Disputed Statements

2008 Financial Crisis, Events

Standing Scholarly debate

Concerns Description

Currently States The 2008 financial crisis was a severe global financial and economic crisis triggered by the collapse of a credit boom built on residential mortgage lending in the United States, which spread through the international financial system after the failure of major financial institutions, including the investment bank Lehman Brothers in September 2008. The crisis produced a sharp global recession, extensive government intervention to stabilize banks, and a prolonged period of unusually low interest rates and unconventional monetary policy in many countries. As with the Great Depression, economists continue to disagree about how to weight its causes: accounts range from an Austrian style emphasis on credit expansion and malinvestment during the preceding boom, to behavioral economics accounts centered on systematic misjudgment of risk by borrowers, lenders and investors, to Keynesian analysis of the policy response needed to prevent the ensuing downturn from becoming as severe and prolonged as the Great Depression.

The sequence of events is well documented; the WEIGHTING of causes among credit expansion and malinvestment, misjudged risk, and the policy response needed is genuinely disputed; see the Dissent notes on this fact.

Source Encyclopaedia Britannica

Austrian School, Schools of Thought

Standing Scholarly debate

Concerns Core Tenet

Currently States Economic value is subjective, arising from individual human judgment rather than any objective property of a good, and market prices emerge from the dispersed knowledge and voluntary exchange of individual actors rather than from central planning.

Source The New Palgrave Dictionary of Economics

Black Monday (1987), Events

Standing Scholarly debate

Concerns Description

Currently States On October 19, 1987, the Dow Jones Industrial Average fell 508 points, 22.6 percent, in a single session, the largest one-day percentage decline in the index's history. The crash began in Asian markets outside Japan and moved westward through Europe before hitting the United States and finally Japan, a genuinely global event with worldwide losses estimated at 1.71 trillion US dollars. The cause remains debated: contemporary analysts blamed computerized program trading and portfolio insurance, a hedging strategy that sold stock automatically as prices fell, for amplifying the decline, while economist Hayne Leland and a later Chicago Mercantile Exchange study argued ordinary investors, mutual funds and broker-dealers drove several times more of the selling than portfolio insurers did. Newly installed Federal Reserve chair Alan Greenspan, weeks into his term, responded the next morning with a public statement affirming the Fed's readiness to supply liquidity to the financial system, widely credited with containing the crash's spread into the broader economy.

The relative weight of portfolio insurance versus ordinary investor selling in driving the crash is genuinely disputed; see the dissent from Hayne Leland and the Chicago Mercantile Exchange research below.

Source Wikipedia tier 2

Chicago School, Schools of Thought

Standing Scholarly debate

Concerns Start Year

Currently States 1927

Historians of economic thought commonly date the identity of the Chicago School to the arrival of Frank Knight at the University of Chicago in 1927, though the label and its wider public association with free market economic policy crystallized more fully during the ascendance of Milton Friedman and George Stigler in the 1950s and 1960s.

Source Encyclopaedia Britannica

Classical Economics, Schools of Thought

Standing Scholarly debate

Concerns End Year

Currently States 1871

Historians of economic thought commonly place the end of the classical period in the early 1870s, when the marginal revolution associated with William Stanley Jevons, Carl Menger and Leon Walras reworked value theory around subjective marginal utility rather than labor or production cost, but the exact boundary year is not agreed and some accounts extend the classical label through John Stuart Mill into the 1880s.

Source The New Palgrave Dictionary of Economics

German Historical School, Schools of Thought

Standing Scholarly debate

Concerns End Year

Currently States 1935

The school's institutional dominance in German economics ended with the Nazi-era purge of Jewish and dissenting scholars in the 1930s and the postwar rise of neoclassical and Keynesian theory, though historians differ on how sharply to date its end, and some trace its influence forward into postwar German Ordoliberalism.

