In his book comparing the Chicago and Austrian schools of economics, Mark Skousen clarifies the various schools of thought by their faith in Capitalism.
Marxists have no faith in capitalism. In the world of capitalism they are the atheists. “To the Marxist, capitalism is so vulnerable to crisis and inequity that the only solution is its compete dissolution. The capitalist system is broken and cannot be repaired. “
Keynesians are the agnostics of capitalism. Keynes felt that money making is a “neurosis”, denies the invisible hand of Adam Smith and felt that financial capitalism is inherently unstable. “Keynes’s solution is not to adopt Marxist socialism, but to empower the federal government to stabilize an unstable capitalist system with the tools of fiscal and monetary policy.”
The Chicagoans have a strong faith in capitalism, but their faith is based on reasoned evidence rather than unsupported faith. The Chicago School, most notably associated with Milton Friedman, does favor government intervention from time to time, such as anti-Trust laws
The Austrian School has a full faith in capitalism, and often decry much of the quantitative work of the Chicago School, sensing that the market economy is too complex to be understood with mathematical models. The Austrians share a strong faith in the free market with the Chicago school, but differ in their assessment of proper macro policy. Where the Chicago economists profess strong faith in capitalism the Austrians may be considered zealots.
Sometimes the most bitter opponents are the ones with only minor differences. (This also seems true of religious conflicts.) Hayek predicted the Great Depression by studying the monetary/ credit growth of the preceding period. Milton Friedman predicted the stagflation of the 1970.
Paraphrased from Vienna and Chicago-Friends or Foes by Mark Skousen, a comparison and contrast between the two free market schools of economic thought.
HKO further comments:
Economics is still a relatively new profession and each groundbreaking principle is refined over time by market realities, sometimes disguised as human progress. Friedman distinguished the Chicago school from the Austrians by subjecting it to more rigorous mathematical and historical analysis. But economics is centered on human action and will thus be resistant to any unified theory of behavior. What once worked in a different time, in different quantities, and in different circumstances may not work today.
But there is also a moral constraint to economics that distinguishes it from the physical sciences. While economists such as Arthur Laffer have shown that higher tax rates do not necessarily yield higher dollar revenues, there remains the moral consideration of how much of your property the government is entitled to, especially if they are only giving it to someone else. The more that the government seeks to override the actions of individuals with concern for the greater good, the greater the risk that private virtues are transformed into public vices.