Marginalists mark the real precursor to modern neoclassical economics — to follow the classicalists, marginalists took a number of economic theories and worked with them, literally, on the margin. Marginal analysis makes up much of what is neoclassical economics, creating the popular economic tenet, “rational decisions are made on the margin.”

The marginalist school of thought can be said to have originated in 1871 with Jevons and Menger’s papers on marginal utility; though, its roots stretch as far back as Aristotle’s Politics, where he discusses the rate at which consumption has value. Even more recently in 1738, when Daniel Bernoulli published his first unequivocally marginalist ideas and theories in “The exposition of a new theory on the measurement of risk,” could be said was a strong stimulus to the marginalist revolution.

Marginalists were largely non-interventionist in thought, suggesting that trade unions, government actions of redistribution and eliminating mistreatment that the socialist school called for were largely poor solutions, and that classicalists made many of the right policy decisions with regard to “invisible hand”-like market distribution and management. The marginalists saw non-market solutions as hugely inefficient.

Marginalists saw the margin as being the only point where decisions and value could be determined — the point where the actual exchange takes place, in neoclassical theory, determines important variables like producer/consumer benefit, actual return, etc. They saw marginal utility as seen by Jeremy Bentham as being a great indicator of pleasures and pains, and formalized rational maximizing behaviour.

In many ways, marginalists formalized and conceptualized concepts of equilibrium, and the traditional supply/demand graph which has been seen by so many microeconomics students today. The emphasis on consumer-firm interactions rather than the aggregate macroeconomic climate produced an environment of analysis and decision making thought, particularly with regard to analysis of certain goods and their market environments.

Of course, much of what the marginalists said is still in play today, but some of the economists to follow — significantly, John Maynard Keynes, challenged and rejected many theories of employment, labour and wages with regard to marginalist and subsequent neoclassical analysis. Some major revolutions in mathematical game theory, with regard to both the labour and advertising markets had similar results.

Modern microeconomics textbooks will see many, many leftovers of the marginalists. The tools, concepts and mathematical techniques pioneered by the marginalists, and subsequently the neoclassicalists, combined with much of the Keynesian contributions to come during the Great Depression highlight almost everything that is modern economics — at least at the beginning level. Diminishing returns, mathematical and model-based economics, laws of demand and rationality, and the value of leisure are all significant contributions by marginalists which are still in solid consideration today.

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