"IntroductionIntroduction: Adam Smith’s TheoryAdam Smith was a Scott philosopher who lived in the 1700s. He is considered to be the father ofmodern economics. During his time, the philosophy of economics was an overall study of humansociety in general. It was more concerned about the questions asked with aspect to the meaningof human existence. Based on these theories going on at that period of time, Smith made aconclusion that collectively every individual in the society ends up producing and purchasing thegoods that they require as a society in general(Smith,1982). This mechanism that happens byself-regulations was named as the “invisible hand” in his book which was called the “Wealth ofNations that published in 1776, which coincidentally was the year of American independence.Smith is widely viewed as a philosopher who was responsible for the capitalist revolution. Histheories were more respected for their practical applications than their analytical aspects. Theacceptance of these policies by the increasing and growing capitalist class led to policy proposalsbeing made and economic practices being developed based on Smith’s Theories (Klein, 2008).This discovery of Smith, laid the foundation for what we know today as the classical economics.The key doctrine of this theory is what is called a laissez-faire attitude of the government indealing with the market place, and thus allowing the “invisible hand “to guide the society in itseconomic attitude (Klein, 2008).Introduction: Keynes’ TheoryJohn Maynard Keynes was a British economist who was born in 1883. He examined capitalismin depth and had very influential views about them. These views were however very differentfrom other great economists who lived before his time like Karl Marx or Adam Smith. Keynespublished his General Theory of Employment, Interest and Money in 1936 which involved adiscussion about the propensity of individuals to either spend or to save the additional income astheir incomes increases, and the effects these would have on the economy on a large scale over aperiod of time (Elliott, Atkinson, 2008).The great significance of Keynes work lies in the fact that he attributed the importance of therole of a government in a capitalist economy. Keynes was at his prime during the Great depression, during the time at which the unemployment in United Sates had reached a whopping25 percent with millions of people losing their jobs along with their life’s savings in addition tothat, there was also no clearly visible path out of depressions for the people and the governmentsin general. So there was a vast criticism during that time about Adam Smith’s invisible handtheory and questions were being raised about the same (Friedman,1968). The period was beingconsidered as a worldwide death of economic activity and capitalism in general. Keynes had alsoplayed a very significant and a key role in setting up of the International Monetary Fund (IMF)and also many other political measures taken after World War 2. Keynesian economics is theapproach to economic policy where in the government in its power allows spend, tax, andborrow to keep the economy in a stable as well as improving state. Any economist who believesin this theory is considered to be a follower of Keynesian economics.The validity and theapplicability of the Keynes theory of using government money and coffers to drive up spend andimprove the economy are still debated even today (Dransfield, 2003).DiscussionDiscussion: Adam Smith’s TheorySmith however couldn’t prove a real existence of his invisible hand, but still he managed to showa lot of examples of its existing in the society in many walks of life. He stated that all thebusinesses, be it a baker, butcher or a candlestick maker all go about their businesses in a veryindividualistic ways. All of them produce the goods depending on their own judgmentof whatthey feel to be correct(Brue, Stanley, Grant, 2007).Again at a personal level, all of them buy theproduced goods that they individually need; again they consult each other about the same for thisas well. Moreover neither the government nor the king,who existed in those time interfered intheir individual affairs. So this was the way he explained for the first time how a free economyworks.This is considered to create the greatest good for the greatest number of people andinvariably leads to economic growth.Smith thereafter has also given his theories pertaining tothe dynamics of the labor market, wealth accumulation and productivity. In general, Smith’swork laid the foundation work for generations of economists to delve and discuss about(Falkner,1997). "