1.2.2—Economic thought

Economic thought is historically situated. In the 18th century Adam Smith emphasized specialization, exchange and laissez-faire; 19th-century classical thought developed utility, marginal reasoning and Say's law, while Marx criticized capitalist ownership and distribution.

The 20th-century Keynesian revolution argued that deficient aggregate demand can sustain unemployment and justify macroeconomic intervention. Monetarist and new classical counter-revolutions restored emphasis on money, expectations, markets and limits of discretionary policy.

In the 21st century, behavioural economics uses psychology to question fully rational choice, while sustainability and interdependence connect economy, society and environment. Circular-economy thinking seeks to reduce waste by keeping resources in use rather than following a linear take–make–dispose model.

A recession can be interpreted through Keynesian demand failure, whereas a new classical account may emphasize expectations and market adjustment. The different mechanism changes the recommended policy.

These are evolving analytical traditions, not rigid labels. Compare their assumptions, mechanism and context; do not attribute every modern policy to one thinker or claim that circularity eliminates all scarcity.