Friedman argued for free trade, smaller government, and a slow, steady increase of the money supply in a growing economy. His emphasis on monetary policy and the quantity theory of money became known as monetarism.

Adam Smith

Friedrich Hayek believed that the prosperity of society was driven by creativity, entrepreneurship and innovation, which were possible only in a society with free markets. In his view, markets create the price signals and incentives to orientate the economy most efficiently.

Milton Friedman, (born July 31, 1912, Brooklyn, New York, U.S.—died November 16, 2006, San Francisco, California), American economist and educator, one of the leading proponents of monetarism in the second half of the 20th century. He was awarded the Nobel Prize for Economics in 1976.

John Maynard Keynes (1883–1946) was probably the most important economist of the 20th century. Today, free-market radicals consider Keynes a leftist, because he insisted that governments have an important role to play in economic life.

Keynes’s second major legacy is the notion that governments can and should prevent depressions. Having said this, Keynes’s theory of “underemployment” equilibrium is no longer accepted by most economists and policymakers. The global financial crisis of 2008 bears this out.

Keynes further asserted that free markets have no self-balancing mechanisms that lead to full employment. Keynesian economists justify government intervention through public policies that aim to achieve full employment and price stability.

While Keynesian theory in its original form is rarely used today, its radical approach to business cycles, and its solutions to depressions have had a profound impact on the field of economics. These days, many governments use portions of the theory to smooth out the boom-and-bust cycles of their economies.

It lost some influence following the oil shock and resulting stagflation of the 1970s. Keynesian economics was later redeveloped as New Keynesian economics, becoming part of the contemporary new neoclassical synthesis, that forms one current-day theory on macroeconomics.

Two economic theories at odds – Keynesian and Chicago School | Rich Elfers. Two major theories have been battling in America: Keynesian Economic Theory and the Chicago School Economic Theory propounded by the late economist Milton Friedman.

He argued that uncertainty caused individuals and businesses to stop spending and investing, and government must step in and spend money to get the economy back on track. His ideas led to a revolution in economic thought. John Maynard Keynes (pronounced canes) was one of the great economic thinkers.