Economic Schools of Thought
Economic Schools of Thought
CLASSICAL | NEOCLASSICAL | HETERODOX | INSTITUTIONAL | Classical economics focuses on the tendency of markets to move to equilibrium and on objective theories of value. School of thought that has a distinct theory of value, distribution, and growth.Classical economics tended to stress the benefits of trade. Its theory of value was largely displaced by marginalist schools of thought which sees "use value" as deriving from the marginal utility that consumers finds in a good, and "exchange value" (i.e. natural price) as determined by the marginal opportunity- or disutility-cost of the inputs that make up the product.Land value taxation was viewed favorably by the classical economists.In classical economics, the definition of capital grew out of labor mixed with earlier capital. Land, by conventional definition, was not capital, nor was it a component of wealth. Rather land was its own category. Conflating land into capital allowed land rent to be hidden and diluted in ways so that the unearned increment arising from social improvements fell to speculators rather than being returned to society in rent. | Neoclassical economics focuses on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits by cost-constrained firms employing available information and factors of production, in accordance with rational choice theory.People have rational preferences among outcomes that can be identified and associated with a value.Individuals maximize utility and firms maximize profits.People act independently on the basis of full and relevant informationNeoclassical economics emphasizes equilibria, where equilibria are the solutions of agent maximization problems. Regularities in economies are explained by methodological individualism, the position that economic phenomena can be explained by
CLASSICAL | NEOCLASSICAL | HETERODOX | INSTITUTIONAL | Classical economics focuses on the tendency of markets to move to equilibrium and on objective theories of value. School of thought that has a distinct theory of value, distribution, and growth.Classical economics tended to stress the benefits of trade. Its theory of value was largely displaced by marginalist schools of thought which sees "use value" as deriving from the marginal utility that consumers finds in a good, and "exchange value" (i.e. natural price) as determined by the marginal opportunity- or disutility-cost of the inputs that make up the product.Land value taxation was viewed favorably by the classical economists.In classical economics, the definition of capital grew out of labor mixed with earlier capital. Land, by conventional definition, was not capital, nor was it a component of wealth. Rather land was its own category. Conflating land into capital allowed land rent to be hidden and diluted in ways so that the unearned increment arising from social improvements fell to speculators rather than being returned to society in rent. | Neoclassical economics focuses on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits by cost-constrained firms employing available information and factors of production, in accordance with rational choice theory.People have rational preferences among outcomes that can be identified and associated with a value.Individuals maximize utility and firms maximize profits.People act independently on the basis of full and relevant informationNeoclassical economics emphasizes equilibria, where equilibria are the solutions of agent maximization problems. Regularities in economies are explained by methodological individualism, the position that economic phenomena can be explained by