Question

Both Keynes and Friedman are said to be economic liberals though policies and programs associated with their names are radically different. Evaluate how a government wishing to implement Keynesian policies would differ from that of a ‘Friedmanite’ government.

Answer 1

Keynes and Friedman are considered to be the proposers of the liberal economics, but acted differently. Keynes never said that firms should only focus upon the profit making, but it was the essential element of the proposal made by the Friedman. So, the government focusing upon the Keynesian principles work upon the following points:

1. Proactive intervention to take care of the best interests of the households and firms

2. Focus upon building a regulatory framework that prevents the exploitation of the consumers

3. Taking care of the interests of the consumers as it is the consumer that creates demand

4. Developing fair competition in the market where smaller firms can compete with the bigger firms

Above policy aspects are completely different to the only profit making responsibility of the firms, proposed by Freidman. The government promotes private property rights to encourage the firms, but it also has the responsibility to protect the environment, consumers and communities where the firms operate. So, here, the government policy differs from the Friedman proposals.