Economic Perspectives

Abstract

Abstract Classical political economy is the earliest stage and school in the evolution of economic science from the late eighteenth century to the second half of the nineteenth century, since Adam Smith the founder. It is the science of the production, distribution, exchange, and consumption of wealth. It has two related branches: pure economics as the theory of a market economy and social economics or economic sociology as an analysis of the institutional structure of economies, including markets. Classical political economy is succeeded by neoclassical economics, the next stage and school in the evolution of economic science from the 1870s to the 1930s and later. It begins with the “marginalist revolution” in economics during the 1870s–1890s, such as the marginal utility theory of value and prices, in adverse reaction to classical political economy's labor version. The founders of “marginalism” are William Jevons, Carl Menger, and Leon Walras, “discovering” marginal utility theory in Europe during 1871–1874. Neoclassical economics consists of two main branches or orientations, “pure” economic theory in the form of “market economics” and social economics or economic sociology.