The paper "Neoclassical and Keynesian Economics" is a great example of macro & microeconomics coursework. With the ever-emerging process of economic integration that is evident around the globe as well as the drift of globalization, international trade is seen to play an important role when it comes to aspects that are related to economic as well as economic growth. There seem to be two main ideas when it comes to economics, one of them is the Keynesian view and it places a lot of value on the belief that the government regulation is essential in all the trading activities and the other is the neo-classical view which tends to favor aspects that are related to the protection and trade liberalization (Althaus, Bridgman & Davis, 2013).
In this article, I will set out to discuss the differences that exist between the Keynesian/ welfare state approach and the neoclassical/new right policies for the economy. In doing so, I will illustrate the differences based on at least one policy area for example health, welfare and education. The last section will be a discussion of the strengths and weaknesses of the approaches in relation to the policy area that has been selected. Differences between the neoclassical and Keynesian view of economics Keynes's theory commonly referred to others as a revolution that had occurred to economics.
Irrespective of this, his theory received a lot of criticism and this eventually led to the emergence of neoclassical synthesis which was termed as a group of theories that reunited previous economists and Keynes view and thus there was a formulation of a creative prospect to economics (Arnold, 2002). A neoclassical economy is termed as an approach that is used by economists and it mainly relates to the demand and supply to individual prudence and their capability to maximize profit or utility.
While neoclassical economists argue that organizations rent or buy the factors of production and they tend to use it at the utmost probable level of efficiency so as to attract the required level of profits (Beresford, 2000). The firms do not have any form of control over the price that is charged for their manufactured goods. These economists also argue that customers can be able to maximize the utility of a product in instances when the ratio of the marginal utility of buying pricing is similar for all the services and goods that are being consumed.
Althaus, C., Bridgman, P., & Davis, G. (2013). The Australian policy handbook (5th edn.). Sydney: Allen & Unwin.
Arnold L, G. (2002). Business Cycle Theory. New York: Oxford University Press.
Beresford, Q. (2000). Governments, markets and globalization: Australian public policy in context. Sydney: Allen & Unwin.
Blanchard, O, (2009). Macroeconomics. New Jersey: Pearson Education Inc.
Colebatch, H.K. (Ed) (2006). Beyond the policy cycle: The policy process in Australia. Sydney: Allen & Unwin.
Fenna, A. (1998). Introduction to Australian public policy. Melbourne: Addison Wesley.
Hutton, W., & Giddens, A. (Eds) (2000). On the edge: Living with global capitalism. London: Jonathan Cape Random House.
Keynes, J. (2008). The General Theory of Employment, Interest and Money. New Delhi: Atlantic Publishers and Distributors Ltd.
King, J. (2002). A History of Post Keynesian Economics since 1936. Cheltenham, UK: Edward Elgar Publishing Limited.
Krugman, P. (2009). How Did Economists Get It So Wrong? New York Times, Sept. 2, 2009.
Maddison, S., & Denniss, R. (2009). An introduction to Australian public policy: Theory and practice. Cambridge University Press.
McClelland, A., & Smyth, P. (Eds) (2009). Social policy in Australia: Understanding for action. South Melbourne, Victoria: Oxford University Press.
Minsky, H. (2008). John Maynard Keynes.USA: McGraw-Hill.
Rabin, J. & Stevens G. (2002). Handbook of Fiscal Policy. New York: Marcel Dekker Inc.
Romer, D. (2000). Keynesian Macroeconomics without the LM Curve [PDF], Journal of Economic Perspectives, Spring 2000.
Snowdon, B. & Vane, H. (2005). Modern Macroeconomics: Its origins, Development and Current State. UK: Edward Elgar Publishing Limited.
Snowdon, B. & Vane, H, 1997. A Macroeconomics Reader. New York: Routledge.
Stewart, R.G. (1999). Public policy: Strategy & accountability. Melbourne: Macmillan.