Marriner S Eccles Contribution to the Keynesian Revolution - Assignment Example

What was Marriner S Eccles’ contribution to the Keynesian Revolution? Explain carefully It is but an irrefutable fact that the contribution of Marriner S. Eccles towards Keynesian Revolution has been immense. During the latter part of the great depression, Marriner S. Eccles was the president of First National Bank, which was based at Utah. Owing to the adverse economic downturn, his bank went to the verge of collapse and it was solely the approach of Eccles that saved the financial institution from disaster. In fact, it is this very approach that Keynes advocated, few years later. (1) It is of great interest to note that, despite the fact that Eccles never had any formal education in economics, he still was knowledgeable enough to voice the very views that were conveyed by Keynes, at a later point of time. While working towards resurrecting his bank, Eccles realized that over-emphasis on savings has been among chief causative factors of the depression. Also, he got convinced that governmental intervention is indispensable to save the economy from crisis. (1) It was in the year 1933 that Eccles became totally successful in convincing the government that, it is only by its (government) involvement in the form of allocating funds to public works, employment and mortgage refinancing, etc, that well-being of economy can be taken care of. He was instrumental in making sure that several reforms in the banking and financial sector got launched, such as The Banking Act of 1935. This particular Act empowers the government in directly getting involved in the numerous aspects of economy. And, it is this very aspect of governmental initiative that is the cornerstone of Keynesian revolution. (1) Given the current macroeconomic problems in the US and other countries (high unemployment, low economic growth, high budget deficits), what kind of advice do you think would be offered by Marx, by Schumpeter, and by Marriner Eccles to US policy makers? Karl Marx: Karl Marx would be having no hesitation whatsoever in arguing that all the current macroeconomic problems have resulted primarily from capitalism. He would go on to advise that if all these issues are to be resolved, it is imperative that a socialistic or communistic approach is meticulously adhered to. Based on the Marxist approach, the governments can be strongly advised to discourage privatization as well as excess dependence on machines. In the current scenario, Marx would have surely urged the economy not to get deceived by the apparently rosy picture painted by capitalism. It is ruthless exploitation (of labor) and not free labor that is focused upon by capitalism. (2) Schumpeter: Given the current macroeconomic issues, Schumpeter would lose no time in advising the governments in adopting an economic system based on capitalism. For, he argues that it is only this system that enables speedy economic growth. As a matter of fact, he would also ask all entrepreneurs to run the extra mile in coming out with things that can be classed as innovations. These innovations, which are in the form of product launches, exploring new markets and coming out with latest raw material, among others, go on to resolve economic hassles and abet economic prosperity. Schumpeter would also emphasize on the significance of preventing capital accumulation, in furthering development (economic). (3) Marriner Eccles: If mariner Eccles has to guide the economy for resolving the contemporary issues, it is but obvious that he would urge the government to get more involved in economic matters. The same is evident by the contents discussed in the previous page. Also, he would ensure that the government does not focus on savings excessively. Last but in no way the least, Eccles himself would initiate reforms needed for resolving present-day issues, as he has done in the late 1930s. What was the Austrian Critique of Socialism? Explain who made the critique and the two major parts of the critique. The Austrian Critique of Socialism has been made by the renowned economist of Austria, Ludwig Van Mises, who forcefully conveyed that the centralized planning based on socialism is just not possible in real-life situations! As a matter of fact, he also came out with an in-depth analysis backing his view. This particular analysis was so comprehensive that it has been considered as being a striking achievement of Mises. The present growth that is displayed by the economy of Austria is chiefly because of the aforesaid critique of Van Mises. (4) Mises’ critique of socialism can be divided into two parts, with the first one speaking about the inability of a socialistic state in making appropriate usage of available resources. He forcefully argues that in such a socialistic scenario, representatives of the state are fully unaware of real value of raw materials, goods, etc. Subsequent to that, Mises came out with the second part of the critique, and which states that an economy based on socialism can conveniently be compared to an army. Just as all matters in the army are reliant on orders of the highest authority, likewise; even when socialistic scene is considered, the state is the eventual source of authority. Using these arguments as basis, he maintains that economic growth is impossible to attain, in a rigid socialistic set-up. (5) What are the characteristics of Anglo- Saxon Capitalism? In general, how does Anglo-Saxon Capitalism