ML - Economic Management Flashcards
What did 20th century western government provide?
Social welfare
What did 20th century government seek to deliver?
Prosperity by ‘managing’ their economies
What did delivering prosperity involve rejecting?
Classical liberal thinking
What in particular had to be rejected?
The belief in a self-regulating free-market and the Doctrine of laissez-fairs
Why was laissez-faire abandoned?
Due to increasing complexity of industrial capitalist economies and their apparent inability to guarantee general prosperity if left to their own devices
Who guided interventionist policies?
John Kenynes
What did Keynes challenge and reject?
Challenge classical economic thinking
Rejected its belief in a self-regulating market
What had classical economists argued?
That there was a “market solution” to the problem of unemployment and all other economic problems
What did Keynes argue about the levels of economic activity and unemployment?
It is determined by the amount of aggregate demand in the economy
What did Keynes suggest governments should do?
Manage their economies by influencing the level of aggregate demand
Give the two ways in which the government would manage the economy
Government spending would be an injection of demand into the economy
Taxation would be a withdrawal
What did Keynes say the government should do at times of high unemployment?
Government should reflate the economy by either increasing public spending or cutting taxes
How would unemployment be solved?
By government intervention not the invisible hand of capitalism
What did Keynesian demand give the government the ability to do in order to secure general prosperity?
Manipulate employment and growth levels
What have Modern Liberals seen economic management as constructive in doing?
Promoting prosperity and harmony in civil society
Finish the sentence:
Keynes was not opposed to capitalism but…
Saw unrestrained private enterprise as unworkable in complex industrial society
What was Keynesianism widely established as in the West?
Economic orthodoxy
What did Keynesianism displace?
The older belief in laissez-faire
What are Keynesian policies credited with being?
The key to the ‘long boom’ of the 1950s and 60s
What did the reemergence of economic difficulties in the 1970s generate?
Renewed sympathy for the theories of classical political economy
What did the renewed sympathy for classical political economy lead to?
A shift away from Keynesian policies
What did the failure of the free market revolution in the 80s and 90s result in?
The emergence of the ‘new’ political economy, or neo-Keynesian priorities
What did Neo-Keynesianism recognise?
The limitations of crude Keynesianism
What did Neo-Keynesianism mark a renewed awareness of?
The link between unregulated capitalism and low investment short terminals and social fragmentation
