Economic Schools of Thought: Crash Course Economics #14

We talk a lot about Keynesian economics on this show, pretty much because the real world currently runs on Keynesian principles. That said, there are some other economic ideas out there, and today we're going to talk about a few of them. So, if you've been aching to hear about socialism, communism, the Chicago School, or the Austrian School, this episode is for you.

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[concretewindow]

"An economist is an expert who will know tomorrow why the things he predicted yesterday, did't happen today."
-Laurence J. Peter

[edvogt]

Economists and weather forecasters are the only people who can be wrong all the time and keep their job.

[dorkmax]

>A: Any socialism is bad
>B: Scandinavia has some successful socialist policies
>A: Nah, those just appear socialist, they're actually free market capitalist
>B: Fine, let's implement them
>A: But that's socialism

The problem with labels

[JasonCTillmann]

My wife is a Keynesian.... she's always spending herself out of depressions.

Great episode!! Rock-on!!

[vzmnjzk]

I am a 70 yr old Grandma from India, and knew very little about the terms used in Economics as I was a student of Biology, but thank you guys and ur team for making this so simple and clear.Though I wish you could go a little slow .Thank you once again!😊

[clarasm]

*Main outtakes of this lesson*
- Economic theories are constantly being proven, disproven and revised.
*Incorrect theories*
Thomas Malthus - In 1798, he argued that population growth would outpace food production.
Social darwinism - assistance to poor people and welfare are socially immoral. Combined ideas of Darwin & Malthus.

*1) Capitalism* - free markets and private property
Adam Smith - "The wealth of nations", 1776. A person following their own self-interest could end up serving the common good.
David Ricardo - Theory of comparative advantage: two people or countries can both benefit from trade, even if one of them can produce more of everything (when both focus on what they're best at and then trade, everyone benefits).
John Maynard Keynes - markets and economies don't self-correct quickly because prices and wages take time to adjust. During recessions, the government must get involved by using monetary and fiscal policy to increase output and decrease unemployment.

*2) Communism* - collective ownership of the means of production in a stateless and classless system
- _Communist Manifesto_ by Karl Marx and Friedrich Engels, 1848 - history is explained by the conflict between workers and property owners. Establishment of the Soviet Union in 1922.

*3) Classical economics* (capitalist ideas)
- _Principles of economics_ by Alfred Marshall, 1890. Government intervention is seen as harmful for the economy.
- Supply and demand. Marginal utility.

*4) Socialism* - the means of producing and distributing goods is owned collectively or by a centralized government.
- Private property and markets. Government ownership of industry. Significant regulation. Big public programs like universal healthcare. Examples: Norway, Sweden, Spain, France...

*5) Austrian school of economics*
- Friedrich Hayek and Ludwig von Mises.
- Regulation and government involvement has never produced the results it promised. It's seen as a problem, not a solution.
- Milton Friedman in the US - Chicago School of Economics, proposing privatization, deregulation and school vouchers.

*6) Monetarism* - Monetarists focus on price stability and argue the money supply should be increased slowly and predictably to allow for steady growth.

*7) Supply-side economics or trickle-down economics* - Deregulation and cutting taxes, especially corporate taxes.

*8) New neoclassical synthesis* - Unified theory that includes ideas from classical economics, including monetarism, and Keynesian economics. It is the basis of mainstream economics today. China and Cuba are not communists anymore, they're capitalists. North Korea is communist.

[khiemluong]

"This guy looks like Mark Cuban, but not as attractive or rich" - Mark Cuban

[Stikibits]

“The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition is the great and most universal cause of the corruption of our moral sentiments.”
–Adam Smith, Scottish political economist (1723-1790)

[nesssssssaaah]

Dudes just helped me aced my test by 80/95.
Thanks Crash Course dudes!

[robokarizma]

No one:
Malthus: 'We all are going to die of hunger.'

[tavoh]

>Scandinavia
>Socialist
This is how you tell if someone has never read a primary source in their life

[TheOsamaBahama]

Scandinavian countries are one of the most free market places in the world, despite the huge welfare system. Just look at the international rank of economic freedom.

[mergele]

Which has the worse comment section? CCEconomics or CCHistory? Vote now!

[ajjosh]

I've never gotten less than expected from crash course. You guys are simply good at what you do. Simple, brief and fun.

[magnapraetorem]

Never mind, they just called Scandinavia socialist.

[ivinspates]

Opportunity Cost - - one of the most underrated subtopics of economics.. yet, one of the most important subtopics in economics imho.

[ottohalbhuber]

Social democracy and socialism are very different.

[SexualPotatoes]

People here really seem to believe they're experts at everything and can't possibly be wrong.
This isn't really a good way to learn about things.

[shreder]

and so the 100 year flamewars in the comment section begun...

[luisrojas]

Really hard to belive that they are experts. When they said that scandinavia is rule by socialism, when there is nothing more capitalism that a country with free market