15/09/2025
Economic school of Thoughts
********************************
Economics has never been based on a single idea or one fixed truth. Over the centuries, different economists have studied societies, markets, crises, and growth. From their observations, they developed different approaches — or “schools of thought.”
Each school of thought tried to answer the same fundamental questions:
• How do markets actually work?
• What role should government play in the economy?
• What truly drives growth, employment, and stability?
From these debates, four major schools of economic thought emerged. Together, they shaped modern economics and continue to influence policy and theory today:
1. Classical Economics
• Founded by Adam Smith and expanded by David Ricardo and John Stuart Mill.
• Emphasizes free markets, competition, and minimal government interference.
2. Neoclassical Economics
• Developed in the late 19th century by Alfred Marshall, Carl Menger, and others.
• Focuses on marginal analysis, demand and supply, and individual decision-making.
3. Keynesian Economics
• Introduced by John Maynard Keynes during the Great Depression.
• Stresses the importance of aggregate demand and government intervention to stabilize the economy.
4. Monetarist (and New Classical) Economics
• Advanced by Milton Friedman and later Robert Lucas.
• Highlights the role of money supply, rational expectations, and monetary discipline.
Why These Schools Matter for Students
For students, these schools represent the four main pillars of economic thinking.
• They show how economics has evolved over time.
• They explain why different countries adopt different policies.
• They provide multiple perspectives to analyze today’s challenges.
No school is completely “right” or “wrong.” Instead, each offers a lens to view the economy. By studying all four, students gain a deeper, more balanced understanding of economic life.
