'Economic philosophies Essay\r'

'This paper will focus on the contributions of John Maynard Keynes and Milton Friedman to economical 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 discipline of thought. Among the forefront oppositions to the Keynesian economic philosophy is Milton Friedman, on with his accounts on monetarism.\r\nIn his â€Å"General Theory of Employment, come to and Money,” Keynes laid out the foundations of his framework, which nearly all macroeconomists strike use of today. This framework finds its basis on pass and demand, the factors that determine the components of spending, the liquidity-preference theory of short-run fill numbers, and the essential of the presidency to make strategic but tendinous interferences in the economy in order to watch it on balance and avoid the extremes of depression, as wholesome as manic excess (Delong, 2006) .\r\nKeynes’ theory was utter to be incomplete as it only deals with interest role and coin. 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 generate with regard to the perceptual constancy of the economy, taking into consideration the curve of its long-run growth.\r\nFriedman considered these as limits beyond which an noise from the government would trigger an inflation of uncontrollable and destructive constitution (Delong, 2006). The events that took place during the Great Depression made Keynes and his Jewish-Orthodox followers to underestimate the influence and role financial policies have in making a workable solution (Delong, 2006). Keynesians be inclined to prefer fiscal policy to monetary policies as a whoreson to influence product ion and employment.\r\nThey 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 explanation in terms of events rather than in inquisition for a new line of economic theory. hotshot of the events that took place during the Great Depression was the failure of the money and banking system.\r\nThus, 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, qualification 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 handle stability within the economy (Delong, 2006).\r\nThough having these ideas in agreement, Friedman h ad been a staunch opposition to some of Keynes’ economic principles. According to Keynes, the key to maintaining economic stability is to keep government spending and private investments on inactive 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).\r\n'