I recently finished listening to an audiobook called “Monetarism and Supply Side Economics.” In a way, it was almost like two audiobooks that happened to be combined together. The script for the “Monetarism” part had a different writer than the “Supply Side Economics” part. But these two schools come to similar conclusions about a number of issues, and they were both from the same general period in economic history. Thus, it makes sense to cover them together as they do here.
Monetarism is often associated with the work of Milton Friedman, an economist from the Chicago school. Thus, a significant portion of this audiobook covers his life and work. Milton Friedman was still alive at the time that this audiobook was first published in 1989. (Milton Friedman did not die until 2006.) Thus, this audiobook’s coverage of his life is necessarily somewhat incomplete, but it is valuable for what it has to offer. Like many other monetarists, Milton Friedman was partially influenced by Keynesian theory, because he believed that governments should control the amount of money in circulation. He was ironically opposed to the existence of the Federal Reserve, but nonetheless believed that if we are to have a Federal Reserve, it should be focused on fighting inflation. Specifically, he believed that the growth of the money supply should be commensurate with the broader growth in goods and services in the economy.
Milton Friedman, American economist
Monetarism may be best known for its prescriptions regarding monetary policy, but it also has much to say about fiscal policy. Specifically, it criticizes the Keynesian focus on massive government spending. Because of the monetarist attacks on Keynesian theory, Keynesian economics fell out of favor for a while in the seventies and eighties. Monetarism is thus one of the most famous responses to Keynesian economics. Conservatives have long been more active in micro-economics than macro-economics, but the monetarists were a prominent exception to this pattern. They did much pioneering work in macro-economics during the seventies and eighties.
Headquarters of the United States Federal Reserve
The other part of this audiobook is about “Supply Side Economics,” as you might expect. “Supply Side Economics” is a relatively new term for a fairly old phenomenon. When people use this term today, they are usually talking about a group that was prominent in the 1980’s – the group that they most focus on here. But they also talk about how these ideas have roots in the eighteenth century, if not earlier. For example, Adam Smith was a supply-side economist, as was the French economist Jean-Baptiste Say. Basically, a supply-side economist is someone who emphasizes that if nations are to have wealth – that is, any kind of goods and services – that wealth has to be created in the first place. In their view, supply is more important than demand for this reason.
Jean-Baptiste Say, a prior French economist
By contrast, John Maynard Keynes seems to have believed that demand was more important than supply. Thus, he is sometimes known today as a “demand-side economist.” This view also has deep roots going back into the early days of economics. Demand-side economists generally take it for granted that any needed wealth will be produced, even if there are no rewards and incentives for producing it. But to date, no evidence has ever been provided for this theory. Communist economies have experimented with removing rewards and incentives for services, and the results of these experiments have been disastrous (to put it bluntly). The clear and unequivocal result of all of these experiments has been poverty, while the result of rewarding people for productivity has been actual productivity, and a higher standard of living.
Robert Mundell, Canadian economist associated with supply-side economics
Of course, there have always been “supply-side economists” and “demand-side economists,” even if they haven’t always been known by these specific terms. This audiobook also covers supply-side prescriptions regarding monetary policy, and shows that this group has long been active on many fronts. The supply-side coverage was my favorite part of this audiobook, although I also enjoyed their coverage of monetarism as well.
American economist Arthur Laffer, originator of the Laffer curve
I could go on about either of these two schools of thought, since both of them have been very influential. This audiobook is a good introduction to both of these schools. This audiobook is also the last installment in the “Great Economic Thinkers” series, which covers the history of economic science since its beginnings with Adam Smith. It went through what was then the “present day,” which was then back in the 1980’s. Thus, I wouldn’t mind seeing a few updates to this series to cover what has happened since then. Nonetheless, these audiobooks are classics on the history of economic science, as it had already transpired by the time that these audiobooks were made.
See also:
Part of the audiobook series
Great Economic Thinkers
Monetarism and Supply Side Economics
See also the audiobook series
Secrets of the Great Investors
Others to be covered later
See also the audiobook series
The Giants of Political Thought
Others to be covered later
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