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What's the difference between Neo-classical and classical economics?
Royal Goddess asked 5 years ago
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Girlie answered 5 years ago
The difference between classical and orthodox theory
Classical and neoclassical theories are distinguished in terms of their themes in analyzing economy, methodology, and value theory. In this section, I will discuss these points. The question of Economics
Classical economists investigated two central economic questions: what causes an economy to grow? what determines the distribution of income into its three forms of wages, rent and profit? The classical theme is the accumulation and allocation of surplus output, and therefore their emphasis was on production and on the factors that influence the supply of goods.
Neoclassical economics, unlike its classical predecessor, focuses on individual choices,which unavoidably reflect subjective preferences and beliefs, and the allocation of given resources among alternative uses. Indeed, the marginalist revolution is a shift in focus from capital accumulation and growth to utility maximization and production efficiency as the aims of economic policy. This shifted the foundation of economics from production to exchange.
On the other hand, the Classical theory paid comparatively little attention to choices of individuals. The classical economists did not believe that there was much of general interest to be said about the preferences of or choices of individuals. Instead, they divided agents into three major classes: capitalists with their capital or stocks of accumulated goods, landlords with their land, and workers with their ability to work.
The aspect of methodology
Holism vs. Individualism
Methodological holism is a view, according to which properties of individual elements in a complex are taken to be determined by relations they bear to other elements. That is, the whole is more than its
Royal Goddess asked 5 years ago
Answer
Follow
Watchlist
Best AnswerVoter's Choice
Girlie answered 5 years ago
The difference between classical and orthodox theory
Classical and neoclassical theories are distinguished in terms of their themes in analyzing economy, methodology, and value theory. In this section, I will discuss these points. The question of Economics
Classical economists investigated two central economic questions: what causes an economy to grow? what determines the distribution of income into its three forms of wages, rent and profit? The classical theme is the accumulation and allocation of surplus output, and therefore their emphasis was on production and on the factors that influence the supply of goods.
Neoclassical economics, unlike its classical predecessor, focuses on individual choices,which unavoidably reflect subjective preferences and beliefs, and the allocation of given resources among alternative uses. Indeed, the marginalist revolution is a shift in focus from capital accumulation and growth to utility maximization and production efficiency as the aims of economic policy. This shifted the foundation of economics from production to exchange.
On the other hand, the Classical theory paid comparatively little attention to choices of individuals. The classical economists did not believe that there was much of general interest to be said about the preferences of or choices of individuals. Instead, they divided agents into three major classes: capitalists with their capital or stocks of accumulated goods, landlords with their land, and workers with their ability to work.
The aspect of methodology
Holism vs. Individualism
Methodological holism is a view, according to which properties of individual elements in a complex are taken to be determined by relations they bear to other elements. That is, the whole is more than its