differ from European and Asian Capitalism? Which is the better example of Anglo-Saxon Capitalism, the US economy or the British economy? Explain The chief characteristic features of Anglo- Saxon Capitalism are inclusive of flexible regulations, absence of high taxes and enhanced power of businesses in terms of recruiting and dismissing workforce, to cite a few. In fact, this particular pattern of capitalism is present in economies like the US, Canada, the UK and Ireland, among others. In economies driven by this form of capitalism, businesses are enabled to give more importance to shareholders, even at the cost of ignoring interests of employees! Many sections of the global economy criticize that, immediate profitability is given more prominence than future planning, by Anglo- Saxon capitalism. (6) The primary difference between the Anglo-Saxon capitalism and the one (capitalism) seen in Europe and Asia is that, the former is totally based on the concept of free market; the aspect of welfare state is secondary. On the other hand, when capitalism in several European zones is taken into consideration, it is observed that it attempts to embrace also some concepts of socialism. To put the matter in a nutshell, European model (of capitalism) endeavors to strike a balance between socialism and capitalism. Likewise, several economies of Asian zone follow that pattern of capitalism which stresses on exports. And, exports are that not significant in the Anglo-Saxon Model. (9) When latest related statistical figures are seen, it so transpires that the United States ends as being a better example of Anglo- Saxon economy, when compared with Great Britain. It won’t be out of place in briefly focusing on the reason for that. The taxes levied in Great Britain are much higher than the ones (taxes) that are seen in USA, and Anglo-Saxon capitalism speaks about low taxes. Similarly, the spending of the UK towards meeting the objectives of a welfare state is greater than the funds that USA allocates, in this direction (welfare state goals). And, a typical Anglo-Saxon economy does not attach much importance to the concept of welfare state. (7) Contrast the theory of Capitalism (theory of markets) with the theory of socialism. Why do you suppose one is more well-developed than the other? (BONUS QUESTION) The Theory of Capitalism conveys that presence of free market is necessary for making sure of consistent economic development. This theory maintains that, when goods and services are exchanged for profit, it is more or less a sure-show way of enhancing standard of living. Here, it is also said that when there is competition in the above free market, various market forces would then make sure that no single entity/group of entities goes on to possess unrestrained economic power. On the other hand, the theory of socialism is totally different from the one (theory) of capitalism. As a direct result of economies adhering to capitalism several issues started to crop up, such as over-emphasis on profits even at the cost of neglecting welfare of people. In this situation, the socialistic pattern of economy propounded by several economists started getting recognized. The basic principle of socialistic theory is the one that speaks of a welfare state where, the chief authority is vested with the state and not with any private entity. (8) When the actual economic scenario is taken into account, it gets noted that capitalism has emerged victorious over socialism. A highly rapid rise in profits of businesses and a huge increase in salaries of top officials of corporates have vividly focused on this victory of capitalism. The dominance of this form of economy (capitalism) also led to severe adverse situations, with not the least among them being an alarming rise in poverty, on a global basis. As a matter of fact, this capitalism-centric economy impacted not just the economic well-being of the masses, but also exercised its affect on the environment. It is said that truth is always bitter, and it is a perturbing truth that even as this is being written, capitalism is still continuing to be the dominant system across the Globe. (8) Sources 1) “Marriner S. Eccles: Keynesian Evangelist Before Keynes”, rooseveltinstitute.org/new-roosevelt/marriner-s-eccles-keynesian-evangelist-keynes, Internet, ROOSEVELT INSTITUTE, ND. 2) “Marxist Economics”, carecon.org.uk/Cpe/MARXIST.htm, Internet, NP, ND. 3) “Schumpeter Theory”, slideshare.net/lbsun07/schumpeter-theory, Internet, SlideShare Inc, 2012. 4) “The Life and Works of Ludwig von Mises”, independent.org/publications/tir/article.asp?a=692, Internet, The Independent Institute, 2012. 5) “LUDWIG VON MISES: THE CRITIQUE OF SOCIALISM & INTERVENTIONISM”, antiwar.com/berkman/mises.html, Internet, Gene Berkman, 1995. 6) “Anglo-Saxon Capitalism”, lexicon.ft.com/Term?term=Anglo_Saxon-capitalism, Internet, THE FINANCIL TIMES LTD, 2012. 7) “Anglo-Saxon Economy Is Most Dangerous Threat for World Peace”, tariganter.wordpress.com/2012/07/22/anglo-saxon-economy-is-most-dangerous-threat-for-world-peace/, Internet, Wordpress.com, July 2012. 8) “Capitalism & Socialism: Two Old Economic Visions”, partnershipway.org/Economics-Politics/building-a-new-economics/partnerism-not-capitalism-or-socialism , Internet, Center for Partnership Studies, ND. 9) “Model Roles”, ciis.org.cn/english/2012-04/18/content_4947478.htm, Internet, China Institute of International Studies, 2006. 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