Keynesian, Marxist, and Classical economics

1. Classical Economics

Key Figures: Adam Smith, David Ricardo, John Stuart Mill
Core Ideas:

• Market Efficiency: Believes in the self-regulating nature of markets through supply and demand.

• Laissez-Faire: Advocates minimal government intervention, arguing that free markets lead to optimal economic outcomes.

• Say’s Law: States that "supply creates its own demand," meaning production naturally generates enough income to purchase all output.

• Long-Term Growth Focus: Emphasizes factors like capital accumulation, labor supply, and technological progress for economic growth.

2. Keynesian Economics

Key Figures: John Maynard Keynes
Core Ideas:

• Demand-Driven Economy: Argues that economic output is influenced by aggregate demand, not just supply.

• Government Intervention: Supports active fiscal and monetary policies to stabilize the economy, especially during recessions.

• Short-Term Focus: Believes markets can be inefficient in the short run, leading to unemployment and economic downturns that require intervention.

• Multiplier Effect: Suggests that government spending can stimulate additional economic activity, boosting overall demand.

3. Marxist Economics

Key Figures: Karl Marx, Friedrich Engels
Core Ideas:

• Class Struggle: Views economic systems as arenas of conflict between the bourgeoisie (capitalists) and the proletariat (workers).

• Labor Theory of Value: Argues that labor is the source of value, but capitalists exploit workers by paying them less than the value they produce.

• Critique of Capitalism: Believes capitalism is inherently unstable and will eventually be replaced by socialism due to its contradictions, such as income inequality and overproduction crises.

• Role of the State: Views the state as a tool of the ruling capitalist class, advocating for a socialist economy where the means of production are collectively owned.

Comparison Table

Each school of thought has influenced economic policy at different times, with classical economics forming the foundation of free-market capitalism, Keynesian economics shaping modern macroeconomic policy, and Marxist economics inspiring socialist movements.