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A variety of approaches and 'schools of thought' have existed within economics. In some periods two or more schools have contended for dominance. For example, in the early 20th century institutional economics and classical economics were both highly influential in the United States.
Currently, the great majority of economists follow an approach referred to by its adherents as "mainstream economics" or simply "economics" and by critics by terms such as "orthodox economics". Within the mainstream, there are competing views on various topics, particularly within macroeconomics, but no distinct schools of thought with well-defined membership.
A number heterodox schools also exist. These schools each comprise a small proportion of the academic economics profession but some have a substantial presence in particular departments. For example, Austrian economists, and other libertarians, dominate George Mason University.
In addition to schools within economics, explicit or implicit views on economic topics are naturally present in other social science disciplines, most notably political science and sociology. Conversely, economic analysis is increasingly being applied in these disciplines.

Contents

Historically important schools

Current heterodox schools

Viewpoints within mainstream economics

Viewpoints outside economics

See also

References

Historically important schools

Historically important schools include mercantilism, kameralism, physiocracy, the Manchester school, the German Historical school of economics and classical economics.

★ 'Mainstream economics' is a term used to distinguish economics in general from heterodox approaches and schools within economics. It begins with the premise that resources are scarce and that it is necessary to choose between competing alternatives. That is, economics deals with tradeoffs. With scarcity, choosing one alternative implies forgoing another alternative—the opportunity cost. The opportunity cost expresses an implicit relationship between competing alternatives. Such costs, considered as prices in a market economy are used for analysis of economic efficiency or for predicting responses to disturbances in a market. In a planned economy comparable shadow price relations must be satisfied for the efficient use of resources, as first demonstrated out by the Italian economist Enrico Barone. Economists represent incentives and costs as playing a pervasive role in shaping decision making. An immediate example of this is the consumer theory of individual demand, which isolates how prices (as costs) and income affect quantity demanded.
Modern mainstream economics builds primarily on neoclassical economics, which began to develop in the late 1800s. Mainstream economics also acknowledges the existence of market failure and insights from Keynesian economics. It uses models of economic growth for analyzing long-run variables affecting national income. It employs game theory for modeling market or non-market behavior. Some important insights on collective behavior (for example, emergence of organizations) have been incorporated through the new institutional economics.
A definition that captures much of modern economics is that of Lionel Robbins in a 1932 essay: "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." Scarcity means that available resources are insufficient to satisfy all wants and needs. Absent scarcity and alternative uses of available resources, there is no economic problem. The subject thus defined involves the study of choice, as affected by incentives and resources.
Economics generally is the study of how people allocate scarce resources among alternative uses.

★ 'Neoclassical economics' as part of a Neo-classical synthesis with Keynesian macro-economics is the dominant form of economics used today, and is the main source of theory for mainstream economists. It is often referred to by its critics as 'Orthodox Economics'. The more specific definition this approach implies was captured by Lionel Robbins in 1932: "the science which studies human behavior as a relation between scarce means having alternative uses." Scarcity means that available resources are insufficient to satisfy all wants and needs; if there is no scarcity and no alternative uses of available resources, then there is no economic problem.

★ 'Classical economics': Also called political economy, this was the original form of mainstream economics of the Eighteenth and Nineteenth Centuries. Classical economics focuses on the tendency of markets to move to equilibrium and on objective theories of value. Neo-classical economics differs from classical economics primarily in being utilitarian in its value theory and using marginal theory as the basis of its models and equations. Marxist economics also descends from classical theory.

★ 'Keynesian economics': This school has developed from the work of John Maynard Keynes and focused on macroeconomics in the short-run, particularly the rigidities caused when prices are fixed. It has two successors:
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★ 'Post-Keynesian economics': An alternative school - one of the successors to the Keynesian tradition with a focus on macroeconomics. They concentrate on macroeconomic rigidities and adjustment processes, and research micro foundations for their models based on real-life practices rather than simple optimizing models. Generally associated with Cambridge, England and the work of Joan Robinson (see Post-Keynesian economics).
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★ 'New-Keynesian economics': The other school associated with developments in the Keynesian fashion. These researchers tend to share with other Neoclassical economists the emphasis on models based on micro foundations and optimizing behavior but focus more narrowly on standard Keynesian themes such as price and wage rigidity. These are usually made to be endogenous features of these models, rather than simply assumed as in older style Keynesian ones (see New-Keynesian economics).

