Into Macroeconomics - Free Essay Example

To introduce anyone into macroeconomics I would start off by telling you about the three schools of thought when it comes to macroeconomics which are, keynesian,classical/neoclassical and marxian.each school of thought has contributed to our way of macroeconomics in multiply ways and thinking. Keynesian economics is an economic theory of total spending in the economy and effects on output and inflation, discovered by John maynard Keynes a british economist in the attempt to understand the great depression of 1930. He voiced that increase in government expenditures and lowering taxes would stimulate demand which would result in pulling the global economy out of the depression.. The reasoning behind this theory was to avoid economical slumps by influencing aggregate demands through the act of stabilization and economic interventions policies by the government but his theories would only prove to work in a short term gain. This provided new ways to look at spending output and inflation instead of looking at the more cynical side of things like the classical economic thinking Classical economy is a doctrine from classical economy founded from adam smith that was developed in the nineteenth century, it uses power from the market system,if left alone will ensure employment to the fullest of economic resources.although classical economist believe that occasional deviations from full employment result from political and economic events automatic adjustments in wages interest rates and markets places will restore economy to full employment.John Locke provided the philosophical foundation for classical economy off his ideas of conception of natural order and the eco nomic bases of adams Smiths theory of self and Jean Baptiste Says law of the equality of market supply and demand. Classic economy is based off two maxims first being based on his or her individual preference under few restraints where there preferences and constraints are given considered, second it presupposes the existence of interdependencies between the actions of all the individuals expressed in the market place only under assumption of being pure and perfect competition, two facilities which determines income distribution and resource allowance. That is, they will regulate allocation of production demand and supply and the optimization of social organization. Guided by the hand David Ricardo and Adam Smith fallowing the support of Thomas Robert Malthus and Jean Baptiste Say believe that classical economy was in Smiths hand,self-regulating ,and self-interest along with capital accumulation and development of monetary institutions based on free trade and on surplus production.also believing in the law of diminishing returns and in division of labour also,the self-adjust ability to the econom y in a laissez-faire system devoid of government intervention.the classical model from circular flow indicates deviation of wages, but eventually will return their rate of natural subsistence. Neoclassical economics was also known as the period that followed Ricardo including the 1870s through to the 1900s were full of criticism from classical economic theories and the capitalist system by socialist and humanist.This period could also be characterized questioning the classical assumption being that laissez-faire was the ideal government policy the eventual demise of the classical economic theory being in the transition to neoclassical economics. Transitioning be either spontaneous or automatic, but perative being the professionalization of economics.Neoclassical economics can be attributed to integrating the original classical utility in a bid with cost of production to explain the commodity and factor the allocation of resources using marginal analysis and prices.David ricardo although providing the methodological rudiments of neoclassical through his way of contextual analysis to a more abstract deductive analysis.the rejection of Marxist economics is where neoclassical economics is grounded to. Marxian economics a school of economic thought based from the work of late philosopher Karl Marx in the 19th-century. The main focus of marxian economics is based from the roles of labour in development of an economy along with its critical classical economic approach to productivity and wages developed by Adam Smith. Marxian argues the specialization of a growing population, coupled with a labour force pushes wages down and the value put on services and goods will not accurately account for the true cost of labour. To break this down one would take a look to its core of marxian economics drawn from Karls Marxs work Das Kapital from where he describes the theory of capitalist system. Marxian economics although most consider it separated from marxism have the ideology found from marxist economics,but it differs from the fact that it focuses on less of political social matters. Even more broadley, Marxian principles clash with virtues of capitalist pursuits. The contrast of classical approaches to economic theory. Taken favour from Marxs promises of the harmonious socialist future inspired by revolutions from global proportions.