Development of

modern economics
Created by Egor Artiukh
 Monetarism
• Monetarism (English money - money) - economic theory,
according to which the money supply plays a decisive role
in shaping the economic situation and establishing causal
links between changes in the amount of money and the
value of gross national product. Monetarism emerged in the
mid-50s of the twentieth century. In the United States. Its
leader - the head of the Chicago School of Political
Economy M. Friedman - opposes active and large-scale
state intervention in the economy, against government
measures to stimulate demand. In his view, state regulation
of the economy is ineffective due to delays between
changes in monetary indicators and real factors of
production, so it should be replaced by automatic growth of
money supply.
 Keynesian economics
• Keynesianism is one of the leading trends in modern economic theory. Named after the world-

famous English economist J. Keynes (1883-1946), who was most fully aware that without active

state intervention in the development of socio-economic processes, without significant expansion

of state functions, capitalism can no longer exist, it is impossible to "avoid the complete

destruction of existing economic forms ". Keynes was one of the first in Western economics to

substantiate the macroeconomic approach to the analysis of socioeconomic processes, operating

in such global categories as national income, aggregate investment, consumption, employment,

accumulation, and so on. He considered these categories in their interaction and functional

connections. Modern followers of economic liberalism (American scientists L. Mises and F.

Hayek) oppose even labor legislation (regulation of working hours, setting a minimum wage,

etc.). Some domestic economists - "reformers" support these ideas about the economy of Ukraine.

They also developed appropriate practical recommendations, which under the rule of most

incompetent governments (after the proclamation of state independence) led to the collapse of

state management of the economy and caused great damage to the national economy.
 Left-wing political economy
• One of the currents of modern economic thought is the left-
wing political economy, which reflects the interests of the
middle classes and strata of the developed countries of the
West (especially the intelligentsia) and the realities of
reality. Since the intermediate strata and strata consist of
various groups, and among the intelligentsia there is a
sharp differentiation, the left-wing political economy is
characterized by internal heterogeneity and even
contradictions in their methodological and theoretical
principles. The birthplace of this trend were the universities
of developed countries, especially the United States. The
most famous representatives of left-wing political economy
are scientists G. Sherman, R. Edvans (USA), P. Anderson,
J. Harrison (Great Britain), and others.
Institutional economics
• Institutionalism - one of the directions of Western economic thought, which emerged in the late
nineteenth - early twentieth century. He denied the conditionality of the development of human
society by production relations (property relations), and recognized psychological, social, and
legal factors as the driving force. The founders of institutionalism were the American scholars T.
Veblen, D. Commons, W. Hamilton, the English economist A. Hobson, and others. T. Veblen, for
example, considered human life as a struggle for existence, and hence the process of selection and
adaptation. Similar, according to institutionalists, in the process of development of society is the
process of natural selection of institutions, the system of which forms a kind of culture and
determines the type of civilization. Institutions themselves are special forms of life (including
economic), human connections and relationships that are sustainable, form in society spiritual
qualities and properties. In turn, institutions are also important selection factors. The most
progressive ideas of the supporters of modern institutionalism are the need for workers to
participate in the ownership and management of production, to provide them with social
guarantees, and the government - the humanitarian intelligentsia. Also noteworthy are their views
on the ecological and economic survival of mankind.
 Neoclassical synthesis
• The neoclassical synthesis, or the neoclassical–Keynesian synthesis[, was a post-
World War II academic movement in economics that worked towards absorbing the
macroeconomic thought of John Maynard Keynes into neoclassical economics. The
resultant macroeconomic theories and models are termed neo-Keynesian economics.
Mainstream economics was largely dominated by the synthesis until the 1970s,
being largely Keynesian in macroeconomics and neoclassical in microeconomics.
• Much of neo-Keynesian economic theory was developed by John Hicks and Maurice
Allais, and popularized by the mathematical economist Paul Samuelson The process
began soon after the publication of Keynes' General Theory with the IS/LM model
(investment saving–liquidity preference money supply) first presented by John Hicks
in a 1937 article. It continued with adaptations of the supply and demand model of
markets to Keynesian theory. It represents incentives and costs as playing a
pervasive role in shaping decision making An immediate example of this is the
consumer theory of individual demand, which isolates how prices (as costs) and
income affect quantity demanded.
• Samuelson appears to have coined the term "neoclassical synthesis", and helped
disseminate the resultant work, partly through his technical and academic writing,
and also via his influential textbook, Economics.