Monetarism




cwln2042l.jpg
Both economists Milton Friedman and Friedrich Hayek believe that the natural force of supply and demand is the way to go, just like the cartoon portrays, instead of regulations set by an authoritative source.

Post 1970s - 2000s
- The economy is returning to principles of classical liberalism.

Milton Friedman believed that excess supply of money causes increase in inflation, thus if governments were to intervene, the central banks should be controlling money flow by responding to the changes in the economy such as when inflation increases. [1]

Friedrich Hayek was strongly against collectivist thinking, and his theory began to gain recognition as the economic thinking shifted towards classical liberalism again. He believed a great level of government intervention would be needed for it to benefit society, and that although government is taking total control, governments cannot understand demands in society in order to do a good job controlling supply. [1]

These economists were responding to the economy with more liberal ideas. Both economists resonate with Adam Smith, believing free market is the only way to balance supply and demand while reducing the threat to limiting individual liberty. [1][2]


Reference

1. "Evolution of Modern Liberalism." Perspectives on ideology. Edmonton, Alta.: Alberta Education, 2010. 208-210.
2. “Supply and Demand Cartoon 8.” Cartoon Stock. 18 Mar 2012 < http://www.cartoonstock.com/directory/s/supply_and_demand.asp>