the meth. ind. one was yesterday's. Here's today's: is it accurate to say that
classical economics (Smith, Ricardo, Marx, etc.) focused on the _tendency_ for markets to move toward equilibrium, with prices revolving around "centers of gravity" (natural prices, prices of production) but never really attaining them, while on the other hand, neoclassical economics, by formalizing Smith, has shifted the emphasis to the actual attainment of equilibrium -- and then staying there until an exogenous shock disturbs the equilibrium? (this is the comparative statics method.) part of the difference here is that the classicals focused on long-period equilibrium (with equalized profit rates) while the neoclassicals brought in short-term equilibrium, which is always attained pretty quickly. The neoclassicals also dropped the rate of profit, to see it instead as "normal profits," i.e., the opportunity cost of a capitalist staying in its industry (which in turn reflects the scarcity of the "factors of production" owned by capitalists, i.e., capital goods, natural resources, and entrepreneurial skills). I've been told that they also dropped the equalization, but that seems doubtful. However, if they did, that would explain how they can continue to use aggregate production functions and the Solow-Swan growth model. -- Jim Devine / "The more you read and observe about this Politics thing, you got to admit that each party is worse than the other. The one that's out always looks the best." -- Will Rogers
