Schools of Thought: Keynesian vs. Classical

Keynesian and classical schools of economic thought are competing perspectives on economic models and how they should deal with certain obstacles.

Classical

Classical economists fundamentally believe that markets are self-correcting, therefore the role of government should be minimal in order to let the “market take its course.”

Short run aggregate demand will ultimately settle at equilibrium along long run aggregate supply (LRAS), which has no impact on price levels (vertical line).
The economy will contract and expand on its own around a constant line of growth.
Competition is preferred over government interference — the “laissez-faire” or free market.
Policy focuses on long-term supply changes (e.g. tax cuts) rather than short-run fiscal policy (demand-side).
Purpose: Avoid negative side effects of demand-side policy (e.g., crowding out private firms and individuals).

Keynesian View

Keynesian economists believe that markets can fail in the short run and therefore require active stimulation from the government or central bank in downturns. While acknowledging potential side effects of fiscal or monetary policy, they believe the net effect can be positive.

Stagflation: Economic stagnation + inflation. Example: 1970s recession required government action.
Sticky Wages: Wages don't adjust quickly due to labor contracts, so government must step in during downturns.

Use in Round

Argument	Strength + Analysis	Rebuttals
“Government stimulation (spending) is a net positive.” Link: Multiplier effect – government demand stimulation increases activity and market liquidity.	There is no single correct answer, so persuasion depends on the judge’s economic views. This can take a long time to debate and risks confusing the judge. However, it also increases employment and liquidity.	Can lead to inflation, debt, inefficiency. Wage/price controls interfere with allocation. May crowd out private investment in loanable funds.
“The market always self-corrects, leaving it alone is best.” Link: Supply and demand sort themselves out eventually.	Some judges may agree, especially if the logic is clear. But it weakens your ability to argue short-term harms, which opponents can exploit heavily.	Short-term pain remains unaddressed (e.g. sticky wages). Stagflation proves markets can't always self-correct. Fiscal policy becomes essential.