Microeconomic Aspects of Neoclassical Theory and the Modern Economy

Abstract:

This article distinguishes neoclassical macroeconomics and microeconomics. It is shown that microeconomic aspects of neoclassical theory wield much greater theoretical and applied importance than neoclassical macroeconomics. They are largely scientifically based, reflect real economic processes and determine economic behavior of economic entities. This paper deals with theoretical approaches of the main representatives of the neoclassical theory (A. Marshall, L. von Mises, F. von Hayek, J. B. Clark) to the analysis of economic processes, and assesses their relationship with the real economy. The important role of limit analysis, both theoretical and practical, is noted. As emphasized in this work, it can be useful not only for the study of microeconomics, but also for the theoretical justification of macroeconomic processes; in particular, cost inflation. Approaches of the representatives of neoclassical theory to cost and price estimation of goods and economic resources are considered. It is shown that the authors characterize the contribution of production factors to the results of company’s work mainly from the position of their activities in conditions of perfect competition. The real economy is dominated by imperfect competition markets, which are characterized by their own features that affect economic behavior of firms in commodity and resource markets, as evidenced by the use of limit analysis. This article assesses the views of representatives of the neoclassical school on the differences between market and planned economy. Their approach to the monopolization process is evaluated to later exhibit its several shortcomings in regards to the underestimation of its objective nature.

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