Neoclassical Economics vs. Classical Economics

Neoclassical economics emerged historically as a counter to classical economics, particularly in response to Marx's critiques. This shift involved the rejection of certain classical theories like the labor theory of value, which were seen as ideologically inconvenient in a capitalist system. The neoclassical approach emphasizes idealized economic models and concepts like general equilibrium, leading to the conclusion that markets function optimally on their own. As a result, it portrays economic crises as temporary adjustments rather than systemic failures, suggesting that any downturns would naturally lead to price adjustments without significant class conflict.