Economic theory – What is it, Characteristics and Examples

What is an economic theory?

Economic theory is the set of general principles or statements that seek to interpret economic reality.

Economic theory develops lines of thought that seek to explain an economic problem at a given historical moment.

Two approaches are distinguished in it: microeconomics, which studies a given productive unit and the behavior of the individual consumer, and macroeconomics, which analyzes the economic variables of a region, a country, or the world.

Characteristics of an economic theory

Economic theory is characterized by:

  • Provides explanations about the behavior of economic variables – inflation, interest rate, exchange rate – on various economic agents – family, business, state.
  • Allows the analysis of economic situations that can occur at the level overall – macro economy level or at a reduced -microeconomía.
  • It presents various fields of study that accompany the historical economic moment that is taking place. Thus has developed economic psychology, experimental economics, among others.
  • It gives rise to tools for measurement, statistics, econometrics, which allow a more in-depth understanding of economic variables, facilitating decision-making.

Examples of economic theories

Classical theory

This theory based its positions on the empirical study of reality, formulating conceptual models through which they enunciated natural laws. The main exponents were Adam Smith, considered “the father of Economics”, David Ricardo, and Jean-Baptiste Say.

The areas of interest of this theory were the groups or classes of individuals, the study of the wages received by workers, and the wealth of nations through the generation of value not paid to the worker that the employer or capitalist received ( surplus value ).

The different schools of these theories considered frequent types of problems, developing lines of thought to explain them.

Marxist theory

Created by the philosopher, sociologist, and economist Karl Marx, this theory was based on the search for equality of social classes, where the proletariat should have the same benefits and rights as the rest of society.

In addition to eliminating social classes, the theory proposed that the proletariat rule a state under the socialist system so that the necessary changes that lead to a more just and egalitarian society can be made.

Keynesian theory

It was developed by John Maynard Keynes. This economist and his school argued that government intervention could stabilize the economy by increasing employment and production levels by increasing public spending in periods of unemployment.

Neoclassical theory

It emerged in the mid-nineteenth century as a reaction to the classical school. His main contribution was the marginal theory of the value of a good, the increase in total utility that involves consuming an additional unit of that good.

Its field of action is individual economic units (people, companies, etc.), that is, microeconomics.

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Ahmed Ismail

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