Keynesian Theory Neoclassical Economists Essay

Pages: 6 (1907 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics

Of course, in the current Congress, conservative supporters of minimal government and laissez faire theories are in a position to block all such stimulus measures.

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Neoclassical theorists would argue that once wages have fallen sufficiently in this recession and employers are unable to force more gains in productivity, they will have no choice except to hire new workers, although they may choose to do so in low-wage countries like China. There has been little sign that massive new hiring is taking place in the United States or other Western economies, even though the layoffs of hundreds of thousands per month that were common in 2008-09 have not yet been repeated. In fact, productivity gains and declines in real wages have been consistently higher than these economists expected, while unemployment has remained higher than they predicted. As Joel Naroff, chief economist at Naroff Economic Advisors, put it: "Survival meant cutting costs as rapidly as possible and fulfilling orders with the fewest number of workers" (Crutsinger and Manning 2009). They are using even more overtime and temporary workers rather than new full-time employees to lower costs, which has also been a persistent trend in the American economy over the last thirty years. Most of them also have little confidence in a rapid economic recovery or a rise in consumer demand, which makes them reluctant to hire new employees and bring back those who have been laid off. Even in 2009, though, economists believed that companies were "starting to reach the limits of how much they can produce with their shrunken workforces" (Crutsinger and Manning 2009). This has not really occurred, however, and the removal of stimulus measures and the election of laissez faire, deficit-cutting conservatives to Congress -- who also seem determined to depress the economy for political reasons -- kept consumer demand relatively flat, along with hiring.


Clarke, P. Keynes: The Rise, Fall and Return of the 20th Century's Most Influential Economist. Bloomsbury Press, 2009.

Crutsinger, Martin and Stephen Manning. "Productivity Gains May Be Bad News for Job Seekers." AP Business Writers, Nov 5, 2009.

Essay on Keynesian Theory Neoclassical Economists Are Assignment

Krugman, Paul. "We're Still in a Paradox of Thrift World" New York Times blog post August 26, 2010, 9:38 AM

Mankiw, N.G. Principles of Economics. South-Western College Publishers, 2010.

Minsky, H.P. John Maynard Keynes: Hyman… [END OF PREVIEW] . . . READ MORE

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APA Style

Keynesian Theory Neoclassical Economists.  (2011, November 14).  Retrieved January 24, 2021, from

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"Keynesian Theory Neoclassical Economists."  14 November 2011.  Web.  24 January 2021. <>.

Chicago Style

"Keynesian Theory Neoclassical Economists."  November 14, 2011.  Accessed January 24, 2021.