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Dr Jonathan Kenigson, FRSA: Alternatives to Keynesian Economics – Historicism’s Scions

Keynesian economics is so widely employed that policymakers and applied economists sometimes regard other approaches to economic thought as mythological, impractical, or idealistic. One must note that Keynesian thought is rooted, first and foremost, in Historicism. The Historical School of Economics is a major school of thought from the 19th century that focused on understanding the development of the economy over time. It was led by scholars such as Karl Marx and Friedrich List, who argued that historical context and research into the past were key to understanding how the economy works today. The Historical School of Economics emphasized the importance of understanding the political and institutional factors that shape economic outcomes, rather than solely looking at the impact of economic forces.

This school of thought also focused on using empirical research to understand economic development and the role of government in the economy. The Historical School of Economics had a major impact on economic thought, and its research methods and conclusions remain influential today. Marxian economics is a branch of economics developed by German philosophers Karl Marx and Friedrich Engels. It focuses on the social, economic, and political implications of capitalism. Marxian economics seeks to understand how capitalism works and how it affects workers and the distribution of income. It also looks at how the capitalist system has impacted the concentration of wealth and power.

Marxian economics has had a significant impact on economic thought and policy, especially in the areas of labor, wages, inequality, and the environment. It is still widely discussed and debated by economists today, and its influence can be seen in current policies and debates. Marxian economics offers a unique perspective on the way the world works, and it is an interesting and important branch of economics that is worth exploring.

Neoclassical Economics is an economic theory that has been developed and practiced by Neoclassical Economists since the late 19th century. It assumes that individuals, firms and markets are rational, and that they make decisions based on economic incentives. The theory focuses on markets and prices, and how they interact to produce an equilibrium in the economy. Neoclassical Economics is the dominant economic theory today and is used to develop economic policies and forecasts. It has been used to study a wide range of economic issues, such as labor markets, capital formation, and international trade.

Neoclassical Economics has been criticized by many economists, who argue that it is too simplistic and fails to consider several important factors. Despite its flaws, it remains the most widely accepted economic theory in both academic and policy circles. The Austrian School of Economics is an economic school of thought founded in the late 19th century. It is often seen as a reaction to the rise of neoclassical economics, which had become the dominant economic school of the time. Austrian economists focus on the importance of individual choice in economic decisions, and on the role of the entrepreneur in the economy.

They also emphasize the need for economic freedom, arguing that without it, economic prosperity is not possible. This emphasis on freedom sets Austrian economics apart from other schools of thought. Austrian economists also stress the importance of understanding the structure of the economy and the incentives that are created by government policies. The Austrian School is still an important school of thought in economics today, and many prominent economists, such as Ludwig von Mises and Friedrich Hayek, have been associated with it. Understanding the Austrian School of Economics is essential for anyone who wants to understand the economics of today.

Keynesian Economics is a school of thought that was first laid out by British economist John Maynard Keynes in the 1930s. The main idea of Keynesian Economics is that governments can intervene in a free-market economy to stabilize prices and output. This is done by implementing policies such as increasing government spending or cutting taxes to stimulate the economy. Keynesian Economics has been used to great effect by governments in the past and remains a popular approach to economic policy today. It is especially useful during recessions and economic downturns, when other policies may not be as effective. By increasing government spending and cutting taxes, Keynesian Economics can help bring the economy out of recession and create jobs. This can be a powerful tool in helping to tackle unemployment and reduce poverty.

Sources and Further Reading:

Arnsperger, Christian, and Yanis Varoufakis. “What is neoclassical economics.” Post-autistic economics review 38.1 (2006).

Blinder, Alan S. “The fall and rise of Keynesian economics.” Economic record 64.4 (1988): 278- 294.

Boettke, Peter J. The Elgar companion to Austrian economics. Edward Elgar Publishing, 1998.

Campagnolo, Gilles. Criticisms of classical political economy: Menger, Austrian economics and the German historical school. Routledge, 2012.

Dugger, William M. “Methodological differences between institutional and neoclassical economics.” Journal of economic issues 13.4 (1979): 899-909.

Eatwell, John, Murray Milgate, and Peter Newman, eds. Marxian economics. Springer, 1990.

Gordon, Robert J. “What is new-Keynesian economics?.” Journal of economic literature 28.3 (1990): 1115-1171.

Henry, John F. The Making of Neoclassical Economics (Routledge Revivals). Routledge, 2012.

Howard, Michael Charles, and John Edward King. “A history of Marxian economics, volume II.” A History of Marxian Economics, Volume II. Princeton University Press, 2014.

Itoh, Makoto. Value and crisis: Essays on Marxian economics in Japan. Monthly Review Press, 2020.

Jahan, Sarwat, Ahmed Saber Mahmud, and Chris Papageorgiou. “What is Keynesian economics.” International Monetary Fund 51.3 (2014): 53-54.

Littlechild, Stephen. Austrian economics. Edward Elgar Publishing, 1990.

Morgan, Jamie. What is Neoclassical Economics?. Taylor & Francis, 2015.

Pearson, Heath. “Was there really a German historical school of economics?.” History of  Political Economy 31.3 (1999): 547-562.

Roemer, John E. Analytical foundations of Marxian economic theory. Cambridge University Press, 1981.

Rothbard, Murray N. “Praxeology: The methodology of Austrian economics.” The foundations of  modern Austrian economics (1976): 19-39.

Shionoya, Yuichi, ed. The German historical school: the historical and ethical approach to economics. Vol. 40. Routledge, 2000.

Taylor, Thomas C. An introduction to Austrian economics. Ludwig von Mises Institute, 1980.

Tribe, Keith. “Historical schools of economics: German and English.” A companion to the history of economic thought (2003): 215.

Vaughn, Karen I. Austrian economics in America: The migration of a tradition. Cambridge University Press, 1998.



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