Policy Flashcards
(15 cards)
William Stanley Jevons
State intervention to ensure basic needs are met (so that individuals can pursue higher goals)
Education and social reform for self-improvement
Skepticism about competition (deprives basic needs)
Carl Menger
Opposed state intervention (interferes with spontaneous order)
Unregulated markets
State should maintain order
Leon Walras
Not the role of economics to discuss distribution
Blend of socialist views and perfect competition
Preferred organisation in agriculture = small agrarian freeholders
Alfred Marshall
Mobilise labour as best relief of poverty
Maximise utility (aggregate society)
Economic chivalry (optimal tax)
Public education and incentives
Competitive markets deliver equilibrium prices
Natural monopolies
Johan Gustaf Knut Wicksell
The monetary authority should steer the monetary interest rate towards the natural rate to stabilise the economy
Competitive use of resources despite being a socialist
State shouldn’t pay benefits but should ensure fairness (equal opportunity)
Supported taxing rents and inheritance
Irving Fisher
Monetary Policy
- full reserve banking to prevent bank runs
- central authority to ensure money supply stability
Fiscal Policy
- consumption-based taxation to ensure intertemporal equilibrium maintained
Public Policy
- government investment in health and productivity-enhancing sectors
Freidrich August Von Hayek
Spontaneous natural order
Intervention makes things worse
Economic freedom goes along with other freedoms (political and educational) - economies left to free exchange perform better and have better welfare.
Minimal state intervention:
- Ensure health is preserved
- Preserve market operation (foster competition)
Mercantilism
State should maintain order and ensure wealth accumulation
Grant trading rights to monopolies
Protectionism
Trade restrictions
Ban on exporting raw materials
Military intervention in colonial wars
Low domestic prices (margin in final goods exports)
Physiocracy
Encourage agricultural production and land productivity
No barriers to trade
Remove constraints of state intervention
Tax on rent
Surplus comes from nature and nature should be left alone
Adam Smith
Government should intervene as little as possible to prevent constraints to growth (state regulation and control are obstacles to growth)
Expand markets and potential trading partners of a country.
Governments should not divert resources to unproductive uses, e.g., Poor Laws.
Focus on expanding production as the main driver of growth.
Exceptions: governments should maintain law and order, justice, and national defence.
Free markets allow the best possible outcomes.
Foster effective competition (remove barriers like monopolies to let P tend to natural P and expand growth)
Economy better guided by the market (invisible hand)
Against interference and tax - but tax rents/luxury goods if have to.
Public debt crowds out investment.
Thomas Robert Malthus
Moral institutions (social norms and education) for population control
Agricultural protectionism (high food prices to discourage population growth and encourage investment in land)
Mild interventionist
Free market advocate in general
- Against welfare policies that disincentivise work
- Supports public spending on non-productive sectors to absorb labour
David Ricardo
Supported gold convertibility
Free trade
Gradual abolition of Poor Laws
Self-regulating markets
Tax (light touch on productive factors) - preferably tax rent and luxury consumption
Public debt - state expenditure generally unproductive
Ricardian equivalence in SR.
John Steuart Mill
Generally laissez faire
In favour of competition and opposed to gvt intervention
Self-regulating mechanisms
Supported natural monopolies for public utilities
Progressive taxation on profits to curb market volatility
Government acts as educator and civiliser for better aspirations
Tax revenues spent on social improvements and foreign development
Distribution laws shaped by institution and policy (no written destiny)
Karl Marx
Capitalism is inherently unstable and will be replaced through class struggle (potential violent reorganisation)
A future system will involve collective ownership of the means of production
Abolition of exploitation (revolution with collective ownership so that workers can be remunerated in line with SNLTV)
Gradual reforms rejected - structural change necessary
No policy can alter the collapse of capitalism (crisis is embedded in the system)
Cannot infer policy given a new institutional setting will emerge
John Maynard Keynes
MONETARY POLICY
- expand money supply to counteract liquidity hoarding (limited effectiveness due to liquidity preference and animal spirits)
- interest rates often ineffective during economic crises (expectations override their influence)
FISCAL POLICY
- public spending to stimulate demand
- deficit spending (balanced budgets constraint)
- restore effective demand (affecting entrepreneur’s expectations and investment decisions)
Economies are too complex for laissez faire and unregulated markets to work effectively and produce full employment.
Wage flexibility may worsen demand (critique to neo)
