History of Economic Thought Since 1870 (Outline) Up until 1870 the ruling system of economic thought was “Classical Economics” Challenges to Classical economics came from –Internal weaknesses –German Historicism –Marxism –Romanticism –New issues and problems a period of transition from Classical economics to what became Neoclassical economics

History of Economic Thought Since 1870 (Outline) This transition is called the “Marginal Revolution” 1st Stage was the development of Marginal Utility theory and theories of demand and exchange 2 nd Stage was development of Marginal Productivity theory and theories of production and distribution Marshall’s Neoclassical Synthesis

History of Economic Thought Since 1870 (Outline) Criticisms of Neoclassicism became prevalent in the 1920s—Institutionalism 1930s Many Developments in Neoclassical Theory “Keynesian Revolution” and counter-revolution More recent developments— new tools and expanding subject areas