Economists who changed the world

In 'The Great Economists: How Their Ideas Can Help Us Today', Linda Yueh delves into the key thoughts of influential economists from Adam Smith to Robert Solow, examining how their ideas continue to shape economic policy and address contemporary issues such as globalization and economic growth. The book provides insights into how these economists' theories can help solve modern economic problems.

Published in 1776, 'The Wealth of Nations' is Adam Smith's magnum opus that laid the groundwork for modern economics. The book critiques mercantilist economic theories and introduces the concept of the 'invisible hand,' which describes how individual self-interest leads to societal benefit. It emphasizes the division of labor, the accumulation of capital, and the importance of free markets. Smith argues that a nation's wealth is not measured by its gold and silver reserves but by the stream of goods and services it produces. The book also outlines the core functions of government, such as maintaining defense, enforcing civil law, and promoting education, while advocating for limited government intervention in market activities.

Published in February 1936, 'The General Theory of Employment, Interest and Money' by John Maynard Keynes revolutionized economic thought by challenging the classical economic theories of his time. Keynes argued that total spending in an economy can fail to generate full employment if total savings exceed total investment. He introduced key concepts such as the 'Principle of Effective Demand,' liquidity preference, and the marginal efficiency of capital. The book emphasizes the importance of aggregate demand, the role of government in stabilizing the economy, and the interaction between monetary and real economic factors. Keynes's theories have had a profound impact on economic policy and continue to influence macroeconomic thought and policy to this day.