The Most Important Economic Schools of Thought | Economics Explained

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An economy is a collection of production and consumption processes that are all working towards solving the central economic problem.

The problem is that we only have access to a finite amount of resources, but the potential for human consumption of goods and services is pretty much limitless.

This is the foundation of economics, every study, every paper, every theory, economic policy, or experiment is ultimately an attempt to find a solution to a problem, that by its very nature, has no solution.

Economics is considered a social science, and although some other scientists from more “rigorous” fields don’t always welcome it into their little club, it still follows the same processes to explore the world around us.

And, as with science, or anything that is extremely complex for that matter, there are disagreements between practitioners at all levels of academia and throughout the entire history of the subject.

The economic schools of thought are very broad ways that economists are clumped into basic groups.

Now the first thing to know about all of these schools of thought is that they all agree with one another on most issues.

In the same way that two physicists will obviously agree with one another that and object at rest will remain at rest, but might disagree about string theory. Two economists will obviously agree that there are opportunity costs for every unit of production, but they might disagree on the long term implications of a consumption tax.

The economy impacts our financial situations, our governments, retirements, environments, crime rates, and basically anything else that is going to make news headlines.

As with anything that people are invested in they form opinions around it. And those opinions are held by everybody from Nobel laureate career economists to that crazy guy advocating for a seed-based economy.

If this contention wasn’t enough then there is one other issue that makes these schools of thought difficult to deal with, and that is that there are no strong borders between them.

There are plenty of economists that agree with some of the principles of one school of thought and then disagree wildly on some other areas. Which is actually a good thing. But more on that later.

For now, to try and make sense of this wild world we are going to look at three major schools, Classical, Austrian, and Keynesian.

To show the differences between these schools we are going to look at the way they suggest solving the central economic problem in key areas.

What they suggest the role of government is.

What do they think the role of the individual is.

What they propose doing in an economic crisis.

And finally what is the key to delivering a wealthier happier economy?

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#Austrian #Keynesian #Economics

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[randorandom]

"Ask five economists and you'll get five different answers - six if one went to Harvard." - Edgar Fiedler

[pablooctaviano]

EE: "If the experiment doesnt work, well you just destroyed a nation"
Argentinian economists: well, is worth the shot

[gonickogogo]

More of this style, please. The country videos are cool for exploring specific subjects and reinforcing those ideas with specific case studies. But these in-depth videos on the basic terminology help a layperson like me understand what each position in the discourse is even referring to. Thanks for doing what you do!

[cyanlos]

7:50 That reminds me of the essay "I, Pencil", one that I absolutely adore. Since I'm no economist, I never realized that Leonard E Read's phenomenal essay was directly based on the principle by Adam Smith!

[LordGdawg]

I cant believe I ever thought economics was boring. Thank you for making it so fascinating and well; down right addictive.

[economicsinaction]

"Why Economists Never Agree on Anything?"

Me, an intellectual: *"Well they'll never agree on that statement"*

[dr.k.math.]

Classical and Austrian Economics are the only ones that make sense, honestly, and are consistent with first principles.

[paveldundr]

What I would add to the problem of "economics is really hard to experiment on" is also that even if you get the law passed and study the results, there are so many other variables that economists can always plausibly argue that the results actualy does not support/disprove the hypothesis since they were caused by other aspects... Say you had an idea for new brilliant taxation scheme and got a country to pass these with effect since 1.1.2019 . You study it's results now and obviously the country is very much not better then before, but odds are it has more to do with covid then your taxation scheme...

[QuestionEverythingButWHY]

“All models are wrong, but some are useful.”
--George E. P. Box

[EconomicsExplained]

I feel like I am about to be very unpopular with 2/3rds of viewers all of a sudden.

[edmundironside]

Carl Menger's Principles of Economics is such a great book

[christopherwood]

Try to get Keynesians and Austrians to agree on what inflation is: Keynesian economics believes that inflation is "meh rising prises tho"; Austrian economics knows it's the expansion of the money supply, thus resulting in rising prises

[QuestionEverythingButWHY]

“He uses statistics like a drunken man uses a lamp post, more for support than illumination.”
-- Andrew Lang

[Quickonomics]

Economists be like: "I may be wrong but... ugh, darn it. Just destroyed another nation." ¯\_(ツ)_/¯

[Sotanaht]

I firmly believe that counteracting the natural cycle of economics is the worst thing we could have ever done. It's created bigger crashes, prevented new growth by protecting the old businesses that should have failed, created megacorperations and all their evils, and is pushing the world off the cliff at the end of "infinite growth". It's also the root cause of inflation outstripping income, the housing crisis, and generational wealth inequality.

[williammckay]

Kudos, to you. As I'm weird, I'm currently watching your channel for entertainment whilst on holidays lol!
I've also recommended your channel to my eldest, who recently completed an undergraduate degree in public health and is doing her Masters next year. In this era of globalisation, I believe all the social sciences are interlinked... your channel is very accessible to those without a background in economic theory. And compulsive viewing. Live long and prosper!

[Some.real.human.]

I don't think there is enough emphasis on the fact that economics is fundamentally a social science. No matter what there will be chaos in the economy because people are chaotic

[DPPZ]

I understand you needed to prioritize certain information, but I think it would have been great to point out why Keynes and Hayek disagreed soo much. For Hayek, the entire reason that the business cycle of ups and downs existed in the first place was because the state intervened to control currency and its ease of access (federal interest rates), which lead to systemic malinvestment. Keynes looked at the business cycle as it was and proposed a solution to the question of how to minimize the symptoms of that intervention, but the Austrians largely felt he was ignoring the root causes of the the problem and proposing a bandaid solution that would leave us worse off in the long run.

[rumbaughsteven]

I enjoy your videos. Probably mostly because I enjoy your accent and enunciation so much, but also believe I learn things from you.
I’ve read a lot of the comments and I’m disappointed that no one criticized your talking about Adam Smith’s pin making breakdown, while illustrating it with videos of needles.

[developingkindness]

Sending you love, brother. I've been there too. For what it's worth, you are seen in my heart. May you find peace.