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Critical thinking in a Nutshell., Economic Schools of Thought. Part 1/2.

Economic Schools of Thought. Part 1/2.

● Introduction (00:00)

Adriene: Welcome to Crash Course: Economics, I'm Adriene Hill.

Jacob: And I'm Jacob Clifford.

Adriene: Now, believe it or not, we actually read many of your comments on YouTube.

Jacob: First!

Adriene: Some are productive and others, not so much.

Jacob: This guy looks like Mark Cuban, but not as attractive...or rich.

Adriene: We've noticed some people are disappointed we haven't covered the different economic ideologies.

Jacob: You're ignoring the Austrian School.

What's this Keynesian trash? Adriene: Well, guess what?

Today, we're going to talk about other schools of economic thought. [Intro Plays]

● History of Economic Theories (0:32)

Jacob: To understand these economic theories, we're gonna have to jump into a little bit of history.

In 1798, a British economist named Thomas Malthus argued that population growth would outpace food production, so eventually humans would run out of food and starve. You wonder why some people call economics the dismal science. Well, Malthus was wrong. Dismally wrong. The world population has grown from one billion in his time to over seven billion today.

And it turns out that the famines we have seen are largely man-made disasters that have very little to do with our ability to produce food. But Malthus was writing at the beginning of the Industrial Revolution. He didn't factor in advancements in technology, agriculture production or transportation. So with the information he had, he was kinda right, but he was still wrong. Economic theories are constantly being proven, disproven and revised.

The problem is, when these theories are wrong, millions of people can be adversely affected. Take Malthus. Some scholars combined his ideas with those of Charles Darwin and concluded that giving assistance to poor people and social programs like welfare are actually immoral. This is called Social Darwinism and it's completely wrong. Now, economics is not an exact science.

It aims to draw conclusions about human behavior without the benefits of labs or perfect control groups. Economic theories reflect different attitudes about human nature and those are likely to change over time. Let's go to the Thought Bubble. ● Thought Bubble (1:44)

Adriene: The founder of modern economics was a Scottish philosopher named Adam Smith.

In 1776, his book The Wealth of Nations, was published. It was an organized discussion about production, markets and economic theory, and it was tremendously influential. Smith introduced the idea that a person following their own self-interest could end up serving the common good. He also advocated free trade. Many countries at the time had heavy tariffs which protected their domestic manufacturers at the expense of trade. A generation later, British economist David Ricardo expanded on Smith's ideas by introducing the theory of comparative advantage: the idea that two people or countries can both benefit from trade, even if one of them can produce more of everything.

When both focus on what they're best at and then trade, everyone benefits. Anyway, the field of economics grew, advancing ideas like private property and free markets.

And then along comes The Communist Manifesto in 1848. Rather than examining individual behavior, German philosophers Karl Marx and Friedrich Engels looked at economic classes and argued that history was explained by the conflict between workers and property owners. This process would inevitably lead workers to overthrow their bosses, ushering in a new stateless and classless system, called communism. Marx followed this up with Das Kapital.

Political movements spawned by Marxist economics challenged Adam Smith's view that individual self-interest serves the common good. The end result was two main camps: free market capitalism, supporting private property, and communism, advocating collective ownership of the means of production. Thanks, Thought Bubble. ● Classical Economics (3:25)

Despite Marx's challenge, market-based economic theory continued to dominate through the end of the 19th century, with contributions from French, British, and American economics.

This body of thought is called Classical Economics, and it was embodied in a book called Principles of Economics, published in 1890 by English Economist Alfred Marshall. Marshall organized and defined concepts we still use today, like supply and demand and marginal utility, which we're gonna get to soon. But as capitalism was expanding around the world, Marxist movements were too.

By the early 20th century, this battle for hearts and minds, along with political and social unrest in Europe, led to the establishment of the Soviet Union in 1922. Jacob: As Communism was maturing in the Soviet Union, the Great Depression crushed the market economies of the world's richest countries, it also dealt a devastating blow to Classical Economics.

The theories of Smith and Marshall didn't have much to say about how something like this could happen, or how to fix it. The British economist John Maynard Keynes proposed new answers in his 1936 book A General Theory of Money, Interest, and Employment, which basically launched the field of macroeconomics. ● Keynesian Economics (4:32)

Along with John Hicks, James argued that market economies don't self-correct quickly because prices and wages take time to adjust.

