A “second great escalation” happened in the history of Economics. The idea of marginalism came into view. Using the example of the price of a diamond verse the price of water, they described how it was not necessarily the amount of a good that dictated the price but the “additional increment.” A great proprietor of this was Walras. He “resolved to do for economics what engineers already had done for various intricate physical systems—that is, construct a model of economic general equilibrium from among the relevant interdependent variables.”
Monday, February 14, 2011
Chapter 6 pg 68-72
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B for Elgin: I think you mean "proponent" not "proprietor".
ReplyDeleteThose of you who had me for ECON 2500 should recognize the "diamonds and water paradox" discussion in this section.
Smith, Malthus, Ricardo and Mill are cute, but marginalism is the core of what we do in economics today. Marginalism is heavily dependent on diminishing returns ... which is why I spend so much time in ECON 2500 talking about shapes of curves and their functions.