Neo Classical Economic Analysis

1. Distinguish between classical political economics and neo- classical economics

The study of trade where, there is limited resources is available is called economics and it is divided into two parts:

Classical political economics:

Classical political economics directly deals with the long run investment in the economy such as development and growth, its original name was economics. Classical political economy was a school of thought which was predominate during the just time before the industrialization and till the middle age of 19th century, before 19th century it was taken over the neo classical school of economics thought.

Marx said that the factor which unite the representative of classical political economy into one intellectual

The period 1870 to 1900 was also characterized by the questioning of the classical assumption that the laissez-faire was an ideal government policy and the eventual demise of classical political economic theory and neo-classical political economics. This conversion was neither automatic nor spontaneous but it was critical for professionalization economics.

Neo – classical political economics is attributed with incorporate the original classical cost of production theory with the usefulness in a bid to explain commodity and factor of prices and the allotment of resources using marginal analysis. Although David Ricardo furnish the methodology basics of neo- classical political economics. Alfred Marshall was regarded as the father of neo – classical economics and Marshall was credited with introduced the concept demand and supply, marginal utility, price elasticity of demand and cost of production. Marginlist eco nomics or neo classical economics theories emphasized that the value use of demand and supply as crucial of exchange value. Similarly neo classical, Karl Menger n Austria, William Stanley Jevons in England and Leon Walras in

Less time consumption (time savings):

As the work force they would not have to change tools and pass them around, the time in control and ideal time would be minimized thus time saving and increase in production.

4. Launching of machinery at work place:

Division of labour is the main factor of invention of machinery so when this theory came into existence there was time of the industrial revolution.

5. Standardridisation of goods and services:

As different labour doing different work or task rather than a single worker producing goods and services there is a standardization of goods and services.

Disadvantages of division of labour:

1. Lack of worker’s skill development;

If the worker is doing only one part of the work and never the whole work their working skill would not be developed and would remain limited to one kinds of work only.

2. Monotony of work:

Doing only one specialized work, repetition of work would lead to monotony of work for the workers.

3. Immobility of worker:

Due to above mentioned reason there would be no mobilization of labour as a result the worker only know his / her skill and would not anyone’s else’s lead to the lot of rigidity. It may affect the production if the worker is absent on same