1. 2. MAIN SCHOOLS OF THOUGHT
GROWTH ECONOMICS and Fund-raising in international cooperation SECS-P01, CFU 9 Growth Economics academic year
2. MAIN SCHOOLS OF THOUGHT
Roberto Pasca di Magliano
Fondazione Roma Sapienza-Cooperazione Internazionale

2. Main Schools
Classical School (1600/1700, until the second-half of the 1800s)
Main authors : Abate Ferdinando Galiani, Adam Smith, Thomas Malthus, David Ricardo, Stuart Mill, Karl Marx
Economics is a social science that studies questions such as capital accumulatin and income distribution
Marginalist or Neo-classical School (since 1870 circa)
Main authors : Jevons, Walras, Marshall, von Hajek, Friedman, Say, Solow Philips
Economics studies how to obtain the best result in the presence of a given amount of resources available
Keynesian School (since 1930 circa)
Main authors: Keynes, Harrod, Domar Galbraith, Stiglitz, Dornbusch, Phelps
Growth is no longer driven by offer, but rather sustained by demand, even public
Growth School and models
Main authors: Harrod, Domar, Solow, Lucas, Romer
Growth regards only advanced countries as they react to economic variables
Development economics (since 1950 circa)
Main authors: Lewis, Kuznets, Bauer, Myint, Streeten, Sen, Yunus
Developing concerne not only with economic aspects but also with institutional and social ones that have greater importance in developing countries
Roberto Pasca di Magliano

3. The State and the Market
In the past, the dominant idea was a mutual relationship between democracy and the free market. Nowdays, it is no more true (i.e. extreme different institutions adopt free market economy)
Looking at major economic events that raise the attention of the public opinion, the scientific and political community periodically interrogate on the role of the free market as well as its relationship with democracy
The discussion aims at understanding the extent and the modalities of State intervention in the market mechanism:
how to correct it in order to avoid social distorsion,
how and where it is possible to faster the growth in presence of lack of private investors
how economic rules (i.e. virtuose ones) can be be used to promote a good governance
At the extremes of this debate, there are on the one hand the supporter of State intervention and on the other the maket oriented economists
Roberto Pasca di Magliano

4. Current economic and political vision
Liberalism
monetarists
neo-classical school
State intervention
keynesian school
neo-keynesian school
INTERMEDIATE VISIONS ARE MORE FREQUENT
Roberto Pasca di Magliano

5. Comparing the two positions
Market supporter argues that:
market is the most efficient mechanism
market has an automatic capacity to adjust itself by increasing well-being
market improve moral qualities (i.e.: meritocracy)
Supporter of State intervention sustains that:
outcome by market allocations may not be socially acceptable
the market, if left unregulated and free to follow its own rules, can produce distortion
State intervention can support economy by doing public investment when the private ones are failing
Roberto Pasca di Magliano

6. Intermediate Positions (1)
In reality, the contrast between market and State is played within the realm comprised between the two extreme positions, most radical in their nature. Hereafter are some major actors:
Milton Friedman pure liberal and intellectually reprentative of the School of Chicago and most notable inspiratior, he trusts the free market as a source of economic and social progress and is able to adjust automatically for any temporary distortion
Jagdish Bhagwati considers economic integration as positive, provided that the distortions be corrected without introducing duties
Anthony Giddens considers that the growing liberalization creates problems that globalization may, instead, contribute to solve
Lawrence Summers considers that, within the market, the State must insure the reduction of inequalities through fiscal harmonization
Roberto Pasca di Magliano

7. Intermediate Positions (2)
Amartya Sen & Peter Singer view risks but also positive opportunities in the market dynamics, underlining the necessity for regulation that bring businesses and individuals towards a virtuous path
Joseph Stiglitz argues in favour of the importance of the role, not only of the national State but also of the international institutions in regulating the market
Edward Luttwak underline the risks that the global market, if it is not properly regulated, might impose upon the workers of the developed world (low salaries, unemployment) and upon the environment
John Gray does not believe that the anglo-saxon model of economic liberalism can be applied to systems that are different from the western one historically speaking and advocates for national solutions
Paul Krugman (2008 Nobel Prize) underlines the need for global governance to make markets work, and that it be entrusted to the IMF
Oliver Williamson (2009 Nobel Prize), known for his analysis on the economic governance and on the limits of the enterprices’ choices
Roberto Pasca di Magliano