Adam Smith, Karl Marx and John Maynard Keynes

WARM-UP What is one way in which Market Economy and Mixed Economy are similar? A They both share the idea of competition and individual rights. B They both share the idea growing their own resources in old traditional ways C They both share the idea the land and capital are owned by the government. D They both share the idea of a hereditary ruler.

Adam Smith, 1723-1790 Scottish Enlightenment writer Wanted to understand what made some countries wealthy and others not so much In 1776, wrote An Inquiry into the Nature and Causes of the Wealth of Nations

Major Themes of Wealth of Nations Division of Labor Self Interest and Cooperation in Markets Role of Government (Laissez-faire) The Invisible Hand

Karl Marx, 1818-1883 German philosopher, economist, sociologist Lived and wrote during the Industrial Revolution in Europe, which was a time of dramatic change to society Observed how this transition created stark divisions and inequities in society Communist Manifesto

Major themes of Karl Marx Class struggle Bourgeosie Proletariat Society will evolve from capitalism to socialism and finally to communism

John Maynard Keynes, 1883-1946 British economist Greatly influenced understanding of macroeconomics Concerned with how to regulate the boom and bust business cycle Argued government intervention in the economy was necessary to control the fluctuations of the boom/bust economic cycle

Major Themes of Keynes Wrote The General Theory of Employment, Interest and Money in 1936 Argued government involvement necessary to moderate “boom and bust” economic cycle Government can do this through fiscal and monetary policy Government’s use of monetary and fiscal policy can boost aggregate demand