Marginalism

The marginalismo is a school of economic thought which emerged in the middle of the nineteenth century as a reaction to the classical school , was also known as the neoclassical school . It focuses on the last unit produced or on the loss of a certain asset. The main contribution of marginalism to the world was the law of decreasing marginal utility , which explains that the value of a good for its owner is determined by the utility of the last unit produced of that good, decreasing its utility depending on the amount of units you have, the more units there are, the lower your utility. The marginalists introduced a formalized language, which led to the assimilation of mathematicsin the economy .

Characteristics of marginalism

• Marginalism focuses mainly on the exchange and formation of the prices of the different products of a company.
• It is considered as a completely new and innovative twist in the liberal vision of the economy , in such a way that the problem of prices in the market is reasoned directly with its behavior .
• The analyzes carried out in marginalism are based on and start from the demand , the consumer or the general consumption of the products .
• The concept of marginal analysis is more widely used in the world of commerce and hence the term marginalist economics comes from.
• Those interested in marginalism show a greater interest in allocating scarce resources for multiple and alternative purposes .
• Use the term utility as an expression of value.
• It has two types of key concepts: marginal utility and marginal productivity .
• They are confident that, in the long term, achieving a full and general balance of jobs is possible.
• They are not based on rigorous laissez faire , but rather allow for smaller-scale participation by the State in crisis situations.

History of marginalism

The main exponents of the marginalist revolution were William S. Jevons (1835-1882), Cari Menger (1840-1921) and Léon Walras (1834-1910), who were in charge of representing a certain intellectual current or school: Jevons was in charge of the English school of marginalism, Menger from the Austrian school and Walras from the Lausanne school. The authors who focused on trying to impose this form of economic thought during the nineteenth century continued the investigations of the French philosopher Condillac (1715-1780), who in his work ” Treatise of sensations»He had outlined a subjective theory of value and for whom economic operations were based on the wishes of individuals. Stanley Jevons (1835-1882), Lóon Walras from France (1834-1910) and Carl Menger , originally from Austria (1840-1921) led the main marginalist schools during the 70s of the last century.

Contributions of marginalism

• He criticized the work-value that the classical school had proposed. After this, the theory of value was done again and the subjective value theory was formed , which explains that the price of a product is determined by the perception that people have regarding the utility or benefit of the product it will give them. and also according to the needs that these consumers present.
• The followers and precursors of marginalism were the first to manage to create a formal language for economics and this language was essential on the path of it to become a whole science .
• Through the use of mathematics , it was possible to propose, study and generalize the relationships with clarity, rigor and simplicity that allow today to test areas of great size and complexity, which, otherwise, would be very difficult.
• Thanks to them, the economic phenomena of structure and change can be explained through the actions of individuals, including their goals and beliefs.

Representatives of marginalism

The works of the authors mentioned below were characterized by the construction of abstract models developed based on mathematical techniques and by the importance they gave to marginal analysis , and its progressive application through microeconomic theory.

• William Petty: tried to introduce mathematical methods to economics.
• Antoine Augustin Cournot: used calculus to explain the behavior of buyers and companies.
• Willian Jevons: discovered the concept of marginal utility and the principle of marginal utility decrease.
• Carl Menger: called economics a deductive discipline .
• León Walras: used concepts of average and total and proposed the theory of general equilibrium.
• John Bate Clarck: studied the way in which wages and profits of companies are determined.