Keynes Versus Friedman

Topics: Keynesian economics, Macroeconomics, Economics Pages: 2 (754 words) Published: October 12, 2008
Keynes versus Friedman
To begin with, I would like to say that these to economists made perhaps the greatest and the most significant contribution to economy in the twentieth century. They are beyond any doubt among most powerful intellectuals that set their feet over the ground. Ideas they created, patterns they discovered and laws they introduced have become fundamental in political economy and macroeconomics. Still, these two brilliant minds did not share each others’ views over some basic economics matters, such as the intensity of governmental regulations, price policy, fiscal and monetary politics. Quite logically, a question arises: who was actually right, whose ideas explain the way economy behaves. In other words, who is the winner in one of the greatest debates in the century? John Maynard Keynes (1883-1946), lay base for what is now called “Keynesian economics”; this school had a major impact on modern economic and political theory as well as on many governments' fiscal policies. In his work “The General Theory of Employment, Interest and Money” he states brilliant ideas over the unemployment and price regulations that should be applied by the government. Keynes was not only a brilliant scholar and professor, but a great manager as well. His experience at manipulating with currencies, creative and successful crisis management, through budget planning proves him to be a great at both economic theory and economic practice. He argued that macroeconomic relationships differ from their microeconomic ones because the scales are absolutely different and this may lead to unpredictable changes in the final results. His work on employment went against the idea that the market ultimately settles at a state of full employment - a central foundation of Classical economists. Instead he argued that there exists an endless amount of equilibrium, the full employment equilibrium position being just one of them. The greatest contribution of this economist can be...
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