3. Translate the text. Economic theories

As we were reading in lesson 1 Alexander came to London to study economics. Now that he has returned home he is ready to apply his knowledge in his practical work in Russia. Before coming to London he was sure that market economy was a magic arrangement enabling to solve all economic problems which arise in society. He also knew that economics was a science producing accurate understanding and explanation of the workings of the economy. But now he knows that there are a lot of conflicting sociopolitical theories on many issues which are covered by economics. He was taught that the most persistent debate in economics had focused on the degree to which the government was able to improve the economy’s performance. And he was informed that none of the competing theories had performed spectacularly well. Indeed few economists have successfully predicted major economic events. Even annual forecasts of inflation, unemployment and output are regularly in error. He also learnt that there were never-ending arguments about, for example, what had caused such dramatic world event as the Great Depression of the 1930s.

Two hundred years ago, Adam Smith convinced most of the world that economy worked best when it was left alone. During the years of the Great Depression the British economist John Maynard Keynes forced people to rethink that conclusion. He convinced people that active government intervention in the market place was the only way to ensure economic growth and stability. For nearly thirty years this theory dominated the economics profession and public policy. And for thirty years the economy of the industrial countries displayed the longest economic boom in the history of these countries. In the early 1970s, when the economy of all industrial countries was performing badly, most of the economists were sure that Keynes’ theory would be abandoned. Since 1980s, Milton Freedman’s monetarist theory was adopted as a guide-line to run the economies of the industrial countries.

Since M.Thatcher in Great Britain and R.Reagan in the USA this theory began to be implemented in these two countries. Later it was expanded to the rest of the industrial world, although with differing degrees. As unemployment and inflation rate began to decline, supporters of this theory claimed victory. But critics pointed to the problems of poverty, homelessness, budget deficits and inadequate public services. And they emphasized that there were no signs of improvement.

4. Answer the questions.

1. Did the trip to Britain change Alexander’s view of the Western economies?

2. What was his opinion of them before the trip?

3. What is it now?

4. What made him change his views?

5. Is economics an exact science?

6. Do economists make predictions?

7. Are they always true?

8. What do you know about Adam Smith?

9. Is J.M.Keynes the most famous American economist?

10. Who is the author of the monetary theory in economics?