To: Ilaine who wrote (35307 ) 11/5/1998 1:19:00 PM From: Mike M2 Respond to
CB, many academics are socialist sympathizers and favor big government and the redistribution of wealth. Naturally they would favor Keynesianism and Monetarism and be biased against laissez-faire economic theories such as the Austrian school. The following is a quote from Vic sperandeo's " Trader Vic Method's of a Wall St Master" p.134 " The phenomenon know as the business cycle didn't really begin until the middle of the 18 th century. Before that, there were depressions, but their causes were easily discernable. <i.e. war and related scarcities> ....Starting in about 1750, however, there emerged a recurring cyclical fluctuation in the economic activity of industrialized nations that wasn't so easy to explain. There were two coincident developments during this period of history: the industrial revolution, which began in England and spread throughout the western world; and the rise of central banking, specifically, central fractional reserve banking controlled by government regulators. ' Two basic schools of economic thought emerged in an attempt to explain the business cycle. " One group, the mercantilists, assumed that there was something inherent, or endogenous, in the market economy which caused cyclical fluctuations in business activity. For this group, their focus was to find theses causes and use government control to eliminate them and provide a stable environment for business expansion. The other group, led by the classical economists, David Ricardo, explained the business cycle by analysis of the effects of paper money and credit expansion on trade. In their terms, the business cycle is caused by exogenous factors of governments intervention in the money and credit markets. Unfortunately, the endogenous school triumphed , culminating in the economics of john Maynard Keynes, which in variant forms still dominates world economic thought today." I do not know how to differentiate between the classical economic and the austrian school other than the austrian school came latter. As I have said i favor the classical or austrian theory. If you are interested I would recommend reading chapter 10 of this book- it goes into greater detail supporting austrian theory. Mike
