There have been many critiques of neoclassical economics, a number of which have been incorporated into newer versions of neoclassical theory, whilst some remain distinct fields. ==Classification== The term was originally introduced by Thorstein Veblen in his 1900 article "Preconceptions of Economic Science", in which he related marginalists in the tradition of Alfred Marshall et al.
Until the 1930s, the evolution of neoclassical economics was determined by the Cambridge school and was based on the marginal equilibrium theory.
At the beginning of the 1930s, the Lausanne general equilibrium theory became the general basis of neoclassical economics and the marginal equilibrium theory was understood as its simplification. The thinking of the Cambridge school continued in the steps of classical political economics and its traditions but was based on the new approach that originated from the marginalist revolution.
Until the 1930s, John Maynard Keynes was also influencing the theoretical concepts of the Cambridge school.
The first phase (= a pre-Keynesian phase) is dated between the initial forming of neoclassical economics (the second half of the nineteenth century) and the arrival of Keynesian economics in the 1930s.
Despite the diverse focus and approach of these theories, they are all based on the theoretic and methodologic principles of traditional neoclassical economics. An important change in neoclassical economics occurred around 1933.
The second phase is dated between the year 1940 and the half of the 1970s.
This theory heavily influenced the anti–trust policies of many Western countries in the 1940s and 1950s. Joan Robinson's work on imperfect competition, at least, was a response to certain problems of Marshallian partial equilibrium theory highlighted by Piero Sraffa.
This approach has often been justified by appealing to rational choice theory, a theory that has come under considerable question in recent years. Neoclassical economics dominated microeconomics and, together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as Neo-Keynesian economics from the 1950s to the 1970s.
This theory heavily influenced the anti–trust policies of many Western countries in the 1940s and 1950s. Joan Robinson's work on imperfect competition, at least, was a response to certain problems of Marshallian partial equilibrium theory highlighted by Piero Sraffa.
The attempt to combine neo-classical microeconomics and Keynesian macroeconomics would lead to the neoclassical synthesis which was the dominant paradigm of economic reasoning in English-speaking countries from the 1950s till the 1970s.
This was explored in a major debate in the 1960s—the "Cambridge capital controversy"—about the validity of neoclassical economics, with an emphasis on economic growth, capital, aggregate theory, and the marginal productivity theory of distribution.
And Becker's subsequent 1962 paper can be seen as an independent and sufficient justification for neoclassical market demand analysis.
This approach has often been justified by appealing to rational choice theory, a theory that has come under considerable question in recent years. Neoclassical economics dominated microeconomics and, together with Keynesian economics, formed the neoclassical synthesis which dominated mainstream economics as Neo-Keynesian economics from the 1950s to the 1970s.
It competed with New Keynesian economics as new classical macroeconomics in explaining macroeconomic phenomena from the 1970s till the 1990s, when it was identified as having become a part of the new neoclassical synthesis along with New Keynesianism.
The second phase is dated between the year 1940 and the half of the 1970s.
The third phase began in the 1970s and is labeled as the neoclassical renaissance, the revival of neoclassical economics.
The attempt to combine neo-classical microeconomics and Keynesian macroeconomics would lead to the neoclassical synthesis which was the dominant paradigm of economic reasoning in English-speaking countries from the 1950s till the 1970s.
Hicks and Samuelson were for example instrumental in mainstreaming Keynesian economics. The dominance of Neo-Keynesian economics was upset by its inability to explain the economic crises of the 1970s- neoclassical economics emerged distinctly in macroeconomics as the new classical school, which sought to explain macroeconomic phenomenon using neoclassical microeconomics.
It competed with New Keynesian economics as new classical macroeconomics in explaining macroeconomic phenomena from the 1970s till the 1990s, when it was identified as having become a part of the new neoclassical synthesis along with New Keynesianism.
It and its contemporary New Keynesian economics contributed to the new neoclassical synthesis of the 1990s, which informs much of mainstream macroeconomics today. === Cambridge Capital Controversy === Problems exist with making the neoclassical general equilibrium theory compatible with an economy that develops over time and includes capital goods.
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