Name that comes from the university in this Swiss city, in which marginalist economist Léon Walras taught and developed its main contributions to economics. Vilfredo Pareto, also a supporter of marginal analysis methods, whose Pareto-optimal notion deeply contributed in the development of game theory and welfare economics later on, was also part of this school.

The Lausanne School contributions to economics, as well as the marginal revolution itself, influenced Alfred Marshall and the Neoclassical School in general.

Named essentially after the work of three economists that taught the same course at the University of Vienna:

–Carl Menger, whose main contribution to economic science is the theory of marginal utility;

–Friedrich von Wieser, who formulated the idea of opportunity cost;

–Eugen von Böhm-Bawerk, who contributed to economics with his studies on the nature of capital and interest rates.

Ludwig H. Edler von Mises and Friedrich A. von Hayek are considered followers of this school, and also as links to the Chicago School.

Influenced by mercantilism and physiocracy theories, it took place from the late XVIII century to the late XIX century. It is considered that its main authors were Adam Smith, David Ricardo and John Stuart Mill, and the fourth, the unorthodox Robert Malthus, however, there is some evidence of previous contributions provided by French physiocrats and Spanish scholastics. They wrote especially about the theory of value, distribution theory and international trade.

The majority of the principles of the classical school of economics were set by Adam Smith in his work “An Inquiry into the Nature and Causes of the Wealth of Nations”, written in 1776. Smith defended free trade and free competition as the best way to make an economy grow, opposing his ideas to government intervention and the mercantilist theory that prevailed at that time.

David Ricardo developed the idea that every nation should specialize in the production of those goods in which they get an advantage towards other nations and produce it more efficiently. As for other commodities, instead of trying to be produced nationally, they should be imported.

Karl Marx studied the same matters, although with different conclusions and defending the working class, which makes him a classical economist in the eyes of some historians.

Thanks to these authors, the study of economics became more of a science, instead of just being some kind of philosophy.

Marginalism is a method of analysis used in microeconomics, which seeks to explain economic phenomena through mathematical functions (production, consumption, etc..). The term “marginal” was first used by Johann H. von Thünen in his “The Isolated State”, in 1826. The Marginal revolution, which took place a few decades later, around 1870, brought the prevailing classical view of value theory to an end. Indeed, thanks to the work of three economists: W. S. Jevons, Carl Menger and M.-E.-Léon Walras. Even though these economists worked independently, they shared a few ideas which made their work the beginning of the utility theory:

–utility was measurable in cardinal units, such as monetary units;

-the utility function is additive and separable;

-they all use the Gossen’ laws.

Physiocracy is an eighteenth-century neologism from the Greek “physis,” nature, “kratia” authority: government of nature. It is the name that François Quesnay and his followers, the Physiocrats, gave in France from 1750 to the new science that saw in nature, especially in agriculture, the source of wealth. All useful and valuable things were generated, following the immutable natural order of economic and social relations studied by political economy. The Physiocrats were popularly known as “the economists” and aroused the interest of Adam Smith in Economics. His philosophy regarding the role of government is summarized in the famous phrase: laissez faire, which basically means letting the economic equilibrium arise from free will, believing the economy to be self-regulating. The emphasis on agriculture was to despise the value of trade by not adding new value to what was created by farmers.

Physiocracy coexisted with the main doctrine at that time, mercantilism. However, physiocracy had a few differentiating characteristics, such as the fact that it developed only in France, during a shorter period than mercantilism (only between 1750 and 1780), had a major intellectual leader, Quesnay, and developed a more analytical approach and models (such as Quesnay’s Tableau Économique), giving scientific status to the study of Economics.

Physiocracy and mercantilism also had some common characteristics, mainly the fact that they studied the economy (from its very core, the natural laws) in order to understand it, but also to formulate sound economic policies. This established the study and understanding of economy as a prerequisite in order to develop economic policies.

Mercantilism is a pre-classical economic thought, according to which the prosperity of nations is reached by promoting agriculture and manufacturing. The aim is to increase exports and restrict imports, thus accumulating gold and precious metals, relevant as a sign of wealth. Bullionism, which is considered part of mercantilist theory, was specific to the monetary matters of this economic thought.

In order to implement policies recommended by the authors of this doctrine, mercantilist policymakers resorted to either prohibiting imports outright on some goods or resorting to high tariffs or quantitative restrictions. Mercantilism was the economic policy prevailing in Europe from 1500 and 1750. Although mercantilist literature was written all around Europe, the most significant texts and thoughts came from French (mainly from Physiocracy authors) and English writers.