# Marginalism

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*The Great Soviet Encyclopedia*(1979). It might be outdated or ideologically biased.

## Marginalism

one of the methodological principles of bourgeois political economy, based on the use of the analysis of marginal values in research on economic laws and categories.

Marginal analysis in economic theory was introduced in the middle of the 19th century by A. Cournot of France and J. von Thuenen and H. Gossen of Germany. Marginalism became widespread in the last quarter of the 19th century, when bourgeois political economists initiated an intensive search for new forms and methods of theoretical analysis and of capitalist apologetics. Marginalism was used after about 1880 by the basic schools in bourgeois political economy, such as the Austrian school and the mathematical school. A thorough substantiation of marginalism was developed by J. B. Clark.

Marginalism views economics as the interaction of individual economies. In marginalism the study of the laws of economic functioning is based on the analysis of the economic behavior of the decision-maker during the production process and in the market. In this analysis quantitative methods can be used. Mathematical analysis is particularly useful in studying the functional connection between factors (for example, the dependence of demand for merchandise on the price, the prices of other goods, and the income of the consumer; the effect of various ratios of input of labor and capital on productivity). It is equally useful in deriving marginal functions (marginal utility, demand elasticity, the marginal productivity of the factors of production). The specific mathematical approach for marginal analysis was developed by the economists of the mathematical school.

The shift from free competition to all-powerful monopolies, and also the growing rate of state-monopoly regulation of the economy, placed before the bourgeois economists a number of practical tasks that could not be implemented by a strict reliance on the subjectivistic understanding of economic processes. Among the tasks were determining the use of economic-mathematical models, analyzing and forecasting market trends, computing the coefficients of the elasticity of demand, and optimalizing production inputs.

The characteristic feature of contemporary marginalists is the departure (although inconsistent) from the orthodox subjectivist interpretation of the economic categories and the enhancement, especially in the works of econometrists, of the role of formal-logical and empiric analysis. Thus, several bourgeois economists and econometrists (H. Schultz, C. Cobb, and P. Douglas) were able to develop mathematical methods of research into some problems of the economy, particularly forecasting and analyzing demand and optimalizing production inputs. A number of provisions and findings of the marginal-school economists had a definite influence on the development of a number of fields of applied mathematics, including theory of games, linear programming, and operations research. The basic marginalistic conceptions, such as marginal utility, marginal rate of replacement, marginal productivity, and marginal capital efficiency, are used in the contemporary bourgeois theories of demand, the firm, prices, and market equilibrium.

Overt attempts to refute the basic principles of Marxist political economy—the labor theory of value and the theory of surplus value—and the overestimation of the possibilities of quantitative analysis of economic theory characterize the methodology of marginalism. These traits of marginalism objectively brought its supporters to a simplified formal understanding of the complex system of social relations, to the creation of abstract models not reflecting reality, and to the formulation and support, with the help of mathematical techniques, interesting as such, of false and antiscientific reasoning. In modern bourgeois political economy, the basic ideas of marginalism (such as free enterprise) are defended by a number of economists (L. von Mises, F. Machlup); some of the marginalist principles and mathematical techniques have been developed and applied to the analysis of the problem of market equilibrium (G. J. Stigler, P. Samuelson, R. Quandt) and have been used by bourgeois econometrists (including A. Wald and J. Duesenberry).

### REFERENCES

Lenin V. I. “Agrarny vopros i ’kritiki Marksa,’”*Poln. sobr. soch*. , 5th ed., vol. 5.

Bliumin, I. G.

*Kritika burzhuaznoi politeconomii*, vol. 1. Moscow, 1962.

Seligman, B.

*Osnovnye techeniia sovremennoi economicheskoi mysli,ch*. 3. Moscow, 1968. (Translated from English.)

Mileikovskii, A., S. Nikitin, and R. Entov. “Evolutsiia marzhinalizma: burzhuaznye teorii stoimosti i tseny.”

*“Voprosy economiki*,” 1968, no. 12.

Al’ter, L. B.

*Burzhuaznaia politicheskaia ekonomiia SShA*. Moscow, 1971. Chapter 8.

G. G. ABRAMISHVILI