They claimed that during recessions, it is necessary for the government to get involved by using monetary and fiscal policy to increase output and decrease unemployment. Keynes wasn't supporting Communism, but his views directly challenged classical economists who saw government intervention as universally harmful for the economy. Now eventually Keynesian Economics became part of mainstream economic theory. See? I told you, economic theory changes over time, and all it took in this case was a catastrophic global depression. Keynes's ideas, combined with the ever-present Marxist critique, opened the door to more and more government involvement.

Since the Great Depression, many nations have pursued a political and economic ideology called Socialism, although Socialist ideas and policies have been around since the 19th century. In most cases, these economies allow for private properties and markets, but also have government ownership of industry, significant regulation, and big public programs like universal healthcare. In Scandinavian countries like Norway and Sweden, they love these socialist policies. Now the US has rejected many of these socialist ideas, but the US government, or at least economists that advise politicians, are clearly in favor of Keynesian economic policies when the economy's in trouble.


Economic Schools of Thought. Part 1/2. Wirtschaftliche Denkschulen. Teil 1/2. Οικονομικές σχολές σκέψης. Μέρος 1/2. Escuelas de pensamiento económico. Parte 1/2. Écoles de pensée économique. Partie 1/2. Scuole di pensiero economico. Parte 1/2. 経済思想の学派パート1/2. Ekonomiczne szkoły myślenia. Część 1/2. Escolas de pensamento económico. Parte 1/2. Экономические школы мысли. Часть 1/2. Ekonomik Düşünce Okulları. Bölüm 1/2. Економічні школи. Частина 1/2. 经济思想流派。第 1/2 部分。 經濟思想流派。第 1/2 部分。

● Introduction (00:00) ● 簡介 (00:00)

Adriene: Welcome to Crash Course: Economics, I’m Adriene Hill. Adriene: Bienvenido a Crash Course: Economía, soy Adriene Hill. Adriene: Chào mừng đến với Crash Course: Kinh tế, tôi là Adriene Hill.

Jacob: And I’m Jacob Clifford. Jacob: Và tôi là Jacob Clifford.

Adriene: Now, believe it or not, we actually read many of your comments on YouTube. Adriene: Ahora, lo creas o no, en realidad leer muchos de sus comentarios en YouTube. Adriene: Bây giờ, tin hay không thì tùy, chúng tôi thực sự đã đọc nhiều nhận xét của bạn trên YouTube.

Jacob: First! Jacob: ¡Primero!

Adriene: Some are productive and others, not so much. Adriene: Algunos son productivos y otros, no tanto.

Jacob: This guy looks like Mark Cuban, but not as attractive...or rich. Jacob: Este tipo se parece a Mark Cuban, pero no tan atractivo... o rico.

Adriene: We’ve noticed some people are disappointed we haven’t covered the different economic ideologies. Adriene: Hemos notado que algunas personas están decepcionadas de que no hayamos cubierto las diferentes ideologías económicas.

Jacob: You’re ignoring the Austrian School. Jacob: Estás ignorando la Escuela Austriaca. ジェイコブあなたはオーストリア学派を無視している。

What’s this Keynesian trash? ¿Qué es esta basura keynesiana? このケインジアンのゴミは何だ？ Thùng rác Keynes này là gì? Adriene: Well, guess what? Adriene: Bueno, ¿adivinen qué? アドリアン：何だと思う？

Today, we’re going to talk about other schools of economic thought. Hoy vamos a hablar de otras escuelas de pensamiento económico. 今日は、経済思想の他の学派について話そう。 [Intro Plays] [Intro Plays]

● History of Economic Theories (0:32) ● Historia de las teorías económicas (0:32) 経済理論の歴史 (0:32)

Jacob: To understand these economic theories, we’re gonna have to jump into a little bit of history. Jacob: Para entender estas teorías económicas, vamos a tener que saltar en un poco de historia.

In 1798, a British economist named Thomas Malthus argued that population growth would outpace food production, so eventually humans would run out of food and starve. En 1798, un economista británico llamado Thomas Malthus argumentó que el crecimiento de la población superaría la producción de alimentos, por lo que finalmente los seres humanos se quedarían sin comida y pasarían hambre. 1798年，一位名叫托馬斯·馬爾薩斯的英國經濟學家認為，人口成長將超過糧食生產，因此人類最終將耗盡食物並挨餓。 You wonder why some people call economics the dismal science. Well, Malthus was wrong. Bueno, Malthus estaba equivocado. Dismally wrong. Totalmente equivocado. The world population has grown from one billion in his time to over seven billion today. La población mundial ha pasado de mil millones en su época a más de siete mil millones en la actualidad.

