Summary
Neoclassical economics is really the birth of mathematics as an inescapable tool for constructing theories that are internally coherent (that is, explained in and of themselves without requiring casuistic examples), escaping the slightly lackadaisical approach of many classical economists like the great Ricardo. This allowed Economics to develop at a much faster pace, and provided the basis for how Economics is studied and investigated today.Marginalism:
Neoclassical economists:
- Alfred Marshall
- Francis Y. Edgeworth
- Arthur C. Pigou
- Vilfredo Pareto
- Irving Fisher
Pigou was a British economist (1877-1959), disciple of Alfred Marshall, whom he succeeded as a professor at Cambridge. Pigou is remembered above all as a precursor of welfare economics, for his books “Wealth and Welfare”, 1912, and “The Economics of Welfare”, 1920, in which he used measures of national income and its distribution in order to understand how wealth and welfare are related. He is also remembered for making a distinction between different degrees of price discrimination.
Being part of the Cambridge school, Pigou used common tools derived from neoclassical economics, such as marginalism, amongst others.
However, there is no welfare economics without a Pareto Optimum. Pareto was another of those who helped bridge the gap between micro and macro, going as far as to look at international patterns in welfare distribution. Known for one brilliant concept, we would hope he is also remembered for being instrumental in the development of macroeconomics, as we are seeing next.
