Javier A. Tabush

 

"The Clash of Economic Ideas interweaves the economic history of the last hundred years with the history of economic thought, examining how contrasting eco- nomic ideas have developed over time to take their present forms. It traces the connections running from historical events to debates among economists, and from the ideas of academic writers to major experiments in economic policy. The treatment offers fresh perspectives on laissez-faire, the mixed economy, socialism, and fascism; the Roaring Twenties, business cycle theories, and the Great Depression; institutionalism and the New Deal; the Keynesian revolution; and war, nationalization, and central planning. The work explores the post- war revival of invisible-hand ideas; economic development and growth, with special attention to contrasting policies and thought in Germany and India; the gold standard, the interwar gold-exchange standard, the postwar Bretton Woods system, and the Great Inflation; public goods and public choice; free trade versus protectionism; and finally fiscal policy and public debt. The inves- tigation analyzes the theories of Adam Smith and earlier writers on economics when those antecedents are useful for readers."

 

 

 

Chapter 1 The Turn Away from Laissez-Faire

 

Menger’s Principles of Economics had co-launched a marginalist-subjectivist revolution in economic theory, a revolution that provided the new ideas in Marshall’s synthesis. 

Keynes wrote The General Theory of Employment, Interest, and Money. He argued that the economy’s current aggregate output is governed by its current aggregate demand, and that the most volatile component of aggregate demand is current investment spending. The reason for the Great Depression- investors had lost their nerve. Solution- Government must expand its spending to boost aggregate demand and particularly investment. 

HAYEK 

Market prices as signals that enable society to coordinate the efforts of millions of decentralized decision-makers. 

Dispersed knowledge- allow the efficient use of resource-without central design.

 

 

 

Chapter 2 The Bolshevik Revolution and the Socialist Calculation Debate

Lenin asked for the government of the Bolshevik revolutions about a checklist of concrete measures they might take, urging their most urgent and most extensive implementations. 

The list went to say a lot of regulation they had to do in order to implement socialism, and the economic policy had to be improvised because there were no concrete guidelines form marx and engels. 

The Bolsheviks make economic Policy

Marx suggests a plan rejecting capitalism through replacing it with a unitary state plan. 

Bolsheviks quickly organized a central planning agency known as The Supreme Economic Council. 

 

 

 

Chapter 3 The roaring twenties and Austrian business cycle theory 

Could the downturn have been avoided, or was there something about the boom years that destined them to come to an end?

The roaring 20’s

The greatly increased open market purchases of the reserve banks in the first half of 1927, and the nesuing reductions in discount schedules had brought about an extremely large growth in bank loans and record volume of corporate security issues, thereby financing a remarkable expansion of our capital equipment. 

Pre Keynesian macroeconomics

Hayek thought that loose monetary policy had kept interest rates too low and thereby distorted production into an unsustainably top-heavy structure. What is loose monetary policy? 

Keynes: loss of nerve by investors meant that investment spending failed to make up for too little consumption spending. How is this proved? 

Keynes suggestions in particular easier monetary policy and an increase in gvt spending financed by borrowing.

 

 

Chapter 4 the new deal and intitutionalist economics

Before 1935 many Progressives could and did admire aspects of fascism’s economic system, despite their distaste for its repression of civil liberties.

 Franklin Roosevelt and the command-economy model

Fascism retains nominal private ownership of business but puts government in close control of major investment and production decisions. 

Franklin Delano Roosevelt and the NRA

Goals were: recovery and reform.

The means: extensions of federal government control over the economy