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.