It is the first important school of economic thought, which included some of the best known economists of all times, as we will see. Thanks to these authors, the study of economics became more of a science, instead of just a kind of philosophy. It took place from the late 18th century to the late 19th century. First, we will learn about some relevant previous doctrines, which will help us understand were the theories of classical economists come from.

Modern economics would look nothing like what they do without neoclassical economics which, for instance, implemented rigorous mathematical analysis into economics. Most of what we absolutely take for granted was discovered by the great economists of the time, and they are also responsible for providing enough of a framework to raise a century long controversy with the other great school of the 20th century.Neoclassical economics is really the birth of mathematics as an inescapable tool for constructing theories that are internally coherent (that is, explained in and of themselves without requiring casuistic examples), escaping the slightly lackadaisical approach of many classical economists like the great Ricardo. This allowed Economics to develop at a much faster pace, and provided the basis for how Economics is studied and investigated today.Neoclassical economics also sees the first clear distinctions between branches of Economics, previously grouped together in the ever present “Principles of Economics” manuals. It sees the basis of the modern didactic framework that we still classify Economics under, and is, in short, the first time that Economics looks like something we might recognise today: consistent theories built upon a solid mathematical framework that aim to underpin the casuistics of what goes on around us.

John Maynard Keynes marked a hugely important turning point in the history of Economics. For the first time, Economics had become positive, allowing for differences of opinion. It was firmly a social science, not a collection of observations or ‘natural laws’ condemned to repeat their patterns ad eternum, but could be interfered with and changed. This brought about a chasm in economic thinking: differences of opinion could bring about real differences in the lives of many.This became all too apparent with the advent of World War II, when economic intervention became all too urgent to help rebuild the lives of all those whose livelihoods had been quashed following a war and a recession that was already 10 years long. The important thing was to decide whether to intervene or leave it to the invisible, all regulating hand.

From the conciliatory mood of the 1940s and 1950s, where we saw how Keynesianism and Neoclassicism could fit together, we move away from the Neoclassical Synthesis and back to a determinedly ‘laissez faire’ attitude with Monetarism. This current popularises government intervention as firmly limited to guaranteeing market safeguards and intervening in the financial markets, abandoning fiscal policy. We move, therefore, into an era concerned with financial stability, where inflation becomes a firm target.Monetarism became popular amongst, famously, US and UK politicians in the 1980s, coinciding with a period of severe stagflation, and is, to this day, a controversial school of Economics, paradoxically known because of its affinity to various legislatures despite being a firm advocate of the separation between politics and economics.

The second half of the 20th century was an exciting time for Economics, with developments rapidly succeeding each other as a reaction to the very different economic scenarios the world faced. This development did nothing if not speed up towards the end of the century, when different theories not only succeeded each other, but often coexisted, feeding off the breakthroughs that were being made by the different schools. In this way, the end of the century was curiously reminiscent of the first half, with a return to the two main schools and a whole new focus on maths.We start by looking at New Classical Macroeconomics. Traditionally, macroeconomics had been the realm of the Keynesians, whereas classical precepts had traditionally been applied to microeconomics and aggregated to have a shot at macro. NCM takes and applies this basis to develop a clear and coherent set of principles that aim to explain the major players, unemployment and inflation, from a fully neoclassical perspective.

The second half of the 20th century was an exciting time for Economics, with developments rapidly succeeding each other as a reaction to the very different economic scenarios the world faced. This development did nothing if not speed up towards the end of the century, when different theories not only succeeded each other, but often coexisted, feeding off the breakthroughs that were being made by the different schools. In this way, the end of the century was curiously reminiscent of the first half, with a return to the two main schools and a whole new focus on mathematics.Fitting into this retro revival period, Keynesians were also kept busy countering the neo-classicists and monetarists who were intruding onto their sacred ground: macroeconomics and the Phillips curve. This current in economic thought is often overshadowed because of the keen political interest that New Classical Macroeconomics was able to garner, but warrants a much closer look than it is sometimes afforded. Were they able to preserve the monetary illusion? Perhaps not, but they were consistent in their approach: exploring market failure one breakdown at a time.