes that followed are contentious and several schools of economic thought claim his legacy.Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle   more
3 votes
1 comment

Marxian economics

Marxian economics or the Marxian school of economics refers to a school of economic thought tracing its foundations to the critique of classical political economy first expounded upon by Karl Marx and Friedrich Engels. Marxian economics refers to se... veral different theories and includes multiple schools of thought which are sometimes opposed to each other, and in many cases Marxian analysis is used to complement or supplement other economic approaches.Marxian economics concerns itself variously with the analysis of crisis in capitalism, the role and distribution of the surplus product and surplus value in various types of economic systems, the nature and origin of economic value, the impact of class and class struggle on economic and political processes, and the process of economic evolution.Marxian economics, particularly in academia, is distinguished from Marxism as a political ideology as well as the normative aspects of Marxist thought, with the view that Marx's original approach to understanding economics and economic development is intellectually independent from Marx's own advocacy of revolutionary socialism   more
3 votes

Neoclassical economics

Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utilit... y by income-constrained individuals and of profits by cost-constrained firms employing available information and factors of production, in accordance with rational choice theory. Neoclassical economics dominates microeconomics, and together with Keynesian economics forms the neoclassical synthesis which dominates mainstream economics today. Although neoclassical economics has gained widespread acceptance by contemporary economists, there have been many critiques of neoclassical economics, often incorporated into newer versions of neoclassical theory   more
2 votes

Classical Economics

Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Malthus and John Stuart Mill. Adam Smith's The Wealth of Nations in 1776 is usua... lly considered to mark the beginning of classical economics. The school was active into the mid 19th century and was followed by neoclassical economics in Britain beginning around 1870, or, in Marx's definition by "vulgar political economy" from the 1830s. The definition of classical economics is debated, particularly the period 1830–75 and the connection to neoclassical economics. The term "classical economics" was coined by Karl Marx to refer to Ricardian economics – the economics of David Ricardo and James Mill and their predecessors – but usage was subsequently extended to include the followers of Ricardo. Classical economists claimed that free markets regulate themselves, when free of any intervention. Adam Smith referred to a metaphorical "invisible hand," which will move markets towards their natural equilibrium, without requiring any outside intervention. As opposed to Keynesian economics, classical economics assumes flexible prices both in the case of goods and wages. Another main assumption is based on Say's Law: supply creates its own demand – that is, aggregate production will generate an income enough to purchase all the output produced; this implicitly assumes, in contrast to Keynes, that there will be net saving or spending of cash or financial instruments. Another postulate of classical economics is the equality of savings and investment, assuming that flexible interest rates will always maintain equilibrium   more
0 votes

Behavioral economics

Behavioral economics and the related field, behavioral finance, study the effects of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, a... nd the resource allocation. Behavioral economics is primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology, neuroscience and microeconomic theory; in so doing, these behavioral models cover a range of concepts, methods, and fields. Behavioral economics is sometimes discussed as an alternative to neoclassical economics.The study of behavioral economics includes how market decisions are made and the mechanisms that drive public choice. The use of "Behavioral economics" in U.S. scholarly papers has increased in the past few years as a recent study shows.There are three prevalent themes in behavioral finances:Heuristics: People often make decisions based on approximate rules of thumb and not strict logic.Framing: The collection of anecdotes and stereotypes that make up the mental emotional filters individuals rely on to understand and respond to events   more
0 votes

New Keynesian economics

New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of New Classical m... acroeconomics.Two main assumptions define the New Keynesian approach to macroeconomics. Like the New Classical approach, New Keynesian macroeconomic analysis usually assumes that households and firms have rational expectations. But the two schools differ in that New Keynesian analysis usually assumes a variety of market failures. In particular, New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions.Wage and price stickiness, and the other market failures present in New Keynesian models, imply that the economy may fail to attain full employment. Therefore, New Keynesians argue that macroeconomic stabilization by the government or by the central bank can lead to a more efficient macroeconomic outcome than a laissez faire policy would   more
0 votes
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jakemg says2015-01-04T23:04:11.2230864-06:00
No economics is what the problem is.

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