xxxxxxxxxxxxClassical-Keynesian Political economy and neoclassical economiesIntroduction In contemporary economies, there have been numerous challenges. Quite recently, there was the global economic slump whose effects were spread all over the globe. Worse still, globalization trends imply the challenges in one national economy are transferred to others or have major ripple effects on other economies. In addition to this, there still remain deeply entrenched disparities in economies, though the situations are specific to national situations. As such, the question of what economic approach to take is vital (Bortis, 1997). The question of going the liberal path or otherwise the humanist approach is important due to the pursuant repercussions on economic performance and citizen service delivery.
In basic terms, neoclassical theory emphasizes upon humanist approaches whereas Keynesian approach is emphatic on political liberalism. This paper presents a brief comparison of the neoclassical equilibrium economic approaches with those informed by Keynesian political economy. In the comparison, the nature and significance of both policy approaches will be demonstrated relative to planning and implementation of health care services. Fundamental differences and relative implications will be delineated. It will shed light into the questions revolving economic theory such as role of money, distribution of value, employment and market relations, both macro and international environments.
Differences between neoclassical economic and classical-Keynesian political economic approaches In political economy and economic science, their relationship is much informed by economic theories which influence any approaches taken in the approach thereof. Since the 1950s there has been a paradigmatic competition between the Keynesian paradigm and its rival the neoclassical theory (Reati, 2009). This has been manifested in literature as well as practice more so in political spheres.
Whereas classical and Keynesian economists view political economy and economic science as showing no differences with regard theory and principles as well as in political economy, neoclassical theorists perceive a great incongruence between them especially with regard to issues of equilibrium (Bortis, 2010). Neoclassical theories have a humanistic focus detailing on equilibrium and disequilibrium in societies. Whereas these theories had a main stay in static equilibrium, their authors also gave a focus on disequilibrium cases specifically as they extended their analysis to dynamics (Cingolani, 2009). With regard to equilibrium, the models entrench the need to maintain static equilibrium for all in economies.
As such, there should a non-declining quality of life and human welfare. Thus, economies and governments should develop programs and interventions ensuring sustainable growth that is founded on technical progress and substitution of intervention possibilities (Rao, 1999). The policies should also optimize environmental externalities as well as ensure there is an aggregate amount of natural and economic capital stocks. This is done with reference to market factors. Rao further indicates that the policy gives an approach which is to ensure there is predominance of individual role and decision in income generation, consumption and environmental implications (1999).
In a nutshell, definition of neoclassical economics should incorporate two key principles: market equilibrium and constrained maximization (Champlin & Knoedler, 2004). In analysis, neoclassical economic principles are universal, without the consideration of time, place and activity. As such, these principles proceed on economic science in which the policies directed by the science influencing a definite course in economies which further negatively define the related non-economic parts such as social and public service (Arestis & Sawyer, 2004).
As a basis, the economic is viewed as being synonymous with market relations. Thus, policies are formulated in line with complex equilibrium models which range from supply-demand relationship in a unit market to general equilibrium which considers all markets.