After World War II

After the chaos of two World Wars and

the devastating Great Depression,
policymakers searched for new ways of
controlling the course of the economy.
This was explored and discussed by
Friedrich August von Hayek (1899
1992) and Milton Friedman (1912
2006)

. They pleaded for a global free trade.

They are supposed to be the fathers of
the so called neoliberalism. However,
the prevailing view was that held by
John Maynard Keynes (18831946),
who argued for a stronger control of
the markets by the state.

. The theory that the state can alleviate

economic problems and instigate
economic growth through state
manipulation of aggregate demand is
called Keynesianism in his honor. In the
late 1950s the economic growth in
America and Europe emerged.

It is often called Wirtschaftswunder

(ger: economic miracle) brought up a
new form of economy. That was mass
consumption economy. In 1958 John
Kenneth Galbraith (19082006) was
the first to speak of an affluent society.
In most of the countries the economic
system is called a social market
economy.

VOCABULARY

Policy makers: in charge of making the politics of a party.

Plead: to ask something in an urgent way.
Prevailing: existing in a particular time or in a particular place.
Neoliberalism:is a market-driven[ approach to economic and social policy
based on neoclassical theories of economics that stresses the efficiency of
private enterprise, liberalized trade and relatively open markets, and
therefore seeks to maximize the role of the private business sector in
determining the political and economic priorities of the state.
Offshoot: a company, group or organization that has developed from a
larger one, a new grain or steam that grows on a plant.

FRIEDRICH AUGUST VON

HAYEK

He was an Austrian-born economist

and philosopher best known for his
defense of classical liberalism and
free-market capitalism against
socialist and collectivist thought. He
is considered to be one of the most
important economists and political
philosophers of the twentieth
century. Hayek's account of how
changing prices communicate
signals which enable individuals to
coordinate their plans is widely
regarded as an important
achievement in economics. Hayek
also produced significant work in
the fields of systems thinking,
jurisprudence, neuroscience and
the history of ideas.

MILTON FRIEDMAN

He was an American
economist, statistician, a
professor at the University
of Chicago, and the
recipient of the Nobel Prize
in Economics. Among
scholars, he is best known
for his theoretical and
empirical research,
especially consumption
analysis, monetary history
and theory, and for his
demonstration of the
complexity of stabilization
policy.

JOHN MAYNARD KEYNES

He was a British economist

whose ideas have profoundly
affected the theory and practice
of modern macroeconomics, as
well as the economic policies of
governments. He greatly
refined earlier work on the
causes of business cycles, and
advocated the use of fiscal and
monetary measures to mitigate
the adverse effects of economic
recessions and depressions. His
ideas are the basis for the
school of thought known as
Keynesian economics, as well
as its various offshoots.

QUESTIONS

1.- WHAT IS THE DEFINITION OF

NEOLIBERALISM?
2.- Who was:
A) von Hayek
B) Milton Friedman
C) John Maynard Keynes?
3.- What happened after the world war
II?