And it turns out that the famines we have seen are largely man-made disasters that have very little to do with our ability to produce food. Y resulta que las hambrunas que hemos visto son en gran medida catástrofes provocadas por el hombre que tienen muy poco que ver con nuestra capacidad de producir alimentos. But Malthus was writing at the beginning of the Industrial Revolution. Pero Malthus escribía al principio de la Revolución Industrial. He didn’t factor in advancements in technology, agriculture production or transportation. No tuvo en cuenta los avances tecnológicos, la producción agrícola ni el transporte. So with the information he had, he was kinda right, but he was still wrong. Así que con la información que tenía, tenía algo de razón, pero seguía estando equivocado. Economic theories are constantly being proven, disproven and revised. Las teorías económicas se prueban, refutan y revisan constantemente.

The problem is, when these theories are wrong, millions of people can be adversely affected. El problema es que, cuando estas teorías son erróneas, millones de personas pueden verse afectadas negativamente. Take Malthus. Por ejemplo, Malthus. Some scholars combined his ideas with those of Charles Darwin and concluded that giving assistance to poor people and social programs like welfare are actually immoral. Algunos estudiosos combinaron sus ideas con las de Charles Darwin y llegaron a la conclusión de que la ayuda a los pobres y los programas sociales como la asistencia social son en realidad inmorales. This is called Social Darwinism and it’s completely wrong. Now, economics is not an exact science.

It aims to draw conclusions about human behavior without the benefits of labs or perfect control groups. Su objetivo es extraer conclusiones sobre el comportamiento humano sin las ventajas de los laboratorios o los grupos de control perfectos. Economic theories reflect different attitudes about human nature and those are likely to change over time. Las teorías económicas reflejan diferentes actitudes sobre la naturaleza humana y es probable que éstas cambien con el tiempo. Let’s go to the Thought Bubble. Vamos a la Burbuja del Pensamiento. ● Thought Bubble (1:44)

Adriene: The founder of modern economics was a Scottish philosopher named Adam Smith. Adriene: El fundador de la economía moderna fue un filósofo escocés llamado Adam Smith.

In 1776, his book The Wealth of Nations, was published. It was an organized discussion about production, markets and economic theory, and it was tremendously influential. Era un debate organizado sobre la producción, los mercados y la teoría económica, y fue tremendamente influyente. Smith introduced the idea that a person following their own self-interest could end up serving the common good. Smith introdujo la idea de que una persona que sigue su propio interés puede acabar sirviendo al bien común. He also advocated free trade. Many countries at the time had heavy tariffs which protected their domestic manufacturers at the expense of trade. En aquella época, muchos países aplicaban aranceles elevados que protegían a sus fabricantes nacionales a expensas del comercio. A generation later, British economist David Ricardo expanded on Smith’s ideas by introducing the theory of comparative advantage: the idea that two people or countries can both benefit from trade, even if one of them can produce more of everything. Una generación más tarde, el economista británico David Ricardo amplió las ideas de Smith introduciendo la teoría de la ventaja comparativa: la idea de que dos personas o países pueden beneficiarse ambos del comercio, aunque uno de ellos pueda producir más de todo.

When both focus on what they’re best at and then trade, everyone benefits. Cuando ambos se centran en lo que mejor saben hacer y luego comercian, todos salen beneficiados. Anyway, the field of economics grew, advancing ideas like private property and free markets. De todos modos, el campo de la economía creció, impulsando ideas como la propiedad privada y el libre mercado.

And then along comes The Communist Manifesto in 1848. Y entonces llega El Manifiesto Comunista en 1848. Rather than examining individual behavior, German philosophers Karl Marx and Friedrich Engels looked at economic classes and argued that history was explained by the conflict between workers and property owners. En lugar de examinar el comportamiento individual, los filósofos alemanes Karl Marx y Friedrich Engels se fijaron en las clases económicas y argumentaron que la historia se explicaba por el conflicto entre trabajadores y propietarios. This process would inevitably lead workers to overthrow their bosses, ushering in a new stateless and classless system, called communism. Este proceso llevaría inevitablemente a los trabajadores a derrocar a sus patrones, dando paso a un nuevo sistema sin Estado y sin clases, llamado comunismo. Marx followed this up with Das Kapital. Marx continuó con Das Kapital.

Political movements spawned by Marxist economics challenged Adam Smith’s view that individual self-interest serves the common good. Los movimientos políticos surgidos de la economía marxista cuestionaron la idea de Adam Smith de que el interés individual sirve al bien común. The end result was two main camps: free market capitalism, supporting private property, and communism, advocating collective ownership of the means of production. Thanks, Thought Bubble. Gracias, Burbuja de Pensamiento. ● Classical Economics (3:25)

Despite Marx’s challenge, market-based economic theory continued to dominate through the end of the 19th century, with contributions from French, British, and American economics.

