neoclassical economics


Also found in: Financial, Wikipedia.

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 ?
The epistemic hubris of neoclassical economics stems from its seeing itself as a value-neutral pure science, like physics.
In this context neoclassical economics is only one of the suggested approaches (Knight 1972, p.
Mirowski, reflecting on his own early dalliances with cliometrics, points out that it should always have been apparent to all that history and neoclassical economics were like 'oil and water' (Mirowski 2004).
139) "Austrian and Neoclassical Economics: Any Gains From Trade?" Mises and other Austrian economists explain the importance of disequilibrium, the entrepreneur, and the competitive process, which can be overlooked by focusing only on equilibrium positions.
Views that combine Marxism, Keynesianism and neoclassical economics are bound to be complex, and at times confusing, but they very well can be part of the solution to the world's problems.
Central to the book's argument is its critique of the ways in which neoclassical economics treats the topics of nature and energy.
Furthermore, because Austrian economics goes against some key elements of neoclassical economics, both in terms of foundations and in terms of policy implications, to be convincing a sympathetic presentation needs to avoid straw-manning neoclassical economics.
To this argument, the author adds the influence of two events that left Neoclassical economics as the dominant paradigm.
Neoclassical economics is the name given to the approach.
Neoclassical economics began about a century after Smith, when three economists (W.
Before the Great Depression mainstream economists dutifully embraced what they called neoclassical economics." This economic science" showed they said that what profited business benefited the whole society.
Consider three business practices that neoclassical economics and game theory have determined generally to be efficient but occasionally harmful to competition: predatory pricing, unilateral refusals to deal, and product tying and bundling.