MARGINAL REVOLUTION

Marginal Revolution



Marginal Revolution

The emergence of the neoclassical school has its origins in the 1870's, when separate, three teachers, publish their works, which entered the value or price of a commodity depends on the marginal utility that provides consumed. These thinkers were:

WS Jevons with his work Theory of Political Economy, 1871

Carls Menger with his book Principles of Economics also from 1871

Leon Walras in his work Elements of Pure Economics, 1974 In parallel, we can mention Alfred Marshall, who published his ideas in 1890. Nevertheless the acceptance of marginalist ideas was not accepted until after a long journey. In fact even before the previous authors had presented the ideas of utility, starting from Aristotle to its value in use, then Bentham applied the concept in philosophy and so others had had the idea that consuming increasing amounts of an While the marginal utility received from this was decreasing, but it was from the late nineteenth century that its application to economic issues was more clear and forceful. (Peart, 1998, 19p)

These three authors applied the analysis to marginal utility theory of demand, conceiving the idea of marginal utility. All three agreed that the allocation of resources was the main topic of the economy. This was a strong point of distancing from the previous theory and the new ideas clearly reflected Microeconomic analysis, but disagreed with their methods. Jevons decided by empirical evidence, while Menger was closer to the abstract deductive logic, finally Walras applied mathematics. (Jaffé, 1976, 14p) First, they discovered that the classical theory of value fails to explain satisfactorily the prices of goods as there were exceptions that could not properly be assumed. They argued that high production costs do not necessarily result in higher retail prices because the value depends on the consumption and income is generated in the future and not the past, i.e. the price of goods to reach the market will depend on the utility that the buyer expects to receive from their consumption, i.e. the demand.

In this vein, which was discussed was whether the factors creating the value of final goods, or if the opposite were the final goods which gave the value of intermediate goods. For which the marginalist explained that the value of the factors was determined by the marginal utility of the final good is produced with these factors but that they in turn did not confer any value to final goods. (Hume, 1955, 66) It was obvious that the error of earlier models was that the price does not depend on the total utility and average utility but of marginal utility. This is much easier to explain the paradoxes like water and diamonds Smith. The Neoclassical not rejected all the classic material, for example, adopted the idea of rationality of the players families make their consumption decisions on the marginal utility they expect. (Ellet, 1966, 54)

Two questions arise, what is the use? How do you measure the value? It is paradoxical that these writers had not ...