Classical economics versus Keynesian economics

I am trying to make a summary table for teaching macroeconomics. This is simplified, of course, but useful still, I hope:


Classical Economics
Keynesian Economics
Say’s Law
Always holds.
Only holds when leakages do not exceed injections.
Unemployment
High unemployment is a structural problem.
High unemployment can come from insufficient aggregate demand.
Equilibrium
Markets equilibrate quickly.
Markets may equilibrate slowly.
In response to a supply or demand change…
A price change will produce a stable equilibrium.
The other curve may shift, producing a cascade of changes.
In response to a recession…
Let the market work things out.
The government should engage in stimulus spending.
Expectations
Market actors' expectations rapidly converge towards a stable equilibrium.
One group of market actors' expectations may affect another group's and that group's then affect the first one's so as to repeatedly destabilize the economy.



What other rows should I have?

10 comments:

  1. Something about money but I hesitate to say what - money is a veil, stable and doesn't matter, money can be unstable and matters a great deal. Rational expectations vs irrational exuberance?

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    1. Yes, Lord, there is certainly something about expectations I'm missing, and I think you are on the right track as to what it is.

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    2. I added an "expectations" row after thinking about your comment.

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  2. Nix the "In response to a recession…" row. At that point they're no longer acting in the role of economist.

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    1. No, whether what you say is correct or not -- and I am largely on your side -- these fine distinctions don't belong in Macro I, and that row is crucial for making the whole study "relevant."

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    2. At least change the color of the box backgrounds to match the alternating pattern.

      Why can't this distinction be made in economics?

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    3. Done.

      "Why can't this distinction be made in economics?"

      What are you talking about?!

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    4. You said "these fine distinctions don't belong in Macro I". I don't see why that is the case. In fact, I think it would be probably be something important to emphasize given the number of people who walk away from economics with the idea that it's normative or some equally confused line of thought.

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    5. I'm happy if I can get them to remember who Keynes was and that he liked stimulus.

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  3. You should fix the color of the second and third boxes in the sixth row. They aren't following the alternating pattern of light blue and dark blue.

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