Difference Between Classical And Neo-Political Economy

3911 Words16 Pages
1. Distinguish between Classical Political Economy and Neo-Classical Economics.
ANS; A classical political economy is a branch of social sciences which deals with the studies of relationships between individuals and society and between markets and the governing state, using a different tools and methods from various discipline of social sciences like economics,political science, and sociology. The term political economy is emerge from the greek word polic, i.e “city” or “state,” and oikikonomo, meaning “one who take care or able to manage a household or estate.” Political economy can be understood by the study of relationship between how a country public’s household is managed or governed in order to establish the relation between political relation and economy.

Adam smith defined political economy as a “branch ofthe science of a statesman or legislator concerned with the two fold objective of providing a plentiful revenue or subsistence for the people and (supplying) the state or commonwealth with a revenue sufficient for the public service.”

Neo-classical economy is a Classical theory states that a product’s value is the addition of the cost of materials and the cost of labor required to produce it, market will take care of everything, determination of price,supply and demands.Neoclassical theory has few basic assumptions which plays an important role in contemporary relevence–mainly that all the economic decisions should be on the basis of rational thinking

More about Difference Between Classical And Neo-Political Economy

Open Document