Saturday, August 31, 2019
Comparing and Contrasting Economic Ideas Essay
Introduction – As individual leaders in modern economic thinking and attitude, economists Milton Friedman and John Maynard Keynes was hailed and criticized by many different individuals and institutions because of their contribution to global economy attitudes as well as because of the sometimes very radical ways that the two required of economic leaders to resort to so that they can follow the economic model that either Friedman and Keynes designed. Both are right and wrong when it comes to understanding economy and providing a solution which can be used to unlock the mysteries of the changing economic dilemma that the world experiences which requires the input of economists. And during their time, Friedman and Keynes enjoyed the god-like loft from which they stood, one at a time, when the world was bowing to the economic thoughts that they made. Similarities: Friedman and Keynes economic thoughts meet in the middle – While Friedman’s and Keynes’ thoughts and focus on economics have inherent differences, some observers believe that the two economic ideas espoused by Friedman and Keynes also have some similarities. For one, the two economists and their ideas are in agreement when it comes to the stable growth rate of money supply and its role in fluctuation and employment[1]. Also, the two were inherently economist in inclination – they stand on similar grounds even if it means digging and building that ground using different shovels and different strokes. Second, the economic ideas of the two individuals share the similar characterisitcs of being popular and widely used and regarded before the ensuing change in political landscape made the idea of obsolete and useless; for Keynes and his economic idea about the role of the state in economic leadership, the flowering of his idea came after the world, particularly the US, felt the squeeze to the economy after the two world wars and the occurrence of the Great Depression, his idea ultimately subsiding by the time the world came closer and closer to the 80s. For Friedman, his economic idea got its turn after it proved having the solution to the problem the Keynes model cannot answer, and after enjoying his moment in the spotlight for some years, the global crisis that engulfed the world pushed Friedman’s ideas closer and closer to the trash bin. Friedman and Keynes and their ideas share the similar pace when it comes to public acceptance, as well as the same characteristic that their ideas each are pets of US presidents; former US president Richard Nixon was a Keynesian while another former US president, Ronal Reagan implemented a Friedman approach in economics[2]. Another similarity in the economic idea of Friedman and Keynes is that their ideas allowed for the identification of an entity or institution or idea that was the reason for the failure of the economy. Take for example the Great Depression, for those adhering to the Keynesian belief in economics, they are inclined to believe that there is someone or something at fault why such occurrence happened, and that is the idea of free market. Friedman thinking will also lead the individual towards the same belief of having someone or something at fault, and that is the Federal Reserve, so far as Friedman economic thinking is concerned. Another similarity shared by Keynes and Friedman and their attack and pattern in developing economic thought and assuring the audience needed for the establishment of the popularity and acceptance of their particular economic thought is the manner by which their economic thoughts and ideas were built and spread around those who will either criticize or embrace it. Wood (1991) explained, â€Å"The most surprising aspect of Friedman’s achievements is that he has not to a greater extent earned the gratitude of the profession. To a large degree this is due to the sharply critical form in which he has presented his ideas.†[3] In his attacks on the positions of other he has at times tended to depart from the more careful and guarded way in which he typically presents his own results. This has assured him of a wide audience, because it is often easier to attract adherents to a revolution in thinking – even a counter-revolution – than to a less dramatic evolution of a hypothesis. This is a characteristic which Friedman shares with Keynes and explains why both have been at the same time highly controversial and highly successful in the development of economic thought. Economists in a head-on collision – Despite the similarities found in Friedman and Keynes and their thoughts and the pacing and social acceptance lifespan of their ideas, Friedman and Keynes and their ideas in economies are more accepted, criticized and reviewed because of how the two ideas find contrasting points against the other. They and their ideas have significant differences that they are described sometimes as the great polarizers of the economy and the economic belief and attitude. For Friedman, Keynes was incorrect about the idea of the state and its active role in dictating the economy. For Friedman, the more suitable solution is for the state to know that its role in the economy is focused on ensuring the growth of money supply. Friedman stressed the importance of monetary policy versus the idea of Keynes and the role of state spending. Friedman also challenged the manner by which Keynes explained the behavior of the consumer especially during the cases of inflation and the ensuing unemployment[4]. The