Seminar preparation
- Concepts of marginalism
- Idea that there is no normative impact
- Why market fundamentalism?
- Discuss different ways to conceptualise the economy
Marginalism
- Marginalism paved the way for neo-classical economics. Based in microeconomics, it looked to explain how individuals and firms make decisions at the margin, meaning they evaluate the additional cost and benefit of producing one more unit of a good or service. The key to marginalism is that it’s a theory of value that is based on the exchange of goods and services, not production. Value is determined in the market by the supply and demand.
- It replaced the classical theory of ‘value’ which centred around production (the value or price of a good is primarily determined by the amount of labor required to produce it).
- In neo-classical economics, the role of the state is to solve market failures and to nudge consumers into making rationale choices
Sandy Darity // challenging the scarcity principle
No Normative impact in Marginalism
- Marginalism is a descriptive theory rather than a normative one. It looks to explain and understand economic behaviour rather than pass judgement on it. Normative economics, on the other hand, deals with questions of what ought to be, ethical judgments, and policy recommendations. It involves making value judgments about economic actions or outcomes, and it may include questions of fairness, equity, and ethical considerations.
Market fundamentalism
"Market fundamentalism" is a term often used pejoratively to describe an extreme belief in the power of free markets and minimal government intervention in economic affairs. Market fundamentalists argue for the near-absolute supremacy of market forces and often advocate for a laissez-faire approach to economics.
Different ways to conceptualise the economy
