Business Ethics

Economics & Ethics

Ryan P. Quinn

Business Society & Ethics

Professor Peter J. Classetti

March 24, 2014

Keynesian economics, also referred to as “mainstream” economics differs drastically from its counterpart, the Austrian school of economic thought. In a very basic sense, the two varying economic philosophies connect with and represent the two main political philosophies, (or what are known in the political realm as parties). Keynesianism is the liberal way of perceiving and practicing economics, whereas Austrian economists are much more conservative in their views on policies and procedures. Not unlike the liberals and conservatives in the world of politics, the main bone to pick with one another among the liberals and conservatives in the world of economics is the topic of government intervention. Conservative Austrian economists believe in an entirely free market, with very little to no government intervention whatsoever, (even in times of severe economic downturn and in the midst of financial crises), whereas more liberal Keynesian economists believe that government intervention is key to maintaining a healthy, growing economy with little to no possibility of collapse. These two vastly different economic philosophies not only have monetary implications, but also very significant social as well as ethical ones.

Keynesian economics was developed by the British economist John Maynard Keynes who was born in 1883 and died in 1946 (Keynesian Economics, 2). His economic theory, which would later bear his name, gained widespread recognition during the Great Depression of the early 1930s. The main components of his economic theories have to do with the role of the Federal Government in the mitigation of economic recessions. Keynes advocated capitalism as a healthy economic system, but also noted that in such a society there are going to be inevitable “boom and bust” cycles, or times of financial prosperity followed by times of hardships. This...