I see the difference differently. The NCs take the output as given, then show how it is divided equitably and efficiently -- from their perspective.
The classical economistswere looking at an evolutionary path in which prices gravitated toward natural levels, but I don't think that equilibrium was part of the package. On Fri, Aug 03, 2007 at 07:08:33PM -0700, Jim Devine wrote: > 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 -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