★ 'Marxian economics': Descended from the work of Karl Marx, this school focuses on the labor theory of value and what Marx considered to be the exploitation of labour by capital. Thus, in Marxian economics, the labour theory of value is a method for measuring the exploitation of labour in a capitalist society, rather than simply a theory of price.^[1][2]

★ 'Austrian economics': This school focuses on the role of the entrepreneur creating temporary market power and being the drive for economic growth.

★ 'Complexity economics': One of the more recent schools of thought in modern economics (dating from the late 1970s early 1980s), complexity economics views economic systems as complex adaptive systems rather than as closed equilibrium systems. Some of the earliest studies in this new field were done by researchers at the Santa Fe Institute in New Mexico, USA.

★ 'Agent-Based Computational Economics (ACE)': ACE is the computational study of economic processes modeled as dynamic systems of interacting agents. Here "agent" is broadly interpreted as a bundle of data and methods representing a social, biological, or physical entity constituting part of a computationally constructed "virtual world."

★ 'Eclectic Economists': The term 'eclectic' means selecting and using what seems best from various sources, systems or schools of thought. Eclectic economists tend to economize to get an optimal result for the problem at hand. The assumption of utility can for example be used, not to imply that people really have such a utility, but as an efficient approximation. Such economists might be 'main stream' or neoclassical in one publication and do political economy in another publication.

★ 'heterodox economics': Many schools of thought at variance with some or all of the particular microeconomic formalism of neoclassical economics have, in the past, been lumped together in this category. These include: institutional economics, Marxist economics, feminist economics, socialist economics, binary economics, and green economics.

Current heterodox schools

In the late 19th century, a number of heterodox schools contended with the neoclassical school that arose following the marginal revolution. Most survive to the present day as self-consciously dissident schools, but with greatly diminished size and influence relative to mainstream economics. The most significant are Institutional economics, Marxian economics and the Austrian School.
The development of Keynesian economics was a substantial challenge to the dominant neoclassical school of economics. Keynesian views eventually entered the mainstream as a result of the Keynesian-neoclassical synthesis developed by John Hicks. The rise of Keynesianism, and its incorporation into mainstream economics, reduced the appeal of heterodox schools. However, advocates of a more fundamental critique of orthodox economics formed a school of Post-Keynesian economics.
More recent heterodox developments include evolutionary economics (though this term is also used to describe institutional economics), feminist, Green economics, econo-physics and Post-autistic economics.
Most heterodox views are politically left-wing and critical of capitalism. The most notable exception is Austrian economics, which is politically aligned with libertarianism. Some proponents of Evolutionary economics share this viewpoint.
Famous schools or trends of thought referring to a particular style of economics practiced at and disseminated from well-defined groups of academicians that have become known worldwide, may be generally summarized as follows:

★ Austrian School

★ Chicago School

★ Freiburg School

★ Keynesian economics

★ Post-Keynesian economics

★ School of Lausanne

★ Stockholm school

Viewpoints within mainstream economics

Mainstream economics encompasses a wide (but not unbounded) range of views. Politically, most mainstream economists hold views ranging from libertarian to social democratic. There are also divergent views on particular issues within economics, such as the effectiveness and desirability of Keynesian macroeconomic policy. Although few mainstream economists regard themselves as members of a "school", many would identify with one or other of neoclassical economics, monetarism, Keynesian economics, new classical economics and behavioral economics.

Viewpoints outside economics

Other viewpoints on economic issues from outside economics include dependency theory and world systems theory

See also

★ History of economics

★ of the JEL classification codes

References

★ John Eatwell, Murray Milgate, and Peter Newman, ed. (1987). '', v. 4, Appendix IV, History of Economic Thought and Doctrine, "Schools of Thought," p. 980 (list of 23 schools)