Adam Smith Vs John Keynes


Adam Smith Vs. John Keynes Essay, Research Paper

How can John Maynard Keynes version of capitalism be compared to

Adam Smith’s? Both are considered to be the molders and theorizers of the

economic era. They are both very different in thinking, one complex the

other basic, in there specific time history.

John Maynard Keynes has had much of the worlds economic theories

based on his beliefs in his most important work The General Theory of

Employment, Interest, and Money. During the Great Depression, Keynes, to

secure a stable economy, promoted the use of government intervention.

However, the idea was said to be deranged be President Roosevelt, he was

against spending tax payers money to allow the nation to get into a national

deficit. Another theory of Keynes was that the inflation and unemployment

were necessary to keep the economy balanced. It can be understood by the

fact that too much inflation expresses signs of low unemployment for the

nation. Even so, if the unemployment rate is too high then the inflation

percentage will pull down the economy to a low percentage too. Because of

President Roosevelt decline to use the theory of Keynes until it was too

late, his theory was not really confirmed. In spite of that, while his theory

was being applied the economy slowly, but surely started to rise. At last,

when World War II came along it caused a mass production which boosted

the economy from slipping down any future, and allowed companies to rise

up from bankruptcy.

Adam Smith was one of the earliest of our economists that Robert L.

Heibroner talks about. Its seems to me like he was the person that presented

capitalism to the English government. Smith was alive during the time that

Britain had a hold on the American colonies. It was Smith that directed the

King and Queen, and recommended The Crown’s abuse of the colonies

would help the homeland and be successful and gain more power. So the

colonies were abused and England, because more successful. He also

guided the monarch to advise the colonies to pay taxes, which later caused

the start of the American Revolution. Anyhow, Americans became free after

the war and strangely enough followed the principles of Smith. One of the

principles they followed were Supply and Damned. Since the south was

agriculture and the north industrial, this helped the nation to prosper on its

own and maintain economic balance for while. Smith’s theories also

consisted of the belief that government should not get involved with the

businesses. He was trying to promote that there should be free

enterprise in the midst of the people to keep the economy balanced and

successful. At the time of the Great Depression some of the American

Economist tried to turn to Adam Smith’s beliefs, but the beliefs that he

promoted could not help the declining economy rise up from gigantic weight

of the national debt.

I have compared and contrasted these two great economist and have a

better understanding of their beliefs. If I had to vote on the one I relate to

the most it would be Keynes. Keynes seemed to be easier to understand and

everything he said seemed to make more since to me. Smith was a little

mind numbing and obscure. I didn t agree with his plan. Because of there

beliefs, these men will have forever have left their mark on the world of

economic history.

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