Preview

A New Front in the Battle of Ideas

Good Essays
Open Document
Open Document
672 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
A New Front in the Battle of Ideas
Case 2-1
A new front in the battle of ideas

1. Does the global economic crisis signal that the American model of free market capitalism is fundamentally flawed?
No, the global economic crisis does not signal that the American model of free market capitalism is fundamentally flawed because America government should definitely provide a support role for the corrective measures to protect its own economy, for example use of various fiscal policy for the economic stimulus, when the various decisions in the private sector of their country are believed to lead to negative economic outcomes, such as depression or recession, which leads to the wide hardship for America.

2. Keynes and Hayek aren’t necessarily household names, but they did get a boost when economist Russell Roberts created a rap video titled Fear the Boom and Bust with filmmaker John Papola. The video is available on Youtube after viewing it you should be able to answer the following question: Are you a Kenyesian ? or do you side with Hayek?
I would side with Hayek, because Keynes believed that intelligent, well-meaning planners and by manipulating economic aggregates such as demand and employment can surely bring happy means to the economy. Hayek believed that individual decisions, imbalances between specific prices and demand or the interest rates and also the specific plans for long-term productive projects, are pillars of a true economy.
To support, Keynes said that it was politically impossible to achieve a nominal wage reductions necessary to clear the market for labor which implies that, to let wages fall so that hiring would be cheaper and unemployment thereby reduced. Keynes instead promoted inflation as a means to trick labor into taking lower real wages. On the other hand Hayek’s believed that no equilibrium is possible when prices don’t or can’t adjust. In any country did wages or the price of labor shall be adjust downward in order to increase the demand for labor which should be

You May Also Find These Documents Helpful

  • Powerful Essays

    Nowadays America, America claims that it holds up the same ideas of liberty of the old days, the ideas that that liberated America of slavery and injustice, these same ideas have lead America to the same consequences that lead America to a close consequence to the Great Depression, and to the so called the " War Against Terror". These similar acts of 1930s done a reverse catastrophe to the economy of America leading to the almost bankrupting of the country. In my research paper I argue that America didn't and will not change the its policies toward anyone who is not American, also I argue that the same economical procedures that America did in the past that led to the Great Depression in 1930s, are the exact same one that lead to the Great Rescission between 2007-2009 and the effects of it is still appearing on the economy of America till now.…

    • 2011 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    As the economic system began to wobble in 2007, Hank Paulson, the then US Treasury Secretary, was able to foresee what the future had in store for us. How was he able to sense that the economy was in danger? Who knows, but looking back, it appears as if his life experience combined with his personal traits allowed him to not only predict the economic failure but also have the vision to lead the way.…

    • 753 Words
    • 4 Pages
    Good Essays
  • Good Essays

    hca 240

    • 944 Words
    • 4 Pages

    John Maynard Keynes helped the allied government defend freedom by planning their wartime economies. Friedrich Von Hayek thought government interference in the economy was a threat to freedom. Keynes thought the market economy would go to excesses and when things got difficult the market wouldn’t work and the government would have to fix it. Hayek disagreed because he believed the market would take care of itself.…

    • 944 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Macro Review Test

    • 2824 Words
    • 12 Pages

    Smith is likely to be a Keynesian economist and Jones is likely to be a classical economist.…

    • 2824 Words
    • 12 Pages
    Good Essays
  • Better Essays

    Albert Brooks 2030 Essay

    • 1103 Words
    • 5 Pages

    Economic issues for years, have negatively impacted several aspects of American life. The Great Depression and the Recession are just two of many financial crisis that were detrimental to the overall health of the country. The Depression resulted in people losing their trust in banks which ultimately led to the decline of banks. Employees lost their jobs and families were displaced from their homes. Many citizens went hungry and even suffered from depression due to the condition America was in. The recession was caused by leaders of major corporations (Wall Street). Too much power had been placed in the hands of individuals who were incapable of making smart decisions that promote the prosperity of America in its entirety. For example, The Federal Reserve Banking System did not shield the economy from the Great Depression and the Recession. Financial crisis is the very thing the Federal Reserve System was designed to protect the economy against it failed miserably more than once. The Federal Reserve System has too much power over the economy, they have the power to create and print as much money as they want which directly affects the money supply and steepens the U.S debt. Those people let greed influence their decision process which ultimately led to the fall of the economy once…

    • 1103 Words
    • 5 Pages
    Better Essays
  • Good Essays

    Fear of the Boom and Bust

    • 389 Words
    • 2 Pages

    The You tube video Fear the Boom and Bust is a very entertaining and interesting rap debate between the two economists, John Maynard Keynes and Freidrich Hayek, concerning the boom and bust cycle. In the video the economists come back to life and rap about their conflicting theories as they go out for a night on the town. This video is a fun and educational way to learn and discuss the two competing economic philosophies and how they relate to our current economic situation. The two economists go back and forth advancing their economic perspectives on economic issues as their approach to the market, government and consumer spending, the role of savings, human action and motivation and the power of investments. It is pretty amazing how the creators of this rap were able to take economic theories and turn them into catchy lyrics. The chorus of this rap sums up the basic conflict between the economists. Keynes and Hayek both rap that “We've been going back and forth for a century” and Keynes says he wants to “steer markets” and Hayek says he wants them “set free”. They both rap together “There's a boom and bust cycle and good reason to fear it” as Hayek blames “low interest rates” and Keynes disagrees and says “it's the animal spirits” implying the bulls and bears. Then each economists views are summarized in two verses. Keynes stresses that in order to get the economy out of the bust they need to utilize the stimulus of government spending so that if consumers have money and spend it then businesses will thrive and create jobs. However, Hayek says it is not the bust that is the main problem but the boom. He says that allowing low interest rates and extending credit encourage investments that cannot be maintained over time and raps that “The boom plants the seeds for its future destruction”. As we see from our current economic problems that the government turned more to Keynes approach to deal with the financial crisis by stimulating markets with…

