The Demand Side of the Neoclassical Model

Economics is a discipline whose scientific development has closely reflected the political temper of the times. One would expect this from a subject intimately involved in the welfare of people. As a separate, clearly-defined field of study, economics emerged in the eighteenth century, and from that point until the late nineteenth century was usually called ‘political economy’. The first great figure in political economy was Adam Smith, and all economists from Smith to J. S. Mill (who wrote about ninety years later) are referred to collectively as the ‘classical’ economists. This group of writers had an important common characteristic from the point of view of those that superseded: they all incorporated in their analysis a value theory based upon the labour content in commodities.