Source Encyclopaedia Britannica

Great Depression, Events

Standing Scholarly debate

Concerns Description

Currently States The Great Depression was a severe worldwide economic downturn that began with the United States stock market crash of October 1929 and continued through most of the 1930s, producing mass unemployment, widespread bank failures and a sharp contraction in industrial production and international trade. Its causes and the reasons for its severity and length remain genuinely disputed among economists: accounts differ on how much weight to place on a prior collapse in private spending, a contraction in the money supply that the Federal Reserve did not prevent, and a credit fueled boom and subsequent correction in the years before the crash, and the disagreement between these accounts runs through the entries for the Keynesian, Monetarist and Austrian schools of thought in this atlas. The Great Depression reshaped economic policy making for decades afterward and directly informed the design of the postwar Bretton Woods international monetary system.

Its severity is well attested; the WEIGHTING of its causes among a prior collapse in private spending, a Federal Reserve driven contraction of the money supply, and a credit fueled 1920s boom and correction is genuinely disputed among the Keynesian, Monetarist and Austrian schools; see the Dissent notes on this fact.

Source Encyclopaedia Britannica

Laffer Curve, Concepts

Standing Scholarly debate

Concerns Significance

Currently States Became the central intellectual argument for supply-side income tax cuts in the Reagan era and remains a live flashpoint between supply-side economists and the mainstream consensus over whether real-world tax rates are high enough for a cut to pay for itself.

Whether real-world tax rates actually sit on the curve's revenue-losing side, so a cut would raise revenue, is genuinely disputed; see the dissent from John Quiggin below.

Source Wikipedia tier 2

Mercantilism, Schools of Thought

Standing Scholarly debate

Concerns Start Year

Currently States 1500

Historians of economic thought do not agree on a single starting point for mercantilist practice and writing, which emerged gradually across Western European commercial states from roughly the late fifteenth through the sixteenth century rather than at one identifiable moment.

Source Encyclopaedia Britannica

Mercantilism, Schools of Thought

Standing Scholarly debate

Concerns End Year

Currently States 1776

The 1776 publication of Adam Smith's Wealth of Nations, which devoted an entire book to refuting mercantilist trade theory, is the conventional marker for the end of mercantilism's theoretical dominance, though mercantilist policies persisted in the practice of several governments well into the nineteenth century.

Source Encyclopaedia Britannica

Minimum Wage, Concepts

Standing Scholarly debate

Concerns Description

Currently States A minimum wage is a wage floor set by law or contract, below which employers may not pay workers for their labor. The existence of a wage floor is not disputed; its employment effect genuinely is. The standard supply-and-demand model predicts that a minimum wage set above the market-clearing wage prices some low-skilled workers out of work. David Card and Alan Krueger's 1994 study of fast-food employment in New Jersey and Pennsylvania, comparing New Jersey after it raised its minimum wage against Pennsylvania where the wage was unchanged, found no such negative employment effect, a result that reshaped the field's methodological debate over how minimum-wage effects should be measured and that the entries for Neoclassical Economics and this page's open question carry in more detail.

Source Wikipedia tier 2

Modern Monetary Theory, Schools of Thought

Standing Scholarly debate

Concerns Description

Currently States Modern Monetary Theory holds that a government that issues its own free-floating currency and borrows only in that currency cannot be forced into involuntary default, because it can always create the currency needed to meet a payment; its real constraint is the economy's productive capacity and the risk of inflation, not solvency in the way a household or a currency-user faces. Warren Mosler developed the practitioner case in the early 1990s, drawing on the older chartalist idea that a currency's value rests on the state's power to tax, and L. Randall Wray, Stephanie Kelton and others built the academic elaboration from the late 1990s onward, including a job guarantee as the preferred inflation anchor in place of unemployment. Mainstream monetarist and neoclassical economists dispute both the inflation-risk assessment and the theory's account of how government bond issuance and interest rates actually interact.

Whether the inflation and interest-rate consequences of the theory's prescriptions are as manageable as its proponents argue is genuinely contested; see the debated-with edges below.

Source Understanding Modern Money: The Key to Full Employment and Price Stability

Modern Monetary Theory, Schools of Thought

Standing Scholarly debate

Concerns Core Tenet

Currently States A sovereign, free-floating currency issuer cannot be forced into involuntary default in its own currency; its true constraint on spending is the economy's real productive capacity and inflation, not financial solvency.

