Greek Criticism: Milton Friedman And The Fall Of Keynesianism

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1 Introduction

About 400 year b.c.e., Greek historian and philosopher Xenophon was first to use in his writings the word economy (oeconomicus) – which in translation means managing the household.
Despite the name, economic ideas were and remained an integral part of the entire society.

From antique to Greece today, the economy, as a social science, traded, developed and shaped under the influence of current of occurrences, changes and needs of the people.

Keynes’s theory represented the biggest inspiration to European States and economic theoretics in the period between 1941 and 1976. In this period the macroeconomics has become a special scientific and teaching discipline. Full employment is becoming the main objective of national economic policy based on the Keynes’s principles of general economic policy.

At the end of the 1970s with the advent of stagflation, simultaneous appearance of unemployment and inflation, as well due to the oil crisis, ruling Keynes economic paradigm gets challenged. This period is characterized by many economists as a fall of Keynesianism following several decades of ascents, or new theoretical crisis, because existing Keynesian ortodoxy had no solution for the newly created problems.

Milton Friedman and his Chicago school of monetarism were opposed to the dominant Keynesianism with its quantitative theory of money. Friedman felt that governments don’t have the capacity to correct deficiencies and that government’s solution to a problem

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