close
This essay has been submitted by a student. This is not an example of the work written by professional essay writers.

The Classical and Neo-classical Perspectives in Economics

downloadDownload printPrint

Remember! This is just a sample.

You can get your custom paper by one of our expert writers.

Get custom essay

121 writers online

blank-ico

The two perspectives of capitalism are similar in that they advocates for free market economies where there is increased privatization of businesses, liberalization of markets and absence of coercive impositions or restrictions from the government regarding economic activities. According to Kates (2014), free-market economies are characterized by valuing of private property and individual rights and political systems that shy away from restrictions or subsidies. Before the emergence of classical economics most national economies were based on command-control, top-down government policies. Classical economics was against mercantilism, which emphasized on maximization of exports and minimization of imports and instead supported a radically different approach. Its perspective regarded the economy as being in a position to rely on market forces to maintain its equilibrium. Intervention from the government in the form of artificial tariffs or other barriers that caused a disruption to the free flow of goods and services were harmful to the economy.

The classical theory is also referred to as laissez-faire economics and focused on growth, free trade and competition and an economic system that is free from government regulation as possible. The theory provides that when people are allowed to pursue their own interests, the whole society benefits (Walsh 2008). The argument under the classical economic theory is that market should be allowed to self- regulate. Under this perspective the concern for profit ensures that resources available in a society are utilized in the most beneficial manner without government’s interference. The role of the government within the classical perspective is providing national defense, a system of public works which includes education and infrastructure as well as a system of justice that enables enforcement of contracts. Similarly, the main goal of neo-classical economics is to enable efficient allocation of scarce resources.

The neo-classical perspective is based on the assumption of rationality which provides that given all possible choices, decision makers will always prefer to maximize their objective (Walsh 2008). According to Shishmanova (2014) the assumption of the theory is that individual’s rationality allows them to maximize their profit or utility and its emphasis is placed on equilibrium. The manner in which consumers and firms interact in a free market should contribute to an equilibrium quantity and supply.The theory requires the government to accumulate capital and eliminate trade barriers and encourage foreign direct investments. After capital is accumulated, it flows from areas of low productivity to higher productivity areas.

Remember: This is just a sample from a fellow student.

Your time is important. Let us write you an essay from scratch

experts 450+ experts on 30 subjects ready to help you just now

delivery Starting from 3 hours delivery

Find Free Essays

We provide you with original essay samples, perfect formatting and styling

Cite this Essay

To export a reference to this article please select a referencing style below:

The Classical and Neo-classical Perspectives in Economics. (2018, Jun 18). GradesFixer. Retrieved September 30, 2022, from https://gradesfixer.com/free-essay-examples/the-classical-and-neo-classical-perspectives-in-economics/
“The Classical and Neo-classical Perspectives in Economics.” GradesFixer, 18 Jun. 2018, gradesfixer.com/free-essay-examples/the-classical-and-neo-classical-perspectives-in-economics/
The Classical and Neo-classical Perspectives in Economics. [online]. Available at: <https://gradesfixer.com/free-essay-examples/the-classical-and-neo-classical-perspectives-in-economics/> [Accessed 30 Sept. 2022].
The Classical and Neo-classical Perspectives in Economics [Internet]. GradesFixer. 2018 Jun 18 [cited 2022 Sept 30]. Available from: https://gradesfixer.com/free-essay-examples/the-classical-and-neo-classical-perspectives-in-economics/
copy to clipboard
close

Where do you want us to send this sample?

    By clicking “Continue”, you agree to our terms of service and privacy policy.

    close

    Be careful. This essay is not unique

    This essay was donated by a student and is likely to have been used and submitted before

    Download this Sample

    Free samples may contain mistakes and not unique parts

    close

    Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.

    close

    Thanks!

    Please check your inbox.

    We can write you a custom essay that will follow your exact instructions and meet the deadlines. Let's fix your grades together!

    boy

    Hi there!

    Are you interested in getting a customized paper?

    Check it out!
    Don't use plagiarized sources. Get your custom essay. Get custom paper
    exit-popup-close

    Haven't found the right essay?

    Get an expert to write you the one you need!

    exit-popup-print

    Professional writers and researchers

    exit-popup-quotes

    Sources and citation are provided

    exit-popup-clock

    3 hour delivery

    exit-popup-persone