When modern neoclassical economics failed to identify causes of the Great Depression, John Maynard Keynes stepped up with his publication, The General Theory of Employment, Interest and Money, laying clear foundations for what modern economists refer to as the study of “macroeconomics.” Keynes supported a number of at the time exotic beliefs about what defined economics and how to properly analyze the Great Depression (the driving force behind Keynesian popularity) - much of Keynesian thought has been eliminated in the modern body of economic works, but, Keynesian philosophy still drives much of both neoclassical economics and political behavior internationally.

The famous Milton Friedman in his Monetary History of the United States 1867-1960 rose a further rejection of standard neoclassical economics, with regard to monetary policy and founded the creation of a new school - the Monetarist school, concerned mostly with the theories of money, supply, national income, and central banking. Monetarists advocate a central bank with policies which aim to keep supply and demand of money at equilibrium - that is, focus on price stability rather than using floating interest rates to inject and withdraw money at more arbitrary cycles. This is defended by the claim that inflation is directly correlated to the money supply, and that a creation of more money without an equal creation of productivity would reduce the (unmet) demand for money, and thus drive down its value.

Finally, the Austrian school, another branch of what is now Neoclassical in nature - advanced hugely by Ludwig von Mises in the early 20th century, and now mostly by public funding from the Mises Institute. The Austrian school is widely respected in the field of freedom-chasing politicians such as the Republican Ron Paul, and Libertarian candidates worldwide. Ludwig von Mises contributed the near-canonical text “Nation, State and Economy,” revolutionized the role of the nation in monetary - rather than fiscal - policy, re-explaining the roles of money, credit, recessions, depressions, and business cycles and how they fall in to the more neoclassical outlook of economics. Rejection of, what we currently see as a commonplace central banking system’s behavior, is Mises’ (and even the Austrian school itself) greatest contribution to the political community - a revisionary view mostly politically pioneered by Ron Paul, and a number of libertarian candidates worldwide.

Von Mises also widely criticized central planning and a lack of ownership - supporting, without a question, the need for private ownership of everything in a society. His work, Socialism (1920), addressed this topic suggesting that since a market without private ownership would be unable to accurately price things, the functionalities of price (that is primarily, rationing and signaling) are incalculable and impossible to reproduce. This accurately predicted the huge queuing and inability to provide seen by future-coming Marxian and socialist movements.

1. Pre-Classical Economics (before 1776)
2. The Classical Era (1776 - 1870)
3. Karl Marx and Rejections of Classical Economics (1870s)
4. Neoclassical Economics and Beyond (1871 - today)
5. View all pages.

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