Alfred Marshall and Beginning of Neoclassic Economics

Alfred Marshall is regarded as the father of Neoclassical Economics, who began with a strong mathematical background and held a humanitarian outlook for lower-income individuals.

He synthesized ideas from classical economists to establish neoclassical economics. Classical economists like Smith, Ricardo, and Mill had differing methodologies, from combining theory and history to abstract deduction. They shared notions of universal economic truths, market-driven solutions, and the importance of households and firms.

Post-Ricardian dissent emerged, challenging classical value theory and favoring utility and demand. Marshall emerged from methodological debates, advocating a unified approach and a broad scope in economics, rejecting simple causal chains for complex interactions in price determination. His concepts like the margin and partial equilibrium aided analysis. While neutral, he leaned toward classical elements, broadening economics' scope and emphasizing cost and supply for prices, including opportunity costs in the short run and real costs in the long run.

Despite using Bentham's psychology, Marshall's "Principles" laid the foundation for microeconomic theory, with subsequent contributions largely technical. Joan Robinson and Edward Chamberlin extended their work on market structures. However, Marshall lacked analysis on income and employment, addressed later by Keynes within Marshall's supply-and-demand framework for aggregates. Marshall's legacy rests on his balanced approach, synthesis of methodologies, and influential contributions to neoclassical economic thought.

Writing by

Nethmi Kaveesha

References

§  Landreth, H., & Colander, D. (2002), History of Economic Thought (4th ed.), Houghton Mifflin Company.

§  Marshall, Alfred (1842–1924). (n.d.). Retrieved from https://carleton.ca/keirarmstrong/learning-resources/selected-biographies/marshall-alfred-1842-1924/