Neoclassical economics Neoclassical theory attaches basic importance to three economic acts that are attributed to all individuals: owning, buying, and selling. It assumes that all goods and services are privately owned by individuals and that all individuals seek to maximize their satisfaction from consumiilg goods and services. Neoclassical economists proceed to analyze what such rationally motivated individuals will do with their property as they maximize their satisfaction. Will they sell their own goods and services for money to buy the goods and services of others which they prefer? Will they sell the service that is called their labor to an individual who will use it to produce other goods and se.rvices? Or will they buy the labor of others and the machines of others, and so on, in order to carry on production themselves? Notice right away that neoclassical theory is based on presumptions about individual human nature. Notice also that the arena in which individuals are presumed to act economically is the market: literally the place where things are bought and sold. At the center of attention are individual private property owners who are free to sell or not sell what they own in the markets around them. Finally, notice that the theory divides goods and services into two broad groups: (1) those that are destined for individual consumption; and (2) those that.. are destined to be used up in producing other goods and services. The market is understood as a place where individuals come with their property to sell and/ or to buy as they wish for the purpose of maximizing their satisfaction. Neoclassical theory does not just analyze markets, it celebrates them. Markets are praised as the best possible institution in which to accommodate the diverse goals of diverse individuals with diverse property holdings. All actions in markets are thought to be voluntary; you buy or sell only when you want to. You advance your interests by selling something only if and when you can find in the market someone whose own interests are advanced by buying what you wish to sell. Every transaction is mutually beneficial or else it will not occur. ... Marxian economics By contrast, Marxian economic theory proceeds by focusing first and foremost on class exploitation. It defines class as a process whereby some people in society produce goods and services for others without obtaining anything in exchange. Marxian theory begins not with presumptions about human nature but rather with presumptions about social relationships, which shape and change what human beings are and think and do. Individuals are understood to be born into social arrangements they did not create nor choose to live with. In Marxian theory, the logic runs from an analysis of social relationships to the resulting patterns onndividual behavior. The emphasis is on class as one economic relationship within the broader society. This reflects Marxisms view that the class division of society into exploiters versus exploited-those who obtain goods and services produced by others versus those who must produce for others-is unjust and has an undesirable influence upon every aspect of that broader society. Marxian economic theory also is intertwined with a philosophic position: that the individualism and free markets favored by the neoclassicals serve to hide and perpetuate class injustice. Marxian economic theory approaches the economy as a complex set of relationships, and includes class exploitation alongside the buying and selling and owning emphasized by neoclassical theory. Indeed, a major purpose of Marxs original critique of classical economics was to remedy what he saw as its fear and loss of theoretical nerve inthe face of class exploitation. Thus Marxian economic theory persists to this day in its insistence on the role of class in economic analysis. Starting from its presumption of class exploitation, Marxian theory proceeds to explore how other aspects of an economy and of the broader society interact with that societys specific class structure (its specific division of citizens into antagonistic; class groupings). ... (D. Wolff/ A.Resnick: Economics, Marxian v/s Neoclassical)
Posted on: Sun, 26 Oct 2014 17:04:38 +0000
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