A Comparison of the Main Features of the Classical and the Neoclassical Paradigms

Economic Perimeters of the Contemporary Mind

 

 

 

Classical Paradigm

 

Neoclassical Paradigm

The object of economics

The aim for engaging in economic research

Accumulation and distribution

to assist policy makers

Efficiency

The discovery of universal laws

 

 

 

 

Institutional framework and unit of analysis

 

Specification of the institutional framework, especially in terms of the division of society between social changes. Behavior expresses class belonging.

 

No classes, but a "general public" making decisions thru votes (individually) in the market. The idea of choice is central.

 

 

 

 

Core of the theoretical structure

Capital, defined in a comprehensive way is at the center of the theoretical structure

Prices form the central concept

 

 

 

Conception of value

 

A production theory of value, in which value is viewed as the expression of the social division of labor

Value flows from the subjective mental evaluation of the individual agents.

 

 

 

 

Conception of profit

 

Profit results from the unequal distribution of wealth between classes; it is the source of growth.

Profit is the reward for abstinence.

 

 

 

 

 

 

James D. Strauss