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The background

In: Classical Economic Theory and the Modern Economy

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The chapter outlines the shifts in economic theory that have occurred since classical times, with an emphasis on the disappearance of the classical theory of value through the introduction of marginal analysis, along with the disappearance of the classical theory of the cycle and its replacement with Keynesian macro. Modern macro focuses on aggregate demand, while micro is a highly mathematized discussion of marginal utility, marginal revenue and marginal cost. Classical theory focused on the theory of the cycle as an entirely supply-side issue, while in relation to the theory of value classical theory based its understanding on the role of relative prices, with the focus on production costs in relation to the level of demand.

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  • ., 2020. "The background," Chapters, in: Classical Economic Theory and the Modern Economy, chapter 3, pages 45-55, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:17468_3
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    Keywords

    Economics and Finance;

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