Schools of Thought in Economics
Comparison of the Six Schools of Thought in Economics
Categories | Mercantilism | Physiocracy | Classical | Socialism | Neoclassical | Keynesian | Monetarist | Market view | Monopolizing markets. | There should be less government intervention. | Market should be self-regulating and resources are efficiently distributed by the “invisible hand”. | Competition is evil, market is bad. | Studied equilibrium and market should be self-regulating or self-correcting | Market failures came about during hard times, government should intervene by spending. | Distortions in the market are brought about by the disturbance of money supply and not by saving money. | Wealth | Through the amount of gold a nation possess | Rome from agriculture and not from trade | The yearly national income, instead of the king's treasury | Laborers will create their government and distribute wealth to them | Maximization of utility and profit. | During recessions, economic output is strongly influenced by aggregate demand | The demand for money is a stable function of wealth, prices, price changes and interest. | Price and value determination | The nobility dictates the price and value. | Solely from the value of “land agriculture” or “land development” | Amount of labor input. The value of a good is equivalent to the cost of producing it. | Lack of price signals and free price system. | Market price reflects interaction between supply and demand. | Result of a sequential and evolving process driven by the force of the entrepreneurial function | Variation in the money supply. | State/Government behavior | State should act like a merchant. | Less government intervention | Nations which trade are better off. | Government employs, government pays according to one’s ability and needs | Maximize profits | Government should intervene through spending when market fails | Government should a lot as an agent of the people and not a giver of benefit | People’s behavior | Follows the rules of
Categories | Mercantilism | Physiocracy | Classical | Socialism | Neoclassical | Keynesian | Monetarist | Market view | Monopolizing markets. | There should be less government intervention. | Market should be self-regulating and resources are efficiently distributed by the “invisible hand”. | Competition is evil, market is bad. | Studied equilibrium and market should be self-regulating or self-correcting | Market failures came about during hard times, government should intervene by spending. | Distortions in the market are brought about by the disturbance of money supply and not by saving money. | Wealth | Through the amount of gold a nation possess | Rome from agriculture and not from trade | The yearly national income, instead of the king's treasury | Laborers will create their government and distribute wealth to them | Maximization of utility and profit. | During recessions, economic output is strongly influenced by aggregate demand | The demand for money is a stable function of wealth, prices, price changes and interest. | Price and value determination | The nobility dictates the price and value. | Solely from the value of “land agriculture” or “land development” | Amount of labor input. The value of a good is equivalent to the cost of producing it. | Lack of price signals and free price system. | Market price reflects interaction between supply and demand. | Result of a sequential and evolving process driven by the force of the entrepreneurial function | Variation in the money supply. | State/Government behavior | State should act like a merchant. | Less government intervention | Nations which trade are better off. | Government employs, government pays according to one’s ability and needs | Maximize profits | Government should intervene through spending when market fails | Government should a lot as an agent of the people and not a giver of benefit | People’s behavior | Follows the rules of