neoclassical economics

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neoclassical economics

the approach to economic analysis, arising especially from the work of Alfred Marshall (1842-1924) and Leon Walras (1834-1910). This dominated ECONOMICS between 1870 and 1930. It replaced the explicitly sociopolitical analysis, in terms of land, capital and labour, which characterized the work of CLASSICAL ECONOMISTS, including MARX (see also POLITICAL ECONOMY), with a more formal analysis of the conditions for the optimal allocation of scarce resources. The approach can be described as ‘subjectivist’, since its central concept, utility, defined as the ‘individual’ satisfaction obtained from the consumption of a good or service, cannot be measured directly but can only be inferred from market behaviour. The approach is also known as marginal analysis, since its central assumption is that economic returns will be maximized whenever equilibria are reached in competitive markets, the point at which ‘marginal utilities’ or ‘marginal revenues’ cease (i.e. where no more of a good or service will be purchased, or where one more unit of production would yield a negative return). While earlier theories of VALUE based on the ‘costs of production’ found room for notions such as EXPLOITATION, no place exists for these in neoclassical theory. Thus it has been suggested that neoclassical economics be seen as involving special pleading on behalf of CAPITALISM AND CAPITALIST MODE OF PRODUCTION. Others, however, argue that the ‘marginal revolution’ in economics can be accounted for by the inherent superiority of this mode of analysis.
References in periodicals archive ?
Before turning to the dominant Neoclassical school, the author employs arguments to explain how it came to dominate the profession.
The neoclassical school concludes that, "[d]ual distribution does not change ordinary incentives for vertical restraints.
For example, Block contrasts the definition of competition, which the neoclassical school teaches to be one of perfect competition, while the Austrian school rejects that notion to advocate the concept of rivalrous competition.
Both the neoclassical school and political economy school of thoughts have relevance to economic policy tackling the aging population problem.
Not all PAE economists oppose the premises of the dominant neoclassical school, but they all agree that neoclassical theory cannot stand on its own.
I intend rather to highlight the conceptual issues surrounding the socioculturalist challenge to the neoclassical school.
While a student at Yale College (now Yale University), Trumbull wrote two kinds of poetry: "correct" but undistinguished elegies of the Neoclassical school and brilliant comic verse that he circulated among friends.
On the other hand, it is well known that Neoclassical School, as early as the latter quarter of the nineteenth century, shifted their attention from issues concerning economic growth and income distribution to the related matter of price formation.
The neoclassical school that totally dominates bourgeois economics in our time may be said to have a vision too, but this vision is so totally dominated by the spirit of apologetics that it turns into a pale and lifeless caricature of the historical reality it purports to reflect: instead of classes in collision and conflict, the actors are powerless individuals seeking to maximize their utilities through the medium of impersonal markets; in this fantasy world they are all equal and have no interrelations outside the market; the dynamics of the system is to move, more or less smoothly and expeditiously, toward a state of general equilibrium; the system's historical destiny is to reproduce the status quo ad infinitum.
On the other hand, the high "capital liquidity" pointed out by the neoclassical school is explained in the context of ABCT as a result of bank credit expansion.
The impact of the increased attention to basic needs is discussed in Chapter 9 (The Basic Needs Paradigm) and the key development contributions of the neoclassical school are reviewed in Chapter 10 (The Neo-classical Paradigm and its Role in Development Economics).
Critiquing the dominant classical and neoclassical schools of economic thought as well as that of Karl Marx, Gleicher calls on people to go beyond an economic isolation.