Free «Economics and Economic Theorists» Essay Paper
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Economics study is one of the major and most important fields of studies as it is directly linked to the overall performance of the economy. The sector is based on different economic theories and models that help in the determination, analysis, and explanation of various factors in the economy. The economists who come up with these theories are referred to as theorists, and they include Milton Friedman, Karl Marx, Thomas Robert Malthus, Adam Smith, John Maynard Keynes, and Friedrich Hayek. Any discussed issue in the economy would be somehow incomplete if the related theorists are not referred to (Wolff & Resnick, 2012). They are classified according to different issues, on which they focus, referred to as schools of thought. These theorists and their theories will affect the economies of different counties and regions for coming generations to emanate.
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Political Economy Issues from Their Theories
The theorists focus and analyze all the issues faced by individuals in accordance to the economic class, to which the individuals belong. They tend to explain the fact that the economy is a dynamic system that changes overtime and not a perfect process that develops in one direction. There are contradictions involved, which are due to be replaced depending on the current economic situation.
Political economy focuses on the individuals in society and the way they socially depend on each other for various issues affecting them (Goldsmith, 2010). This involves the wealth possessors and the ways they put their wealth into use. It does not explain the relationship between the prices of goods and services in the economy as well as their distribution but it brings into focus issues involving what is being produced and the way in which it is produced on the market.
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In the 21st century, the economy experiences different types of economic problems from various situations that arise from time to time. These problems include high rates of unemployment, economic depressions, and large debts caused by inadequate funds in the countries. John Maynard Keynes’ theories mainly focus on these issues and the ways that can be used resolve them to stabilize the economy (Greenwood, 2010). Milton Friedman’s theories also put into consideration the economic issues of the 21st century as he analyzes and explains consumption in the economy relating to the individual’s income and expenditure. Milton suggests that the total amount earned by the individuals in the economy equals to the total amount they spend for the consumption of goods and services.
However, other theorists based their theories on the past historical issues. Thus, they are not likely to be used in the economy in the near future because the economy keeps on changing with time, which makes it hard to rely on the theories as references. The Malthusian theory by Robert Malthus identifies and explains the progress of population in relation to the food production. According to him, population follows a geometric increase while the production of food in the economy increases in arithmetic progression. Due to the development of civilization, population may decrease in future contrary to the Malthus’ suggestion in his theory; hence, the theory may not be applicable in the near future.
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Karl Marx theories mainly focus on the changes in historical economic issues rather than possible predictions of the economy’s future. The theories fail to provide viable solutions that can be put in place to solve the future economic problems based on the past matters. This makes the theories by Karl Marx a weak basis to depend on in the near future in solving the existing economic hitches.
Positive and Normative Economics
Positive and normative economics is a big concern of major theorists that have ever existed. It deals with identifying, internalizing, and explaining concepts along with their casual relationships. This is done in an attempt to give viable solutions in the economy and provide a stabilized base of the economy (Caplin & Schotter, 2008). This is what the concept of what is and what to be entails.
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We may never be as smart as we may perceive to be, which is evident in different theories. A moral economic slogan is intended to keep people on the right track as they have in mind that in whatever action they participate, they can never be as perfect as they would think. Keynes explains that lack of moral behaviors in the economy could lead to harmful effects; hence, morality should be embraced in every economic decision made.
The technocratic view of Keynes considers wealth as simply an artificial process of internalizing and attempting to solve economic problems faced in society. It is evident according to Keynes’ theories that the depression in the economy arises from our actions as individuals and so does every moment of it. This depression could be avoided if economic decisions were made without any blunder involved.
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The technocrats participate partially in economic equilibrium, according to Milton Friedman. The technocratic view only calls for planning but it do not necessarily suggest what is to be done in the planning to improve the economic condition (Rodrik, 2007). He outlines that since the peoples’ affair is moral set, so is the economy. There is large ignorance of morality by the technocrats, which leads to massive economic failures that may be complicated to solve.
Milton Friedman argued for straight association to capitalism and he was against all behaviors that could tamper with freedom and the decisions made in the economy. He views all social accountability as distortion to economic freedom since individuals are not given chances to decide on how they would like to spend their money.