Monetarism Seeks to Explain the Major Economic Phenomena Through a Single Variable, the Supply of Money

The purpose of this chapter is to present and critically evaluate the major propositions of the monetarist school of economic thought, that is, the school of economic thought according to which the quantity of money is the utmost important economic variable whose changes affect the behaviour of the entire economic system. Although the characterisation Monetarism was coined by Karl Brunner in 1968 to describe a school of economic thought that includes, besides Milton Friedman (1912–2006) and Anna Schwartz (1915–), Bruner himself and Allan Metzler among others, it is in fact a very old school of economic thought since its traces can be found in early nineteenth century. The University of Chicago, where monetarism was developed, clings to a free market tradition that restricts government’s intervention should be kept to a minimum and seeks to explain the major economic phenomena through a single variable, the supply of money.

--Lefteris Tsoulfidis, Competing Schools of Economic Thought (Berlin: Springer-Verlag, 2010), 301.

Classical, Keynesian, Neoclassical, Monetarism, New Classical, Real Business Cycles, New Keynesian, the Microeconomic Revolution of the 1930s, Sraffa Critique of the Firm, Neoclassical Synthesis, and Capital Theory

Thus, although this book deals with the history of economic thought, it does not necessarily follow a historic (in the sense of the order of presentation) approach, but rather a logical one, that is to say it deals with the social conditions associated with the emergence of a school of economic thought, its evolution, and its contemporary influence. One cannot write a book on the history of economic thought without writing separate chapters on the major economists of the past, that is, Adam Smith, David Ricardo, Karl Marx, and J.M. Keynes. Of course these economists formed schools of economic thought, that is, the classical and the Keynesian. As for the neoclassical school of economic thought, the ideas of its founders, that is, Stanley Jevons, Karl Menger, Léon Walras, and Alfred Marshal are put together into a single chapter and school of economic thought. The book also studies the evolution of current mainly macroeconomic approaches, that is, monetarism, new classical economics, real business cycles, and new Keynesian economics. Furthermore, we include separate chapters such as the microeconomic revolution of the 1930s, the upshot of Sraffa’s-based critique of the neoclassical theory of the firm, the neoclassical synthesis, capital theory, and a final chapter that summarizes and critically evaluates the major schools of economic thought.

--Lefteris Tsoulfidis, introduction to Competing Schools of Economic Thought (Berlin: Springer-Verlag, 2010), 1.