Эссе на тему Keynesianism vs Monetarism

Keynesianism vs Monetarism: Two Ways of Listening to the Economy

In the middle of a recession, the economy stops sounding like a confident orchestra and starts resembling a rehearsal where half the musicians are missing and the rest keep losing the beat. People want work, firms want customers, and suddenly everything that usually “just happens” through markets begins to stall. Here, Keynesianism walks onto the stage with a very practical question: if private demand is tired, who will push the swing? Monetarism answers from the back row, calm and severe: the swing is fine—stop yanking the chains; stabilize money, and the rhythm returns. Same stage. Different ears.

These two traditions—Keynesianism and Monetarism—are often described as enemies, but it is more accurate to treat them as rival diagnosticians examining the same patient under different lamps. One taps the knee and watches for a reflex in spending. The other checks the pulse of money and expects the body to regulate itself if circulation is stable. And both can be brilliant; both can be wrong in ways that are expensive.

1. What Keynes Actually Argued (and Why It Felt Like Heresy)

Keynesianism begins with a stubborn observation: an economy can get stuck. Not “slightly inefficient.” Not “temporarily mispriced.” Stuck—like a bicycle chain jammed in winter salt. John Maynard Keynes wrote The General Theory of Employment, Interest and Money in 1936, with the Great Depression still glaring through the windows, and his central provocation was that the level of employment depends on effective demand, not on the idea that wages and prices will always slide neatly into a full-employment equilibrium (Keynes, 1936). If households and firms decide—rationally, fearfully, or just reflexively—to save rather than spend, total demand can fall short of what would keep everyone employed. In that situation, waiting for “the market” to fix itself can look like waiting for spring while refusing to light a stove.

Short sentence: Keynes did not trust the automatic cure.

Longer one: he thought that when expectations collapse, investment becomes not a tidy calculation but a mood-driven leap, and if the collective mood turns sour, the economy can spiral into underemployment in a way that is self-reinforcing, because lost income further reduces spending, which further reduces income, and so on—an unpleasant echo chamber.

This is where fiscal policy enters, not as decoration but as a mechanism. Government can spend when others won’t. It can borrow to do so. It can become, in Keynes’s language, a “spender of last resort,” pushing demand back toward a level compatible with higher employment. The famous “multiplier” story—one person’s spending becomes another person’s income—was not meant as a fairy tale; it was meant as plumbing. Open the valve. Let water flow.

2. Monetarism: The Economy as a Machine That Hates Surprises

Monetarism, especially in the hands of Milton Friedman, is less enchanted by spending programs and more suspicious of policymakers’ ability to time anything correctly. Where Keynesians see a stalled engine that needs a jump, monetarists see a driver who keeps stomping the pedals at random and then acts surprised when the car lurches.

Friedman’s most influential claim was that inflation is “always and everywhere a monetary phenomenon,” meaning persistent inflation requires persistent money growth that outpaces real output (Friedman, 1968). He argued that central banks cause much of the trouble by letting money growth swing wildly—too loose in booms, too tight in busts. In this view, the most responsible policy is not activism but rules: steady, predictable monetary growth; minimal discretionary tinkering; fewer dramatic “rescues” that arrive late and miss the target.

And yes, monetarists have their own trauma archive. Friedman and Anna Schwartz’s monumental A Monetary History of the United States, 1867–1960 treats the Great Depression not as proof that capitalism naturally collapses without fiscal stimulus, but as evidence that the Federal Reserve allowed the money supply to contract disastrously, turning a recession into catastrophe (Friedman & Schwartz, 1963). Their diagnosis: the doctor bled the patient.

Monetarism is also closely tied to the “natural rate” idea: unemployment has a long-run level determined by real factors—labor market frictions, demographics, institutions—and trying to push unemployment permanently below that level through demand expansion will mostly generate inflation. Friedman framed this as a critique of the Phillips curve optimism of the 1960s (Friedman, 1968). The economy, he implied, does not like being forced to smile for the camera.

3. The Real Battlefield: Short Run vs Long Run (and the Question of Expectations)

At their hottest point, the disagreement becomes almost philosophical. Keynesianism is comfortable saying: “In the short run, demand governs output and employment; we must act.