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Chapter 70 Representative Works of Neoclassical Economics
Chapter 69 The masterpiece of neoclassical economics: "Principles of Economics"

Anyone who has studied economics is most familiar with this: When supply exceeds demand, prices fall; when supply exceeds demand, prices rise

.The up and down fluctuations of supply and demand are always around price changes, not too far away, only close to or equal to.In fact, the argument for
As mentioned above, Marshall, a generation of famous economists, made a similar discussion in his "Principles of Economics" as early as 1890. He said: "

The marginal productivity of motion determines the demand price of labor...when the demand price is equal to the supply price, there is no increase or decrease in output
It is in a state of equilibrium. When supply and demand are balanced, the quantity of goods produced in a unit of time is called equilibrium production.

quantity, its price is called the equilibrium price. "From today's perspective, the ideas in his book are quite "advanced".

Professor of economics writing new theories

Alfred Marshall (1842-1924) was a famous bourgeois economist and a famous representative of neoclassical economics
Things.

From 1868 to 1877, Marshall was a lecturer of special lectures on moral philosophy at St. John's College, Cambridge University.

The economics part is taught for this lecture, and logic and modern philosophy are also taught.

From 1883 to 1884, he succeeded the University of Oxford who died

The famous economic historian A Toynbee is a lecturer at Barrio College, Oxford University, teaching economic history. In 1885 he returned to the sword

Bridge University was a professor of economics for 23 years until his retirement in 1908. In 1890, he wrote "Principles of Economics".

The formation of Marshall's economic theory and the publication of "Principles of Economics" were important factors in the development of British society and economy and the development of capitalism as a whole at that time.
The historical requirements of world development were the product of the historical conditions of Western society at that time.

The British ruling class urgently needs
We need a new economic theory to serve ourselves.

In the field of political economy, since the

After Marx's "Das Kapital" was published in 1867, the previous bourgeois regular studies could no longer undertake the task of defending

Due to the new needs of the development of social economy and class struggle, in the 19s, the New Historical School, Frontier School, etc.
New bourgeois economics such as the school of real utility.These new theories of justification provided the basis for Marshall to piece together an updated theory of justification.

new material for thought.Marshall's economic theory was produced to meet this new need.

"Principles of Economics" is an epoch-making masterpiece

The basic content of economic theory in Marshall's "Principles of Economics" is about the problem of demand and supply.

When discussing the demand theory, Marshall first put forward his theory of the law of desire and utility demand.Marshall's theory of demand
The starting point of the theory is human desire.He believes that needs are the satisfaction of desires, and human desires are satisfied by utility.therefore

, desire and utility are interrelated nouns.He pointed out that people's desires are endless and diverse, but everyone
Desires have their limits.This mundane and fundamental tendency of human nature can be explained by the law of saturation of desire or by the law of diminishing utility.
This law is used to explain: the total utility of a thing to any person (that is, the total pleasure or other benefits it gives him)

increases with the increase in the quantity of things, but not as fast as the increase in the quantity of things.If all his quantities of the thing are in the same ratio
If the rate increases, the benefit derived therefrom increases at a diminishing rate.When a person wants to buy something, he is just attracted

That part of the purchase may be called his marginal quantity of purchase, since he is still in the process of hesitating whether it is worth paying for it.

edge.The utility of his marginal purchase may be called the marginal utility of the thing.And the marginal utility of a thing to anyone is

Decremented with every increase in the quantity of the thing he has.However, marginal utility only expresses the buyer's subjective demand for a thing.
cannot be directly measured.Therefore, he indirectly uses the amount of money that the buyer is willing to pay for the purchase, that is, the demand price.
measure
.Thus demand is transformed into demand price, and marginal utility is measured by marginal demand price.Since marginal utility is diminishing, the
The price also decreases with marginal demand.

Here, there is a trade-off relationship between the price of the commodity and the demand for the commodity, that is, when the price of the commodity falls, the
Product
An increase in the quantity demanded; an increase in the price decreases the quantity demanded of the commodity.However, this increase or decrease is due to the

The nature and situation of different consumers are different.The elasticity of demand is used to measure the price fall or rise.

The theory of consumer surplus is an important part of Marshall's theory of demand in this book.What Marshall called consumer surplus,
It is the difference between the price that consumers are willing to pay for a commodity and the market price of the commodity.when the market price
The rate at which the quantity demanded increases or decreases below a certain rate, which measures the response of demand to a change in price

Degree, thus, Marshall put forward his demand elasticity theory.The magnitude of the change in quantity demanded due to an increase in price

If it is greater than the range of price change, it is called high elasticity of demand; otherwise, it is called small elasticity of demand.

Generally speaking, the demand elasticity of daily necessities such as grain, oil, salt, and household coal is small, and the demand elasticity of medicine is even smaller;

For luxury goods or high-priced goods, the demand is more elastic.However, for different income groups, the elasticity of demand is not the same

.