This body of thought is called Classical Economics, and it was embodied in a book called Principles of Economics, published in 1890 by English Economist Alfred Marshall. Este cuerpo de pensamiento se denomina Economía Clásica, y se plasmó en un libro titulado Principios de Economía, publicado en 1890 por el economista inglés Alfred Marshall. Marshall organized and defined concepts we still use today, like supply and demand and marginal utility, which we’re gonna get to soon. Marshall organizó y definió conceptos que seguimos utilizando hoy en día, como la oferta y la demanda y la utilidad marginal, a los que llegaremos pronto. But as capitalism was expanding around the world, Marxist movements were too. Pero a medida que el capitalismo se expandía por el mundo, los movimientos marxistas también lo hacían.

By the early 20th century, this battle for hearts and minds, along with political and social unrest in Europe, led to the establishment of the Soviet Union in 1922. Jacob: As Communism was maturing in the Soviet Union, the Great Depression crushed the market economies of the world’s richest countries, it also dealt a devastating blow to Classical Economics. Jacob: Mientras el comunismo maduraba en la Unión Soviética, la Gran Depresión aplastaba las economías de mercado de los países más ricos del mundo, también asestó un golpe devastador a la Economía Clásica.

The theories of Smith and Marshall didn’t have much to say about how something like this could happen, or how to fix it. Las teorías de Smith y Marshall no tenían mucho que decir sobre cómo podía ocurrir algo así o cómo solucionarlo. The British economist John Maynard Keynes proposed new answers in his 1936 book A General Theory of Money, Interest, and Employment, which basically launched the field of macroeconomics. El economista británico John Maynard Keynes propuso nuevas respuestas en su libro de 1936 A General Theory of Money, Interest, and Employment (Teoría general del dinero, el interés y el empleo), que básicamente lanzó el campo de la macroeconomía. ● Keynesian Economics (4:32) ● Economía keynesiana (4:32)

Along with John Hicks, James argued that market economies don’t self-correct quickly because prices and wages take time to adjust. Junto con John Hicks, James argumentó que las economías de mercado no se autocorrigen rápidamente porque los precios y los salarios tardan en ajustarse.

They claimed that during recessions, it is necessary for the government to get involved by using monetary and fiscal policy to increase output and decrease unemployment. Afirmaron que, durante las recesiones, es necesario que el gobierno intervenga utilizando la política monetaria y fiscal para aumentar la producción y reducir el desempleo. Keynes wasn’t supporting Communism, but his views directly challenged classical economists who saw government intervention as universally harmful for the economy. Keynes no apoyaba el comunismo, pero sus opiniones desafiaban directamente a los economistas clásicos que consideraban que la intervención gubernamental era universalmente perjudicial para la economía. Now eventually Keynesian Economics became part of mainstream economic theory. Con el tiempo, la economía keynesiana pasó a formar parte de la teoría económica dominante. See? ¿Lo veis? I told you, economic theory changes over time, and all it took in this case was a catastrophic global depression. Te lo dije, la teoría económica cambia con el tiempo, y todo lo que hizo falta en este caso fue una catastrófica depresión mundial. Keynes’s ideas, combined with the ever-present Marxist critique, opened the door to more and more government involvement. Las ideas de Keynes, combinadas con la siempre presente crítica marxista, abrieron la puerta a una participación cada vez mayor del gobierno.

Since the Great Depression, many nations have pursued a political and economic ideology called Socialism, although Socialist ideas and policies have been around since the 19th century. Desde la Gran Depresión, muchas naciones han seguido una ideología política y económica llamada socialismo, aunque las ideas y políticas socialistas existen desde el siglo XIX. In most cases, these economies allow for private properties and markets, but also have government ownership of industry, significant regulation, and big public programs like universal healthcare. En la mayoría de los casos, estas economías permiten la existencia de propiedades y mercados privados, pero también cuentan con la propiedad gubernamental de la industria, una importante regulación y grandes programas públicos como la sanidad universal. In Scandinavian countries like Norway and Sweden, they love these socialist policies. En países escandinavos como Noruega y Suecia adoran estas políticas socialistas. Now the US has rejected many of these socialist ideas, but the US government, or at least economists that advise politicians, are clearly in favor of Keynesian economic policies when the economy’s in trouble. Ahora bien, Estados Unidos ha rechazado muchas de estas ideas socialistas, pero el gobierno estadounidense, o al menos los economistas que asesoran a los políticos, están claramente a favor de las políticas económicas keynesianas cuando la economía tiene problemas.