Source Understanding Modern Money: The Key to Full Employment and Price Stability

Monetarist Economics, Schools of Thought

Standing Scholarly debate

Concerns Start Year

Currently States 1956

Historians of economic thought commonly date the emergence of Monetarist economics to a 1956 essay by Milton Friedman restating the quantity theory of money, though the school crystallized gradually across the work of Friedman through the 1960s rather than at one single identifiable moment.

Source The New Palgrave Dictionary of Economics

Moral Hazard, Concepts

Standing Scholarly debate

Concerns Proposed By

Currently States No single originator

Documented in English insurance usage since the seventeenth century, long before any one economist; Kenneth Arrow's early-1960s work gave the term its modern, non-moralizing, information-asymmetry meaning in economics.

Source Wikipedia tier 2

Neoclassical Synthesis, Schools of Thought

Standing Scholarly debate

Concerns Description

Currently States The neoclassical synthesis is the academic movement that reconciled John Maynard Keynes's macroeconomics with the older neoclassical tradition, applying Keynesian short-run analysis (sticky wages and prices, markets that do not clear, a role for government demand management) alongside classical long-run equilibrium theory (markets clear through price and wage adjustment once given enough time). John Hicks's 1937 IS-LM model, which analyzes the goods market and the money market simultaneously, became its central technical tool; Franco Modigliani extended it to incorporate labor markets in 1944; and Paul Samuelson coined the term itself and popularized the whole framework through his best-selling textbook Economics from 1948 onward. The synthesis dominated postwar academic and policy macroeconomics through the 1950s-60s before the 1970s stagflation, simultaneous high inflation and high unemployment the framework's own Phillips curve said should not coexist, triggered its collapse as the reigning consensus.

Whether the synthesis' own account of policy, that Keynesian demand management and neoclassical long-run equilibrium theory could simply be layered together, survives the Lucas critique and the 1970s stagflation evidence is exactly what New Classical economists dispute; see the debated-with edges below.

Source Wikipedia tier 2

New Institutional Economics, Schools of Thought

Standing Scholarly debate

Concerns Start Year

Currently States 1937

Economists commonly trace New Institutional Economics to Ronald Coase's 1937 essay The Nature of the Firm, its founding transaction-cost insight, though the school's name itself was coined later by Oliver Williamson in his 1975 book Markets and Hierarchies, and the tradition's institutional-performance and commons-governance branches developed further still through Douglass North's and Elinor Ostrom's work from the 1970s through 1990.

Source The Nature of the Firm, Ronald H. Coase

Phillips Curve, Concepts

Standing Scholarly debate

Concerns Description

Currently States The Phillips Curve describes an observed inverse relationship between unemployment and the rate of wage or price inflation, first plotted by A. W. Phillips from a century of British data in 1958. Early Keynesian economists read the relationship as a genuine, policy-usable menu, accept a bit more inflation and buy a bit less unemployment. Milton Friedman and Edmund Phelps countered in the late 1960s that the trade-off can only be short-run, because workers and firms revise their inflation expectations, so any attempt to hold unemployment below its natural rate through persistent inflation is self-defeating and the long-run curve is vertical. Austrian economists reject the aggregate relationship even in the short run, arguing that averaging unemployment and inflation across an economy obscures the real, uneven price signals that monetary expansion distorts.

Whether a stable, exploitable trade-off exists at all, and why, is one of the field's longest-running causation disputes; see the school associations below.

Source The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957

Physiocracy, Schools of Thought

Standing Scholarly debate

Concerns End Year

Currently States 1776

Historians commonly mark the 1776 publication of Adam Smith's Wealth of Nations, which absorbed and superseded the Physiocratic system, as the conventional end of Physiocracy as an active school, though some Physiocrats continued writing into the 1780s and the exact closing date is not agreed.

Source Encyclopaedia Britannica

Post-Keynesian Economics, Schools of Thought

Standing Scholarly debate

Concerns Start Year

Currently States 1975

School formation was gradual rather than a single founding event; Kalecki's 1930s-40s work is a recognized theoretical antecedent, Robinson's Cambridge circle organized through the 1960s-70s, and Minsky's own synthesis matured across the late 1970s and 1980s, so historians place the date differently depending on which strand they treat as decisive.

Source Stabilizing an Unstable Economy, Hyman Minsky