Keynes-Friedman Showdown – While it is understandable how there will be purely separate groups that support the thoughts of Keynes and the economic thinking of Friedman, there are instances that the two modern day economic thinkers figure in colossal showdowns (which is not of their doing, of course, but the doing of other people and institutions particularly award giving bodies that set out to identify who is the best between the two). An example of these instances is the during the time globally popular and highly respected weekly glossy magazine TIME undertook the task of naming the recipient of the Economist of the Century honor to wrap up the end of the twentieth century[5]. Skousen (2001) wrote about how the members of the selecting group were torn between Friedman and Keynes, and how Friedman ultimately bested Keynes despite the fact that some TIME magazine staff, including editor in chief Norman Pearlstine, believed that the award should go to Keynes. Pearlstine believed that the manner by which Keynes articulated the importance of free markets as well as the significance of the undue government intervention that will resort to the creation of danger in the economic landscape[6] is an important modern day economic idea that will benefit not just one country but the world, especially now that the world is experiencing global trade and economics. Cambridge University in 1970, during the time Friedman faced a highly partisan, pro Keynes crowd who rooted for their favorite Nicholas Kaldor which Friedman soundly defeated during the debate[7]. Some would say that the surprising Friedman win in that particular debate (which silenced the murmuring crowd of infidels) was due largely because of the absence of Keynes himself, but it may also point to the fact that Friedman and his economic ideals holds true in some aspects. Conclusion – Many scholars, critics, new economists, political analysts and historians until now continually debate about the similarities and differences of Keynes and Friedman and their economic ideas. More importantly, they debated about how each economist and each idea they gave to the world helped in shaping world economy as it is today. Some say that Milton was unlike Friedman, while some think they are the same. Some believe that Friedman was better than Keynes, while others feel otherwise. Others go to the extreme, considering that the two lived in an interconnected life, that one completes the other, as DeLong believes that Friedman was not a competitor to Keynes, but more of the man that completed Keynes[8]. The issues and points arising in the debate focused on the person and their ideas bring about immense complexity that the end is always hard to see, predict and achieve. But for the differences of Friedman and Keynes, it is no doubt that both economist contributed immensely in the field of economics, and because of that, they were showered not just with official honors but with very flattering commentaries by critics and observers. Mark Blaug was quoted by Skousen in his book as attributing to Friedman and his great ability for debating and fighting for his position in economic ideologies[9] that resulted to his earning the respect of even his most critical and previously unimpressed adversaries. Skousen (2001) believes that Friedman is the most famous economist alive, but he was quick to counter his proposition by reminding the readers that Friedman was not a giant at first in the circle of economic thinkers, owing largely to the fact that Friedman and his economic ideas (i.e. his monetarism beliefs) were heavily criticized early in his career as an economic thinker. [10]       Truly, both Keynes and Friedman created such economic ideals that went to the extent that it became antagonistic with each other. But professionals knew that underneath it all, the more important thing to consider is the fact that the differences and similarities found in Keynes’ and Friedman’s works gave the world what it can used to manage changing economic difficulties. Works Cited: DeLong, J Bradford. â€Å"Friedman Completed Keynes.†Project Syndicate. 2006. 23 May 2008            . Heuser, Uwe Jean. â€Å"The Underrated Power of Economists.†Indymedia.org.uk. 28 June 2007.            23 May 2008 . Macesich, George. â€Å"World Economy at the Crossroads.†Greenwood Publishing Group,            Incorporated, November 1997. Skousen, Mark. â€Å"The Making of Modern Economics: The Lives and Ideas of the Great            Thinkers.†Sharpe, Me., Inc., March 2001. Wood, John Cunningham. â€Å"Milton Friedman: Critical Assessments†Vol. 14. Taylor &            Francis, Inc., August 1990. [1] Macesich, George. â€Å"World Economy at the Crossroads.†Greenwood Publishing Group,                Incorporated, November 1997. p. 12. [2] Heuser, Uwe Jean. â€Å"The Underrated Power of Economists.†Indymedia.org.uk. 28 June 2007.                23 May 2008 . [3] Wood, John Cunningham. â€Å"Milton Friedman: Critical Assessments†Vol. 14. Taylor &                Francis, Inc., August 1990. p. 465. [4] Heuser, Uwe Jean. â€Å"The Underrated Power of Economists.†Indymedia.org.uk. 28 June 2007.                23 May 2008 . [5] Skousen, Mark. â€Å"The Making of Modern Economics: The Lives and Ideas of the Great                Thinkers.†Sharpe, Me., Inc., March 2001. pg 379. [6] Ibid. [7] Skousen. pg 380. [8] DeLong, J Bradford. â€Å"Friedman Completed Keynes.†Project Syndicate. 2006. 23 May 2008                . [9] Skousen, p. 380 [10] Ibid.
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