Neo-Classical Theory

Discipline: Economics

Influenced by classical economic theory, neo-classical theory developed after World War II in opposition to the Cambridge School. It focuses on micro-economic theory and explores the conditions of static equilibrium.

Neo-classical theory is essentially concerned with the problems of an economy enjoying equilibrium at full employment.

The neo-classical theory is also concerned with savings-determined investment, marginal utility and marginal rates of substitution.

Leading adherents and developers of the theory were John Bates Clark (1884-1963), Francis Edgeworth (1845-1926), Irving Fisher (1867-1947), Alfred Marshall (1842-1924), Vilfredo Pareto (1848-1923), Leon Walras (1834-1910), and Knut Wicksell (1851-1926).

Also see: neo-classical growth theory

Source:
J F Henry, The Making of Neoclassical Economics (London, 1990)

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