Chart Comparing Economic Models

Chicago School of Economic Thought Keynesian Economic Theory Socialism/ Communism Development Economics

The main theorists of this model are Milton Friedman, Frank Knight, Ronald Coase, George Stigler and Robert Fogel, among other economists (Fischer, Livengood, Loosli, Morgan & Snarr, 2008). The theorist of this model is John Maynard Keynes (Fischer, et al, 2008). The main theorists include Mao Zedong, Karl Marx, Friedrich Engels, Robert Owen and Joseph Stalin, among others. Theorists include Adam Smith, W. W. Rostow, Paul Rosenstein-Rodan, Joseph Schumpeter, among other economists.

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Some aspects of this model are applied in the US, UK, Canada, Australia, among other countries. Certain aspects of this model are applied in the US, UK, Canada, Australia, among other countries. Socialist or communist countries include China, Tanzania, Cuba, among other countries. All countries apply one or more concepts of the economic development model.

It argues that the economic power lies in the market. The model believes that free markets best allocate resources than the government (Fischer, et al, 2008). It advocates for minimal government intervention. Keynes believed that economic power lies in the market (Fischer, et al, 2008). However, he argued that markets are not perfect hence he advocated for government intervention through spending and taxation to regulate aggregate demand (Fischer, et al, 2008). Economic power under this model lies with the government. The state owns resources, and there is centralized planning (Tsoulfidis, 2014). The model believes that economic power lies in the government, people and markets. The government has a critical role in economic development. The theories focus on international trade (Cooper & Rivoli, 2006).

Influential architects of the model are Milton Friedman, Frank Knight, Ronald Coase and George Stigler. John Maynard Keynes is the architect of Keynesian Economics. The influential architects of socialism and communism are Karl Marx and Friedrich Engels Main architects are Alexander Hamilton, Henry Clay, among others.

Dominant Models and How They Have Evolved Today

The Keynesian and Chicago School models are the dominant theories today. The Chicago School of Economic Thought from the initial claim of free markets and no or minimal government intervention. After economic crises such as the Great Depression, it was evident that free markets cannot self-adjust (Tsoulfidis, 2014). Milton Friedman and other Chicago School of Thought Economists now advocate for the monetarist view where the government's role is to control inflation by regulating the money supply (Ebenstein, 2015). This is what the Fed is doing through several monetary policy actions.

The Keynesian view of controlling aggregate demand is widely used. For instance, most governments used taxation and aggregate demand to boost the economy during the 2008 financial crisis (Tsoulfidis, 2014). Keyne's view evolved, and he now believes that individuals have rational expectations. However, he still advocates for government intervention since markets are not perfect.

References

Cooper, R., & Rivoli, P. (2006). The Travels of a T-Shirt in the Global Economy: An Economist

Examines the Markets, Power, and Politics of World Trade. Foreign Affairs, 85(2), 191. http://dx.doi.org/10.2307/20031930Ebenstein, A. (2015). Chicagonomics: The Evolution of Chicago Free Market Economics. New

York: St. Martin's Press.

Fischer, J., Livengood, R., Loosli, K., Morgan, J., & Snarr, T. (2008). Commanding Heights: The

Battle for the World Econom. New York: Free Press.

Tsoulfidis, L. (2014). Competing schools of economic thought. Springer.