POLSCI 111 Chapter Notes - Chapter 15: Austrian School, Keynesian Economics, Monetarism

• School: U of M
• Department: Political Science
• Course: POLSCI 111
• Professor: Arthur Lupia

Document Summary

Government and the economy: ideas and historical trends. Government intervention in the economy is pervasive and enormously consequential. Laissez-faire capitalism: the idea that if left alone from government interference, economic markets will efficiently create greater wealth for the society as a whole (adam. Marxism places control of capital directly in the hands of the people. American economy toward european-style socialism: keynesianism: proposes that government spending be used to regulate the ups and downs of economic cycles that lead to fluctuations in unemployment. It promotes active government intervention, mostly spending on new government programs, during economic downturns. The government should feel free to borrow money to permit this spending, or to raise taxes on the wealthy. The idea is to create jobs even if their purpose isn"t completely necessary. Many counter reactions of keynesianism : monetarism: a philosophy that says the key to prosperity is maintaining a supply of money in the society that matches the productive capacity of the society.