Question

This format should allow you more time to think about your answer. The length of your answers should range from 2-4 paragraphs, depending on the complexity of the question. Each question is worth 10 points. Remember to use the readings and your class notes to answer the questions. Use citations/quotes and then go on to interpret and explain the quote in your own words.

Marxian economics adopts a very different framework for understanding the dynamics of the capitalist economy. Compare and contrast the primary differences between Neoclassical economics and Marxian economics in terms of: (a) method of analysis; (b) unit or level of analysis; (c) theoretical framework for understanding change and transformation in an economy. In your answers be sure to explain dialectical materialism and historical materialism (Hint: Rius will be the most helpful here).

Answer 1

Difference between Neoclassical economics and Marxian economics in terms of

a) method of analysis- Neoclassics assumed that price is created by the marginal productivity of factor inputs and marx assumed that price is created by productive labour. Neoclassicals do not use aggregate demand in analysis whereas marx use aggregate demand in analysis.

b)unit or level of analysis- Marx used power based concept of income distribution.Neoclassicals used profit share of analysis of distribution.