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The Economic Policy Through The Lens Of History Summary

529 Words3 Pages

Chloe Griffith
Mrs. Magnus
Economics 2GH
30 August 2015
Analysis of the Economic Policy Through the Lens of History
Throughout history main ideas for the best and most effect way to govern have been argued. These two ideas are the classical economics and Keynesian economics. According Roger E. Farmer’s, Economic Policy Through the Lens of History, the past can be separated into three sections within the two main ideas. When one idea fails society assumed it didn’t work, and switched to the other. Little time was spent concerning the circumstances each idea was under. The right idea was that two types of economics need to be combined in order to function properly, rather than one extreme to the next.
Classical economics was the original idea that had been used happily until around 1930. The classical idea includes free markets, where prices were controlled by companies without restrictions. This also lets trade be controlled privately, without government. Classical economics was the main idea until it was unsuccessful in the Great Depression and the unemployment rate rose to be …show more content…

Ironically, classical economics didn’t fall until the Great Depression. When Keynesian economics took over, it ended over the inflation reasoning issue. After people moved on from what happened in the Great Depression they wanted a free market again. Ragnar Frisch agreed that the economy’s timing was not optimal for the classical economics; he believed that if the economy calmed down the classical way would thrive. Another person, Keynes, had a differing opinion, he thought that classical economics was the reason for the Great Depression, rather than it getting caught and being blamed as not being helpful. He had unique ideas that interconnected the stock market with the labor market. Ragnar Frisch and Keynes had ideas that made society rethink which economic was the correct

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