It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
– Adam Smith
There are 9 major different schools of Economics

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Classical Economics (liberal economics): asserts that markets function best with minimal government intervention. It was developed in the late 18th and early 19th century by Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, and John Stuart Mill.

Classical economists observe that markets generally regulate themselves, when free of coercion. Adam Smith referred to this as a metaphorical “invisible hand,” which refers to the notion that private incentives– the profit motive are aligned with society welfare maximization as each individual works towards self interest. Additionally, Smith stressed the importance of competition and was against monopolies.

It is based on private ownership and a laissez-faire approach.


The theory of Communism may be summed up in one sentence: Abolish all private property.
-Karl Marx
Marxist Economics: Marxists believe that the transition from capitalism to socialism is an inevitable part of the development of human society. Karl Marx and Friedrich Engels believed that there would be a class struggle which would cause society’s inevitable development from bourgeois oppression under capitalism to a socialist and ultimately classless society- Communism (socialism) would be born.
In the long run we are all dead.
-John Maynard Keynes

Keynesian Economics: John Maynard Keynes during the Great Depression developed the various theories about how in the short run, and especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy). Rather than self interest he said people are influenced by animal spirits.

Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle.

Keynesian economics advocates a mixed economy.