When the price consumers are willing to pay to satisfy their desires, consumers can not only be satisfied in the purchase, but also

for additional benefits.Marshall called this excess satisfaction "consumer surplus".

After Marshall had expounded his theory of demand, he discussed his theory of supply, which was his theory of production.here

, he mainly discusses the law of the supply and change of each factor of production in production.According to Marshall, the process of modern production

In addition to the three factors of production, labor, land and capital, the organization should also be used as a factor of production.what is said here
Organization refers to business operations and industrial organizations.Among these factors of production, except land, the other three factors have their own
These supply prices have their own changing laws.Theory of production or theory of supply is the study of the various demands of production

Variations in commodity prices and their impact on production.

Labor, a factor of production, has a special meaning here in Marshall, which refers to the mental labor of human beings engaged in economic work.
movement or manual labor.Labor is any mental or physical exertion, partly or wholly aimed at obtaining some advantage,
Therefore, any kind of labor that does not directly or indirectly contribute to material production, such as schoolwork for students, cannot be regarded as labor

to research.

Capital refers to the equipment accumulated for the purpose of producing material wealth and obtaining income.capital as a factor of production, it

Not for immediate consumption in the satisfaction of desires, but the primary source of wealth, capital consisting largely of knowledge and organization

, some of which are privately owned and others not privately owned.Knowledge is the most powerful productive force; it makes people

Humans can conquer nature and force it to satisfy human desires.Organization facilitates knowledge.He divides economic development into two

Category: First, it depends on the reasonable division of labor and alliance among enterprises, the rational division of the economy and the scale of operation of enterprises.he called it

external economy.Second, it depends on the full and effective use of resources by individual enterprises, and the improvement of organizational and operational efficiency.he
Call it an internal economy.The prices of these factors of production in production constitute the cost of production.

Marshall also made a certain discussion on the problem of supply elasticity.The so-called elasticity of supply refers to the relationship between the quantity supplied of a commodity and its price

level of reflection.

On the basis of discussing demand and supply, Marshall proposed his equilibrium price theory.Marshall's theory of equilibrium prices

It is his theory of value and the core and foundation of his economic theory.The concept of value was used in Marshall's economic theory
Read, the value he talked about is the price.

In Marshall's view, profit is the capitalist's reward for managing enterprises and organizing production and taking risks.It includes the following

The remuneration of the factors: the remuneration of the supply of capital; the remuneration of the supply of operating capacity to employ capital; the remuneration of a certain organization of the enterprise
.According to Marshall, wages are the remuneration of labor, and its size is determined by the demand and supply of labor, a factor of production.to
Because the supply price of labor is complex, some of them may be affected by non-economic factors and change, so

Therefore, the actual situation is constantly changing.

Interest is the price of capital, the factor of production.He divides interest into pure interest and gross interest.The so-called pure interest refers to the pure interest
The price of capital or the reward of waiting.In addition to pure interest, gross interest also includes handling fees for using capital, manager

fees, investment risk insurance, etc.The interest mentioned here refers to pure interest.The magnitude of the interest is determined by the production of capital

determined by demand and supply.According to Marshall, interest is the price at which the demand and supply of capital are in equilibrium.capital needs

Prices depend on the marginal productivity of capital.Its demand is the same as that of general commodities. High prices, that is, high interest rates, require
Ask for less; low prices, that is, low interest rates, demand more.The supply price of capital depends on the waiting and sacrifice of the capitalist, that is,
Abstinence.

In "Principles of Economics", Marshall systematically put forward the demand theory, supply theory, equilibrium price theory and distribution theory.

etc., forming the basic theory of neoclassical economics, which has a very important position in the history of Western economic development. "economy

Since its publication in 1890, Marshallian economics

The influence of doctrine on them is enormous and far-reaching. Pigou, founder of welfare economics in the 20s, early 20s
The theories of monopolistic competition of Robinson in England and Chamberlain in the United States are tributaries formed on the basis of certain theories of Marshall.Right now
Even Keynes, who revolutionized the bourgeois traditional economics represented by Marshall in the late 30s, also recognized his

The theory was a natural development of Marshall's line of thought which he had believed in for many years.Even today, Marshall's economics
Said is still the basis of modern bourgeois microeconomics.Marshall's economic theory is concentrated in the book "Principles of Economics"
.The publication of this work not only made him famous, because they taught at Cambridge University for a long time, and they taught at Cambridge University.
The Cambridge School was represented by him and his students.Marshall was the founder of the Cambridge School.among his disciples
The famous ones are Pigou, Robertson and Keynes.Western economists regard Marshall's "Principles of Economics" as an "epoch-making" work on par with Adam Smith's "The Wealth of Nations" and Ricardo's "Principles of Political Economy and Taxation".

Inheritance and development of classical economics.

(End of this chapter)