It is undeniable that neoclassical and radical economics have continued to dominate the discussion in the world of economics. Both approaches have their own principles and beliefs which they use to prove to the society that they are the best path to pursue. However, it is also evident that neoclassical economics has taken the edge over radical economics because it is the one that is primarily being followed in society today.
One of the key arguments of the neoclassical economists is that the main priority of the consumers is always to make sure that they will be happy and satisfied (Yates, 2003, p. 120). Thus, their decisions on which products and services to buy will be based on their assessments of whether these products and services will be good enough for them or not. There is always a valid reason as to why the consumers would want to buy certain products or services because the last thing that they want to do is to waste their hard-earned money on buying defective products and disappointing services. Consumers know that they must be wise in spending their hard-earned money, so they will buy the products and services which they believe will be beneficial for them over the long-term. The bottom line here is that the consumers will always try to get the maximum value for the money that they spent in buying products and services. Aside from this, another key argument of the neoclassical economists is that products and services usually have values that exceed the expenses involved in their production. While the traditional economic theory believes that the values of products and services are obtained from the expenses of the materials used along with expenses related to labor, the neoclassical economists contradict this and instead suggest that it is the opinions and feedbacks of the consumers that have a major influence on what the values of products and services will be.
Finally, neoclassical economists believe that competition paves the way for the fair distribution of resources within the economy. Markets become more balanced because of the presence of supply and demand. Thus, competition is something that cannot be disregarded because it plays an important role in ensuring that the economy will always be efficient and productive.
On the other hand, one of the key arguments of radical economists is that the values of products and services are known through the labor that was used to make them and the time that was spent (Yates, 2003, p. 164). The radical economists have no doubt that the people from the working class are the ones who deserve to be praised because these products and services will not be there if not for the hard work of these people. If the products and services are generating tremendous profits, the people from the working class are the ones responsible for this.
Another key argument of the radical economists is that the wealthy people who have complete access to the means of production and can manipulate them according to their plans are irrelevant. They are irrelevant in the process of making the products that the people need to survive and thrive. Unfortunately, the wealthy people continue to find ways to keep on getting richer because of their clever strategies that enable them to abuse the people from the working class. The radical economists think that the wages being given to the people from the working class under capitalism are not identified through the value being produced by the workers within a specific timeframe, but by the expenses connected to their capability to provide excellent quality of work. Thus, the wealthy owners of businesses do not pay their workers fairly because of the surplus value involved. The workers become overworked but get underpaid, while the wealthy businessowners just keep on getting richer under capitalism. This is the reason why the radical economists feel bad for the abuse that the workers get under capitalism.
It is obvious for the radical economists that capitalism cannot be the economic system that must be followed by the society simply because it is very advantageous on the part of the wealthy people while it is very disadvantageous on the part of the people from the working class (Roberts and Feiner, 2012, p. 2). Thus, their solution is to abolish capitalism and replace it first with socialism followed by communism. The radical economists believe that implementing socialism would be an important measure that will lead to the eventual non-existence of the state, while implementing communism will lead to the creation of the most beneficial economic system for the people because the products and services would be disseminated fairly to everybody. There will be no more exploitation that would happen to the people just like what happens in capitalism because everybody is on equal footing under communism. It is only through initiating a radical change to the economic system that the people from the working class will finally be free from the oppression and abuse being done to them by the wealthy people.
The similarity between neoclassical and radical economics is that they both believe in the integral role of the people as consumers and as workers in the economy. Both approaches put priority on the people because they are the ones who work hard to ensure that the businesses will be profitable which in turn will lead to economic progress. The people also serve as the consumers who buy the products and avail the services that they need. Neoclassical and radical economics acknowledge that it is the people who have the power to dictate what would happen to the economy because they bring in the money and they also spend the money. However, the difference here is that neoclassical economics focuses more on the reasoning behind the decision-making of the people as consumers so that they can get the most value out of their hard-earned money, while radical economics focuses more on the unfair treatment and abuse being experienced by the people as workers under capitalism.
Another similarity between neoclassical and radical economics is that they both believe in the value of products and services. Both approaches recognize the fact that there are certain factors that will determine the value of products and services because this cannot just exist out of nowhere. The neoclassical and radical economics preach that there must be a concrete basis that must be used in determining the value of products and services. However, the difference here is that neoclassical economics believes that the value of the products and services is determined through the opinions and feedbacks of the people as consumers (Morgan, 2015, p. 169). If the people are generally satisfied with the products and services that they used, it is very likely that the value of these products and services will be very stable. On the other hand, if the people are generally dissatisfied with the products and services that they used, it is very likely that the value of these products and services will be very low. On the part of radical economics, the value of products and services is determined by labor power. It is based upon the quality of effort that was exerted by the workers who made the products and services available. Thus, radical economics considers it very unfair if the workers will still be abused by the wealthy businessowners considering that these are the people who sacrificed a lot and worked hard.
There is no doubt that the debate will always be there as to which between neoclassical economics and radical economics is the best approach that must be used. Even if neoclassical economics clearly has the edge today over radical economics, this does not mean that radical economics has already lost its followers because there are still many people who continue to believe that only radical changes to the economic system will bring progress to society. Nonetheless, both neoclassical and radical economics have their own similarities and differences which make them stand out.
Morgan, J. (2015). What is Neoclassical Economics? New York, NY: Routledge
Roberts, B., and Feiner, S. (2012). Radical Economics. New York, NY: Springer
Yates, M. (2003). Naming the System: Inequality and Work in the Global Economy. New York, NY: NYU Press
2 replies on “Economics”
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