marginalists

Marginalists are economists associated with the marginal revolution of the 1870s, a shift in value and price theory from focusing on total costs to emphasizing margins. They argued that the value of goods and the prices at which they are exchanged are determined by marginal utility and scarcity, with decisions governed by the next, or marginal, unit rather than totals. This approach underpins modern neoclassical economics.

Key figures include Carl Menger (1871) who introduced marginal utility as the source of value, William Stanley Jevons (1871) who developed a utility-based theory of price, and Léon Walras (1874–1877) who formalized general equilibrium with price adjustments across markets. Later marginalists such as Eugen von Böhm-Bawerk and John Bates Clark contributed to capital, interest, and distribution under marginal analysis.

Core concepts include that value derives from the marginal utility of a good to an agent and its marginal cost of production; the downward-sloping demand curve follows from diminishing marginal utility and substitution effects; the equi-marginal principle describes optimal allocation by households and firms; marginal productivity theory links factor prices to the marginal product of inputs.

Impact: The marginalist framework became the foundation of neoclassical microeconomics, shaping price theory, welfare economics, and general equilibrium theory. It helped explain value in terms of scarcity and marginal decisions and influenced subsequent economic theory and policy analysis. Critics have questioned the empirical measurement of utility and the assumptions underlying marginal analyses, while later developments refined and extended the theory.