Theories of Value and Distribution

This chapter provides definitions of classical and neoclassical theory and establishes criteria by which the propositions outlined in Chapter 1 will be evaluated. The distinction between classical and neoclassical theory, which forms a point of reference of this study, is based on the identification of the essential analytical elements of each theory. In the view of many writers the logical structure of these theories are significantly different to warrant their treatment as two distinct schools of thought (see Schumpeter, 1954, pp. 567–8; Dobb, 1973). In many studies which make use of this distinction the precise logical structure of these theories of value and distribution are presented in mathematical form. Here I outline them verbally, preferring to illustrate them by drawing on the words of the great economists who developed them.