Keynes & A.Smith

Yesterday was deathday of J.Maynard Keynes (1883-1946) , doubtlessly one the most important figures in the entire history of economics.
He revolutionized economics with his classic book, The General Theory of Employment, Interest & Money (1936). This is generally regarded as probably the most influential social science thesis of the 20th Century, in that it quickly and permanently changed the way the world's outlook to the economics and the role of govt in society.

No other single book, before or since, has had quite such an impact. In the twenties Keynes was a believer in the quantity theory of money (today called monetarism)
Keynes's General Theory was path breaking in several ways.
The two most important are, first, that it introduced the notion of aggregate demand as the sum of consumption, investment, and government spending. Second, it showed (or purported to show) that full employment could be maintained only with the help of government spending. Economists still argue about what Keynes thought caused high unemployment. Some think that Keynes attributed unemployment to wages that take a long time to fall. But Keynes actually wanted wages not to fall, and advocated in the General Theory that wages be kept stable.

1st published in 1776, The Wealth of Nations is generally regarded as the foundation of contemporary economic thought. Adam Smith, a Scottish prof. of moral philosophy, expounded the then-revolutionary doctrine of economic liberalism.
Combining economics, political theory, history, philosopy and practical programs, Smith assumes that human self interest is the basic psychological drive behing economics and that a natual order in the universe makes all the individual, self interesed battle add up to social good.
His conclusion, that the best program is to leave the economic process alone and that govt is useful only as an agent to preserve order and to perform routine functions, is now known as non-interventionism.
His book is in one of the most referred books list of economics lecturers, i myself heard of it, maybe hundred times during my undergradute days.. )

Quoted passages from his book...
AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS
by Adam Smith 1776

The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations. According therefore as this produce, or what is purchased with it, bears a greater or smaller proportion to the number ofthose who are to consume it, the nation will be better or worse supplied with all the necessaries and conveniences for which it has occasion.
But this proportion must in every nation be regulated by two different circumstances; first, by the skill, dexterity, andjudgment with which its labour is generally applied; and,secondly, by the proportion between the number of those who areemployed in useful labour, and that of those who are not so employed.

Whatever be the soil, climate, or extent of territoryof any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two circumstances.