Three Major Theories of Economics

Economics can be described as a kind of social science. This social science mainly revolves around the various aspects of services and goods such as producing them, distributing them and finally consuming them. Economics focuses on the way people, governments and businesses select the allocation of resources. There is a lot of focus on trade and labor in economics. There can be many types such as microeconomics and macroeconomics. There can be theories in economics as well so as to gain a better understanding of the subject. As we move forward, we shall focus on the theories of economics. 

Theories of Economics

Before studying the theories of economics, it is essential to understand the meaning of theories. A theory can be understood as a reasonable or methodically accepted principle that helps in explaining certain phenomena. In economics, the theories help to understand the working of economics. Based on the specific function of economics, an economist can use a theory. The theories in economics might also be helpful in the analysis, interpretation and prediction of the behavior of industries, financial markets and governments. Here are three major theories in economics: –

• Keynesian Economics 

The major idea of Keynesian thought is focused on how collective demand cannot integrally be equal to the prolific economic capacity instead there might be several factors such as private as well as public which can determine it. Keynesian economics is what involves several macroeconomics models and theories explaining the collective demand, the entireness of the economy’s expenditure and lastly, affects the phenomena such as economic productivity and rise. 

• Marxism Economics

When one is focusing on how capitalism has affected the growth, efficiency and labor then all this comes under the theory of Marxism. It is a sort of socioeconomic theory which aims to interpret how capitalism has affected growth, efficiency and employment. According to this theory, there are mainly two socioeconomic classes: the bourgeois class and the proletariat class. The ruling class can be called the bourgeois class whereas the working class can be called the proletariat class. As per Marxism, the bourgeoisie class manages the ways of production whereas the proletariat class is the one which is owning the labor which is involved in the production of goods. 

• Neoclassical Economics

Neoclassical economics is often taught as introduction courses for economics in colleges which act as a base for an operational economy. The principles of Neoclassical economics are commonly used as a theoretical outline for illustration of the popularly expected merits of capitalism which includes the inclination of bazaar prices to reach equilibrium as the capacity of demand and supply alters. Therefore, it demonstrates the ideal valuation of resources that appear since the natural forces of individual wish as well as shortage. 

Conclusion

As observed from the above section, the topics regarding the understanding of Economics as a subject as well as the meaning of economics have been covered in a comprehensive way. The various topics above include the meaning of a theory and the implication of a theory in economics. Apart from this, the three major types of theories in economics have also been understood. The three main theories that are discussed above include Neoclassical economics, Marxism Economics and Keynesian Economics. The theories help in gaining a better understanding of the working of economics. Based on the specific function of economics, an economist can use a theory. The theories in economics might also be helpful in the analysis, interpretation and prediction of the behavior of industries, financial markets and governments. Thus, it can be concluded that the above diverse sections helped in learning about economics as well as the theories commonly studied in economics.