Originally Posted by
justinc.1089
The common economic schools of thought are Keynesianism, Monetarist, Supply-Side, and Classical.
Austrian economics falls under Classical best, but differs significantly at the same time for a major reason. Most Classical economists describe the Classical school of thought as theorizing the economy will work best if left alone.
That brings up the question, does left alone mean current government interventions should be removed? This is the stance Austrians take. Or does it mean that everything should be left how it is now, including the current government regulations? That's the position most self-described Classical economists take.
There's also New-Classical or Neo-Classical, or something like that, but I'm not familiar with it. I think it probably amounts to basically the same as Classical anyway.
So I think the Austrian school of thought is VERY similar to the Classical school of thought.
Supply-Side is NOT the same though.
Supply-Side is the only school of thought I really can't remember very well actually. I think its aimed at doing whatever promotes short-term growth in the economy, not just tax policies like some people are mentioning on here.
I will break down the schools of thought as I remember them for you, and if I'm wrong someone else can correct me:
Austrian school of economic thought: The free market will work, so no government intervention or as little as possible is best.
Classical school of economic thought: The economy will correct itself fastest when left alone. So don't change things because that creates problems.
Monetarist school of economic thought: Fiscal policy of government is too imprecise and harsh to effectively manage the economy, but monetary policy can stimulate or slow the economy as is needed.
Supply-Side school of economic thought: Economic policy should be oriented towards short-term, immediate growth. (It might be oriented towards long-term growth. I could swear its short-term, but I'm pretty certain the big thing here is to do whatever gets growth happening, which is why tax is often mentioned along with this, because taxation slows growth).
Keynesian economic school of thought: The government can use fiscal tools to manage the economy. Many people, including even some prominent economists, extend this school of thought to also include government using BOTH fiscal AND monetary policy to manage the economy. So the Monetarist school of economic thought can be thought of as a sub-school under Keynesianism somewhat, much like the Austrian school of thought could be somewhat thought of as a sub-school under Classical in some regards.
Later on I will glance in my economics text book and see how it defines supply-side economics. Its really not too important though because since its goal is producing growth, a supply-side economist will inevitably have to choose an economic action from another school. Supply-side is kind of a fake, pretend school of thought in my opinion because it is not an alternative theory to monetarist, keynes, classical, and austrian.
Monetarist, Keynes, Classical, and Austrian schools all differ in their theory, but supply-side just doesn't really seem to have a genuine theory distinguishing it from these other real schools of thought.
Also, Keynes, Monetarist, Classical, and Austrian can be reduced to just 2 schools of thought like this:
Keynes-Monetarist
Austrian-Classical
The reason is Monetarists and Keynesians agree with each other pretty often, and the theories do not necessarily completely contradict with each other, although they do partially. The same goes for Classical and Austrian too.
I hope that helps to explain the different schools of thought to you.
Btw, I've noticed Austrian economists have a terribly bad habit of ignoring monetarists and classical economists as schools of thought because usually austrian economists only address keynesian economic thought since it is the most opposed to austrian thought, I guess. Or maybe austrian economists think monetarists and classicals aren't really their own schools of thought since both of those are kind of branches of austrian economics and keynesian economics in actuality.
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