INTD 2002 Lecture Notes - Lecture 2: John Maynard Keynes, Invisible Hand, Keynesian Economics
19 Jan 2018
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Lecture'#2
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Document Summary
Their ideas of "free market" and "laissez faire" against the monarchs" control of the economy. Influence of the enlightenment: reason as the basis of freedom, equality, property. Homo economicus: people as isolated individuals motivated only by material self-interests. Self-governing field and should not be regulated by the government. Arguments like: if italy could produce wine more cheaply than england, and if. England could produce cloth more cheaply that italy, then both countries could benefit through free trade without tariffs. Traditionally, if wine were brought into 18th century england it would be subject to tax by the crown. For liberals, government involvement through tax and tariff was seen as an infringement against self-determination, liberty and the right for individuals to prosper. Key idea: "invisible hand" of market: best allocation of resources with least government interference. These ideas inspired 18th century revolutions against monarchies. But liberalism faded away in the 20th century until the 1970s.
