Economic Schools of Thought

Question

What are the key economic schools of thought?

Answer

There is a considerable amount of schools of economic thought. Nevertheless, some of the key schools of thought are Classical and Neoclassical economics, Keynesian economics, Chicago school, Austrian school and Institutionalists. The main debate is around neoclassical economics Vs. Keynesians. Classical economics is attributed to economists such as Adam Smith and David Ricardo who were mainly concerned with how economies grew and prospered. Classical economics paved the way for Neoclassical economists who tend nowadays to be described as the mainstream economics. Such economics stresses the price mechanism and the use of supply and demand. For much of the post WW2 era, the mainstream also included Keynesian economics. Keynesian economics challenges the Neoclassical economics in particular, the view on Say’s Law. Keynes argument was that Say’s law does not hold. Say’s law is an economics rule that supply creates demand. Keynesnian economics includes the following concepts: Fiscal policy, wage and spending, Phillips curve, IS/LM analysis, consumption function and liquidity preference theory of interest, multiplier effect and interest rates.

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