Economic Schools

The systematic study of how societies produce, distribute, and consume wealth. Every school below is one answer to a single question: what makes a nation prosper, and what should the state do about it?

from Economic Thought

The first coherent economic doctrine of the nation-state: wealth is a fixed store of gold and silver, so a country prospers by exporting more than it imports and hoarding the surplus. It justified tariffs, colonies, and chartered monopolies.

from Mercantilism

The French physiocrats broke with mercantilism by locating all real wealth in agriculture and the land. Their slogan 'laissez faire' and Quesnay's circular Tableau économique were the first models of an economy as a self-regulating system.

from Physiocracy

With The Wealth of Nations, Smith founded economics as a discipline: the division of labour, self-interest coordinated by an 'invisible hand', and markets that allocate resources without a central plan. Free exchange, not hoarded gold, is the true source of wealth.

from Classical Economics

Ricardo turned classical economics into rigorous deduction: the theory of comparative advantage (why nations gain from trade even when one is better at everything), the law of rent, and the labour theory of value that Marx would later inherit.

from Classical Economics

Malthus argued that population grows geometrically while food grows arithmetically, so misery is the natural check on the poor. The gloom earned economics its nickname, 'the dismal science', and framed debates on growth for a century.

from Ricardian Economics

Marx took Ricardo's labour theory of value to a revolutionary conclusion: profit is surplus value extracted from workers, and capitalism's internal contradictions drive recurring crises toward its own overthrow. Das Kapital reframed economics as class struggle.

from Marxian Economics

A family of critics — institutionalists like Veblen, and later post-Keynesians — who reject the assumption of the rational optimising individual, insisting that habits, power, and institutions shape the economy more than abstract equilibrium.

from Classical Economics

Three economists independently overturned the labour theory of value: worth comes not from labour but from marginal utility — the value of the last unit consumed. This shifted economics from production to individual choice and subjective preference.

from Marginal Revolution

Marshall fused marginal utility with cost of production into the supply-and-demand scissors, giving economics its central diagram. Rational agents maximising at the margin, meeting in equilibrium, became the mainstream framework taught to this day.

from Neoclassical Economics

Arrow and Debreu proved with topology exactly when a set of interdependent markets can all clear at once. It was neoclassical economics at its most mathematically ambitious — and its most abstract, assuming perfect information and competition.

from Neoclassical Economics

From the 1980s, economists rebuilt microeconomics on strategic interaction: agents whose best move depends on what others do. Nash equilibrium, auctions, and mechanism design let the field model oligopoly, bargaining, and markets with a few players.

from Neoclassical Economics

Applying neoclassical rationality to asset prices: portfolio theory, the efficient-market hypothesis, and option pricing. It made finance a quantitative science — and its assumption of rational pricing became behavioural economics' favourite target.

from Neoclassical Economics

The Depression convinced Keynes that markets can settle at persistent mass unemployment. His General Theory argued that aggregate demand drives output, and that governments should spend to fill the gap when private spending collapses. It founded modern macroeconomics.

from Keynesian Economics

Samuelson and Hicks fused Keynesian macro with neoclassical micro into the textbook 'synthesis' — the IS–LM model, tuned by fiscal and monetary policy. It was the postwar consensus until 1970s stagflation broke its promise.

from Neo-Keynesian Synthesis

Answering the monetarist critique, New Keynesians grounded sticky prices and wages in rigorous microfoundations. Their models of imperfect competition and rational expectations now underpin how most central banks think about policy.

from Neoclassical Economics

Friedman and the Chicago School countered Keynes: 'inflation is always and everywhere a monetary phenomenon.' Steady control of the money supply, not fiscal fine-tuning, is what stabilises an economy — and markets left alone outperform planners.

from Monetarism

Lucas argued that people anticipate policy, so predictable government intervention is neutralised in advance. Rational expectations and the Lucas critique demanded that every macro model rest on optimising individuals, reshaping the whole field.

from Marginal Revolution

Springing from Menger's marginalism, the Austrians rejected mathematical equilibrium for a view of the economy as a dynamic process driven by subjective knowledge. Mises argued that without market prices, central planning cannot rationally allocate at all.

from Austrian School

Hayek's great insight was that prices are a communication system: they aggregate dispersed knowledge no planner could ever gather. Markets are a 'spontaneous order' — coordinating millions without anyone designing the result.

from Neoclassical Economics

Drawing on psychology, Kahneman and Tversky showed that real people systematically violate the rational-agent model: loss aversion, framing, and predictable biases. Prospect theory replaced the idealised optimiser with the human mind as it actually decides.

from Behavioural Economics

Thaler carried behavioural insights into policy: small changes in how choices are presented — the default option, the framing — can steer people toward better outcomes without banning anything. 'Libertarian paternalism' entered government worldwide.