Jennifer Burns: evaluation

Transcript context

…Where does Austrian economics fit into that pile, and Marxian economics? Can we just even just linger and try to redefine Keynesian economics and Chicago School of Economics and Neoclassical economics and Austrian economics, because there’s some overlap and contention? For sure. So, schools of economics, so we could start with classical economics. Classical economics, we could think of Adam Smith is your classic classical economist, the founder of the discipline. Classical economics does not really use math, is very close to political economy. It’s concerned with, as Smith puts it, the wealth of nations. It’s concerned to some degree with distribution. It’s concerned to some degree with what makes a good political system. What tends to really define classical economics when you’re looking from a great distance is what’s called the labor theory of value. So, where does value come from in classical economics? It comes from the labor that a person puts into it. So, maybe this in some ways comes from Locke’s notion of property that you mingle your labor with the natural world. We can say labor theory of value. So, classical economics concerned with… Smith is arguing against mercantilism for more free trade, often goes by the name of political economy to show it’s more capacious. It’s thinking of politics and economics. You can still read these books today. The sentences are long. The words are different, but you can still follow along. So, the real big transition from classical economics and political economy to economics as it’s understood today, comes with the marginal revolution. The marginal revolution is a scientific revolution that happens in a couple of different places simultaneously. This is one of these things that you see in the history of science. There’ll be some breakthrough like, “Darwin has a breakthrough,” but somebody else has sort of the same breakthrough at the same time, totally differently. So, there’s a version of marginalism that’s continental. There’s a version in the German-speaking lands, in the French-speaking lands and in Britain. They all come together, and the shift is in the theory of value. So, the theory of value in marginalism is on the margin. So, say you have one apple, and you want a second one. How much is going from one apple to two apple worth for you? Probably quite a bit. If you had 10 apples, maybe going to 11 apples doesn’t matter that much. The marginal value is less. So, what marginalism does though, most importantly, is it opens the door to math and economics, because it means you can graph this now. You can depict this relationship graphically. There’s some really interesting work in the history of economics that shows a lot of the people who developed marginalism were looking to physics as a model, Physics, the queen of the sciences. So, they were thinking… They imported terms from the natural world to describe the social world through the lens of economics terms like equilibrium. So, the idea being that if you looked at a market, a market would reach equilibrium when everybody has bought and sold all that they want, or the price will settle at an equilibrium price when it’s really the demand and supply are matching up. Some of these ideas are things we would pick up at a microeconomics class.…

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