For a more evidence-based approach, I'll go with Keynes' General Theory, which works, but has few adherents among the major parties in the West.
If we wanted to try and accurately describe the economic policy by the government in Washington, you'd have to describe the monetary and fiscal policies. Both of these since 2007 have been Keynesian far more than the other two schools (Monetarist and Austrian).
This hasn't always been the case (Friedman was much more in vogue from the late 70s to approximately late 90s as measured by policies put in place).
Keynes General Theory could theoretically work as he describes in his book, but is unrealistic in practice because of the political dynamics in government.
[1]http://krugman.blogs.nytimes.com/2009/10/05/the-story-of-the...
Im sorry this is not right. It is in fact dead wrong!
The austrian have from the VERY, VERY start objected to models that discribed market as perfect, or people as perfectly rational. Go into the internet and look up what austrians actually say about markets, google 'Market Process Theory'. It is actually the case that most of austrian theory trys to figure out how a groupe of ignorent humans like we are with our imperfection can creat such a complex structure of production or what Hayek called 'The extended order'
Why do people that have a bar half knowlage of economics, clame such wild things about a 120 year old tradition of economic thought.
The thing that most austrians clame, is that the market produces better results then a goverment influencing the market can that is because goverment does not have the knowlage (nor the insentive but that more public choice theory) to imporve the market outcome.
The problem is that with optimal we usally mean theoreticly optimal in such debates. In terms of practical solution we speak of comperative advantage (in comperative institutional analysis).
http://www.aei-ideas.org/2012/08/explaining-paul-ryans-austr...
Sure Bush talked about Free Markets but not even closly did anything about it, what he did was start a war, make a lot of debt, regulation increased in that time too.
Goverment only ever gets bigger, with very few expetion. From a free market perspective the republicans are not any diffrent then the democrats.
I btw am not from america, I have no idiolocial views in american politics, I just obeserve that both partys are not free market at all.
It was actually a democrat who was the only one that at least ran on a balanced buget (clinton).
Maybe you cannot describe those policies as Monetarist or Austrian. But given that everybody's policies there are driven by some desire to cut the budget deficit at a time of a very weak economy - with the only disagreement being over how the cuts should look - it just seems very bizarre to call that Keynesian.
First of all neither stimules nor saving companys is anything to do with free markets.
Both party want to spend more money, I would not belive for a second that republicans are more free market then democrats. The like to talk about it more but they infact are just ass bad. The real diffrence is what friends they have.
Both partys like to spend money on there friends.
Lets talk about free markets again when the actually DID cut the buged and I think nobody denys that the stimuls is keynesian.
What has to be considerd is that goverment actors are just as dumb ass market acters, with the importend diffrance that there own ass is not on the line.
I think the biggest error in 20 century economics has been to think that the general equillibrium model has any relevane to the real world.
We can agree on this part, and I'll further add that it's also a tremendous error to ignore that the equillibrium is dynamic and to ignore or downplay what happens in the intermediate periods during which the system is in disequillibrium.
To explain how the market reaches equillibrium (mostly only in theory) or how it at least sometimes moves towards equillibrium (mostly in the real world) is what economic analysis must provide. Just like Darwin explained what make evolution work.
The Theory behind this is called Market Process Theory, it is mostly created by people from the Austrian School of Economics but also from a lot of swedish economist.