An overview of major economic doctrines since the 19th century
Before we dive into the first major 19th century doctrine, it's important to first highlight the major economic practice of the time: mercantilism. According to mercantilistic doctrine, the wealth of a nation came from the accumulation of gold and keeping a positive international trade balance, often achieved through policies such as tariffs and protectionism.
In response to mercantilism, Adam Smith, with the publishing of The Wealth of Nations in 1776, proposed what came to be the ideological backbone for early industrial capitalism. This period was marked by the economic doctrine of Laissez-Faire (1800-1870), the belief that markets are intrinsically self-regulating, and are best left alone without government intervention.
According to Adam Smith, the wealth of a nation comes not from the gold it hoards, but from the goods and services it is able to produce. Therefore, it's best for a country to invest in specializing in efficiently producing the goods it is able to do best, while trading with other countries for the rest.
At the same time, Marxism (1848-1991) reframes industrial capitalism as a historical “class struggle” over the ownership of the means of production. According to Marx, profit is driven by the surplus value of labor, which is then captured by the “owner” class. To this end, a centrally-planned economy should be built not around profits, but around the welfare and the needs of the population.
Neoclassical Economics (1870-present), on the other hand, builds around the idea that goods and services bear no “intrinsic” value: they are worth exactly what other individuals are willing to pay for the perceived benefit.
Neoclassical theory assumes that each individual is a rational agent who thinks “at the margin”--according to the merits of each presented trade--, maximizing in the end their own well-being and satisfaction (also known as “marginal utility”).
Therefore, supply and demand are the natural equilibrium forces that self-regulate the economy and lead to societally efficient allocation of resources.
The Great Depression (1929), though, revealed the reality of a self-sustaining market failure, where the markets failed to self-regulate, leading to widespread stagnation and economic hardship.
In response to the shortcomings revealed, Keynesianism (1930-1970) proposes that the government plays a central role in increasing spending and providing money in the form of stimulus to kick start the economic recovery.
Under this doctrine, the government should adjust the monetary and fiscal policies with the purpose of controlling the “heating up” and the “cooling down” of the economy, thus preventing economic downturns for the shared continuity of economic activity and societal prosperity.
Finally, the most recent doctrine, Neoliberalism and Monetarism (1980-2008) addresses the perceived failing of Keynesian doctrine to address “stagflation”, which is composed by high inflation paired with high unemployment.
According to Monetarism, inflation is essentially caused by monetary policies which increase the supply of money while not contributing to a greater supply of goods and services.
Neoliberalism focuses on supply-side economics, advocating for cutting taxes and deregulating industries as means to attract private-sector investments to the economy (as opposed to greater government spending).
In addition to that, neoliberalism posits that, since private enterprises depend on profit for continued activity, that incentive creates more efficient business structures than their state-owned counterparts. Therefore, the government should, whenever possible, allow the privatization of major state-owned companies.
Finally, it's important to note this is a very quick overview of major economic doctrines; it's inevitable that some simplifications were made. What's interesting to note, though, is how each doctrine comes as a “response” to the major shortcomings of an existing context.
Therefore, nostalgic appeals to the “golden old days” of a previously popular doctrine must, necessarily, address the empirically and historically known shortcomings; or at least argue why they do not apply in a current context.