Professor John Hall
Journal of Economic Literature Classification Codes
B13, B30, D31, D63
Income Inequality, John Bates Clark, Laissez-Faire, Neoclassical Economics, Vilfredo Pareto, Welfare Economics
This inquiry seeks to establish that key assumptions foundational to Neoclassical Economics contribute towards income inequality. A consideration of the Neoclassical interpretation and assumptions of the laissez-faire approach to market economies opens the inquiry. I examine the economic outcomes that result when the assumptions underpinning the Neoclassical application of laissez-faire are false, as they often are in the real world. The inquiry then turns to the theories and natural “laws” as advanced by Vilfredo Pareto (1848-1923) and John Bates (J. B.) Clark (1847-1938), which were built upon the Neoclassical adaptation of laissez-faire and became canon in the Neoclassical school. Finally, the inquiry explores how the Neoclassical doctrine preserves the status quo of welfare distribution and considers states of inequality to be an inexorable result of the “natural laws” of economics developed by Pareto and Clark
© 2022 Katharine Nester
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Nester, Katharine. "An Inquiry into the Assumptions and Tenets of Neoclassical Economics That Lead Towards Income Inequality, Working Paper No. 55", Portland State University Economics Working Papers. 55. (15 June 2022) i + 17 pages.