Now for the sake of this article (I already heard the protest of, "what only two primary competing economic theories?") I am only talking about the two competing economic theories currently at the forefront of modern American Capitalist economic practical application. There is the school of Keynesian Economic Theory, based largely on work of the twentieth-century British economist John Maynard Keynes and "Supply Side" or "Reganomics" based in part on the works of Robert Mundell and Arthur Laffer.

There are many differences, but I will distill them down to the basics so that when you here Keynesian or "Supply Side" or "Reganomics" or "The Laffer Curve" tossed around in the evening news shows, you will have a general understanding of what is both stated and implied by the comparisons. 

Keynesian Economics is based upon Keynes work "The General Theory of Employment Interest and Money".  The primary gist of the theory is that the state (i.e. government) can stimulate economic growth and improve stability in private business through managed control of interest rates, taxation and various public works projects.  This policy is often considered demand-side economics, where government policy can be used to increase demand during times of economic downturn thus avoiding higher unemployment rates and losses of output.  Keynes argued that mass unemployment and deflation can be avoided by managing demand.  Keynesian Economics favor tax decreases for lower income earners citing that lower income earners are more likely to spend the difference rather than save the interest, thus fueling consumer spending which in turn will create more jobs to meet the increased demand. 

One of the tenets you will often here is the "multiple of the original investment" concept.  This you hear Barack Obama speak of often. This concept is best summed up with the following: The Government investment in infrastructure will result in more spending in the general economy, which will stimulate production and capital investments involving still more income and spending.  The initial investment, in theory, will start a cascade of events, which the end result will be positive economic activity that will "multiply" the initial government investment. 

Keynes is often associated with both collectivist and social democrats due to his theoretical necessity for centralized planning to manage demand.  Keynes also wrote, in response to that his theory lend itself toward totalitarian abuses, "the theory of aggregated production...nevertheless can be much easier adapted to the conditions of a totalitarian state tan the theory of production and distribution...under the conditions of free competition..."(1)

Reaganomics is an amalgemation of ideas most often attributed to Robert Mundell and Arthur Laffer.  The primary focus is on marginal tax rates.  In theory, buy leaving more capital in the hands of investors you will increase supply and spur overall economic growth. The focus on capital supply to the markets to invest and create jobs is contrast with the Keynesian focus on creating demand for goods and services at the consumer level to create jobs.  The "supply-sider" will argue that by creating more jobs via favorable investment climates, you will by natural progression increase demand for goods and services as new income earners enter the workforce and market place. 

Reaganomics takes "supply-side economics" a step further with a fairly simple four point strategy. 

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1. Keynes, John Maynard. Foreword to the General Theory. Foreword to the German Edition/Vorwort Zur Deutschen Ausgabe