Introduction to the Neoclassical Economic thought

Neoclassical economics, a cornerstone of modern economic thought, emerged in the late 19th century as a response to the shortcomings of classical economics. Major economists, including Alfred Marshall, W. S. Jevons, Carl Menger, and Leon Walras, laid the foundation for neoclassical thought, transitioning from a macroeconomic to a microeconomic perspective and introducing marginal analysis as a major tool.

In the early 1870s, the "Theory of Political Economy" was written by Jevons in English, the "Principles of Economics" by Menger in German, and the "Elements of Pure Economics" by Walras in French. These seminal publications introduced the concept of marginal analysis to economic theory, which marked the beginning of neoclassical economics.

Alfred Marshall is considered the father of neoclassical economics. He introduced the concept of marginal utility and examined how individuals make choices based on marginal costs and benefits. This shifted the focus from the classical emphasis on production to the neoclassical emphasis on consumption and individual preferences.

Leon Warlas introduced the concept of general equilibrium, illustrating how markets for goods and services interact to establish equilibrium prices and quantities. W.S. Jevons proposed the concept of marginal utility, asserting that a commodity's value depends on its marginal utility to consumers. Carl Menger focused on subjective value and individual preferences, emphasizing the role of utility in shaping economic choices. Neoclassical economics also introduced concepts such as opportunity cost, perfect competition, and rational choice theory.

In conclusion, neoclassical economic thought builds upon classical economics by shifting focus towards individual preferences, utility, and market equilibrium. Alfred Marshall, along with Jevons, Menger, and Walras played crucial roles in shaping this evolution. Their insight into marginal utility, subjective value, and general equilibrium revolutionized economic analysis and paved the way for the modern understanding of markets and consumer behavior.

 

Writing by, 

M.S.Nikesha

References,

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