Question

in an essay of at least 2 well-developed paragraphs, explain how the theories of Adam Smith and john maynard keynes are seen in our present American free enterprise system

Answer 1

Answer:

In our present American free enterprise economic system:

Some people want to see pure capitalism being put in place.  This means that there is no government interference with the workings of the economy.  Some others, including the government, have understood that there is no perfect capitalism.  As such, they call for government intervention to ensure that economic crises are not allowed free reign.

Adam Smith, as a philosopher, vehemently advocated for a free market economy without any form of government interference.  He did not even support the imposition of taxes by the government.  John Maynard Keynes also supported a free market economy, but he advocated for some government intervention from time to time.  John Keynes stated that government must intervene during economic crises through subsidies.

Explanation:

Adam Smith elevated the economic theory of laissez-faire. He noted that the free markets needed only the invisible hand to regulate themselves by means of competition, supply and demand, and self-interest.  John Keynes advocated for increased government expenditures and lowering of taxes as two important means to stimulate market demand and pull the global economy out of depression.