One of the most commonly spoken words in today's society, especially in the United States, is "the economy." Therefore, most people associate the economy strictly with money, and to a certain extent, this is correct. Along with this interest in money and the economy, however, is the demonization of certain economic thinkers in the past two hundred years. Most notable among these disgraced names is John Maynard Keynes and Karl Marx. These accusations have become increasingly wild and false, though, especially over the past few decades. The question that is never answered, despite the attention that has been brought to the light, is this: Are these theories really as bad as we make them out to be?
Let us start with Mr. Keynes. He was college educated, but, in fact, hated economics while he was receiving his education. It is rather surprising, therefore, that he became the foremost adversary to the Austrian school of economics. The Austrians stated that the ideal shape of the economy is with no government intervention, with regulations and taxes present only when necessary. This all changed with John Maynard Keynes. In his theory, he states that government intervention is not a bad thing. Occasionally, there is a slump, or decrease, in spending by the general population. In order to minimize the amount of time the economy is shrinking, the government should be allowed to spend in order to stimulate the spending confidence of the people. The other side of this coin is that as soon as the economy has achieved sustainable growth, the government should make it a priority to erase the debt accumulated while helping the country.
This theory was used (some say incorrectly) by Franklin Delano Roosevelt during his terms as President. However, the proper way of executing this method was lost after Roosevelt's death, which culminated in Milton Friedman writing "In one sense, we are all Keynesians now; in another sense, we are not at all." The message of John Maynard Keynes is simple: the government occasionally should step in and assist the people, but only so that the country does not go into a regressional phase. This spending spree that our government has embarked on is not the fault of Keynes, but the fault of the people's apathy. It is the job of the people who reside in that country to ensure their government is not abusing their power. Unfortunately, our government is abusing it, and as a result, we are moving closer and closer to socialism and communism. Communism as written by Karl Marx, though, is not bad.
Karl Marx was a German philosopher in the 1800s. He is most well known for writing The Communist Manifesto, and this is where most people take issue with Karl Marx. However, the most important thing to realize about Karl Marx is that his view of communism is so different from how we view it today that it is worth looking at again. Communism is an ideal society, where everyone has equal rights and opportunities. All property is owned by everyone, people use what they need, and there is enough for everyone. There would be no need for police, because people would be polite and caring toward one another. Money would slowly disappear, because no one would need it. There would be no need for government, because the people would take care of each other and themselves.
This is a fantastic idea, but unrealistic in this world. This society requires a completely moral people, and this is simply not found in today’s society. The incarnations of communism that we have seen, as portrayed by Lenin, Stalin, and Mao, are all their view of what communism should be, and this should not reflect back on Karl Marx. None of them practiced true communism. People inherently want what will make them better off, but not everyone is capable of seeing the big picture. For example, if I were alive in the Civil War period, it wouldn't matter to me if my army was winning the war. If the soldiers from my side were right in front of me, and my country's flag fell, I would rush over there, because that is where the stress was located. This is how most people treat the economy and government; if they can't see it, it doesn't affect them. In order to live in a communist society, this mindset must be changed.
As I studied these two great men and their theories, I came across three other men who forever changed my perspective of the field of economics: Ludwig von Mises, Stephen Dubner, and Steven Levitt. Mises wrote the book Human Action, which describes how economics is really about understanding how people act. Steven Levitt and Stephen Dubner cowrote the popular books “Freakonomics” and “SuperFreakonomics”, which take economic principles and look at how they can be used to answer questions.
In “Human Action”, Mises starts out by describing how every basic principle in economics can be defined by one person acting, or making a decision. There are three things required to take action: power, plan, and vision. A person needs to have the ability to take action, hence power. They need to know how they will do it. So comes the power. They also need to see where they are going, thus vision is required.
This topic is explored further in “Freakonomics” and “Superfreakonomics”. Dubner & Levitt use many different scenarios, ranging from cheating sumo wrestlers to global warming. These two men take economic principles and apply them to those scenarios in order to establish why those actors would do it. Perhaps if people looked at economics this way, they would be more willing to try to understand it.
The important thing to realize is that economics isn’t even about money most of the time. John Maynard Keynes and Karl Marx simply looked at the best way that they could see to solve a problem. It's not just the money. Economics is really so much more than that. It’s all about a journey.