Paul Samuelson and the Foundations of Modern Economics - Assignment Example

   There are different ideas that are presented by Paul Samuelson, Abba Lerner, and John Kenneth Galbraith in relation to the idea of the creation of a framework for human flourishing. According to Lerner, he enunciated three basic rules that are used in functional finance that he believed were to change the lives of people. In one of his principles, he stated that a government should maintain a reasonable level of demand at all times (Samuelson & Puttaswamaiah, 2002).  In this consideration, he also added that in case of too little spending in the society; the government should reduce taxes or increase its own spending to correct the situation that also leads to unemployment.  The other principle stated that by borrowing money when there is a need to raise the interest rate and through lending money when there is a need to reduce the rate of interest, the administration should be able to uphold the rate of interest that encourages the best amount of investment (Samuelson & Puttaswamaiah, 2002). All the two finance principles were summarized in his principles with the limiting the national debt principle so that all the needs of the people in the society are taken into consideration.

            John Kenneth Galbraith also had principles that argued and was based on understanding the trouble that exists currently within economics and economic policies. The works that were created by him were partly rooted in Marshall’s theory of the firm most of his principles were followed after the post-war economy was dominated by bureaucratic corporations with more demand of consumers and also financiers. The principles he developed believed in expenditure as a factor that would be used to satisfy the needs of the consumer. The policies that are developed by the government are those focusing on consumer satisfaction.

            Paul Samuelsson developed policies and views that also focused on the actions of the government and the saving of the economy. A balanced-budget multiplier was a principle that was developed by him. He states that dollars of tax reduction are almost as powerful as weapons that can be used against mass unemployment as an increase in the expenditures that are made by the government.

The formation of a free market that allows people to use whatever they want should not be encouraged in the economy. Free markets will lead to problems such as prices that are not affordable to consumers and also the production of poor goods and services with harm to consumers.