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On Sun, 17 Aug 1997 14:33:10 MST Pat Gunning <[log in to unmask]>  
wrote: 
 
> Whatever we take "neoclassical economics" to be, don't you think that 
> the first step is to contrast it with "classical economics?"  
 
Can I add a thought prompted by Pat's question (but which probably  
doesn't help with the definition of neoclassical economics)? 
 
A major difference between classical and neoclassical economics 
which is rarely mentioned in this context is the role of demography. In  
the classical economics (Smith, Ricardo, etc.) population is  
endogenous. Wages above subsistence lead to population growth. Hence,  
in a static model, wages are reduced to subsistence (as in parts of  
Ricardo). In a growing economy wages are above subsistence, but tied to  
it (as in Smith). In (most) neoclassical economics population is  
exogenous. So in the classics wage determination is different from the  
determination of other factor incomes. In neoclassical economics wages  
and rents are essentially on a par - the amount of land and the number  
of people are given. People divide a given endowment of time between  
different uses just as land is divided between different uses. (Marx  
was confused - he tried to abandon Malthusian demographics but keep the  
subsistence wage.) 
 
Many of the main differences between ealy nineteenth (classical) economics 
and early twentieth century (neoclassical) economics seem to follow from 
this difference, not from the adoption of marginal analysis which can  
be seen (as Marshall saw it) as a refinement rather than a rejection  
of the classics. In terms of time, the marginal revolution and the shift  
in the role of demograhics did not coincide exactly, but by the time the  
dust settled both were complete. The oft-touted idea of surplus is a  
consequence of Malthusian demographics, albeit only in a crude, static  
formulation - wages are at subsistence, so non-wage incomes are the  
'surplus' over subsistence. Drop the demographics and subsistence wages  
vanish, so surplus is no longer an interesting idea. I know there is a  
modern economics of population, but it doesn't play the same role at all. 
Tony 
---------------------- 
Tony Brewer ([log in to unmask]) 
University of Bristol, Department of Economics 
 
 
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