    • 389 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    "American Capitalism | Lichtenstein, Nelson, Editor." Penn: University of Pennsylvania. Web. 10 Apr. 2011. <http://www.upenn.edu/pennpress/book/14238.html>.…

    • 1926 Words
    • 8 Pages
    Powerful Essays
  • Better Essays

    In 1929, the U.S. economic crisis broke out. New York wall street stock market collapse, a quarter of the workforce was unemployed, two million were homeless, and the product is unsalable, and so on. The Capitalism basic shield is root cause. The Market supply and demand to appear shield is direct cause.…

    • 1270 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    Isolationism In 1930s

    • 2383 Words
    • 10 Pages

    Indeed, in the early 1930s, when the Great Depression reached its peak, many had came to believe that their nation should withdraw from foreign affairs in order to focus more on its internal problems such as the economic crisis.16 This implied no more foreign military interventions, immigration, or even international economic alliances. As a matter of fact, Americans were considering that their economy needed to be closed from foreign markets in order to develop. To that extent, protectionist measures, such as the Smooth-Hawley Tariff that closed the U.S market to Japan17, abounded from 1929 trough 1934, protecting American endangered industries against foreign competition.18 As Democrat President Franklin Roosevelt said so, “our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy”19. In that sense, we may think that little American business owners, generally belonging to the middle class, supported isolationism, as it would allow them to keep their business alive. Furthermore, the government’s decision to withdraw from the previous monetary system of Gold Standard in order to devaluate the dollar, which would better support domestic recovery, caused the failure of the London Economic conference of 1933, which aim was to…

    • 2383 Words
    • 10 Pages
    Powerful Essays
  • Powerful Essays

    The American economy has been one of the world’s greatest economies, because of its adaptation of the free market system. This economy allows people to somewhat do what they want to do in business. If you want to open a business, and have the money and knowledge to do so, the freedom is there to do so. The same way for the consumers (us); we somewhat have the freedom to buy and sell in our economy. This system embraces the private sector, which is the people, rather than the public sector, the government. However, in recent years, this economy has started to embrace views that command, socialistic, and communistic economies embrace. There has been more government control in the economy, which means less freedom for people to start their own business or less to gain from workmanship. Without entrepreneurship and workmanship, an economy cannot survive well.…

    • 1611 Words
    • 6 Pages
    Powerful Essays
  • Satisfactory Essays

    Hayek found a few faults with Keynesian Economics. First off he pointed out that Keynes’s argument about savings is actually an argument about the dangers of hoarding. “It’s agreed that hoarding money is deflationary in its effects. No one thinks that deflation is in itself desirable.” So…

    • 617 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Hayek believed that for an economy to survive the free market must be allowed to have its ebbs and flows. He believed that while at times unemployment would be high government should not step in with more regulations. Hayek believed that government regulation on the market would lead to government control and would ruin the economy.…

    • 364 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    Economic Theory

    • 1225 Words
    • 5 Pages

    The global economy recovers from the crisis that engulfed global financial markets in the course of 2008. The effort to stave off total economic collapse has left governments burdened with massive debt that will take years of painful effort to work off. The policy prescriptions of market liberalism, including deregulation, privatization and regressive tax reform, are being advanced with seemingly undiminished confidence.Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch. The Crisis between 2006 - 2102 basis in the microeconomics theory is a global effect. The…

    • 1225 Words
    • 5 Pages
    Better Essays
  • Good Essays

    The United States is a Capitalism System a System that has a small group of people who control large amounts of money, or capitol, make the most important economic decisions. This is true so Julie would probably say that The United States of America is considered a free market economy. The U.S has a Capitalist system. Capitalism is a social system based on the recognition of individuals rights, including property rights in which all property is privately owned. There are two classes of capitalism. One is the capitalism class and the other is the working class. The capitalism class is a small group of people. These people basically sell their ability to work for a wage or salary. They own the group that produce and distribute goods. The working class is then paid to produce goods and services which are then sold for profit. This profit goes to the capitalism class because; they can make more money selling what the working class has made. The capitalist live off the profits the working class produces and make reinvestments on their profits to make more money. In capitalism the motive for producing goods is to sell them. They don’t care if they satisfy the people’s needs. They just want to sell and make money. The government is allowed to change the rules at any time. The state doesn’t directly give jobs so in times of a recession the unemployment levels can be very high.…

    • 426 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    The term ‘classical economists’ was firstly used by Karl Marx to describe economic thought of Ricardo and his predecessors including Adam Smith. However, by ‘classical economists’, Keynes meant the followers of David Ricardo including John Stuart Mill, Alfred Marshal and Pigou. According to Keynes, the term ‘classical economics’ refers to the traditional or orthodox principles of economics, which had come to be accepted, by and large, by the well known economists by then. Being the follower of Marshal, Keynes had himself accepted and taught these classical principles. But he repudiated the doctrine of laissez-faire. The two broad features of classical theory of employment were:…

    • 3146 Words
    • 13 Pages
    Powerful Essays