Economic Models

A comparative analysis of methodological individualism and the classical economists.

This paper attempts to identify, compare, and contrast the comprehensive models of the economic systems, focusing on the methodological individualism and the classical economist approaches. In particular, it looks at how these two philosophies have basic assumptions about human nature, technology, and social institutions. It also discusses how these philosophies may have some inherent problems and how the assumptions made by the methodological individualism thinking and the classical economists provides an excellent opportunity to distinguish how our economy literally works and how it theoretically works and if those are technically one and the same.
“The staunch followers of Classical Economics were strong defenders of the laissez-faire capitalism approach to politics. They believed in immigration, saving and capital investment, lower taxes and a simpler tax codes, balanced budgets and opposed minimum-wage laws and felt war was bad for the overall economy. The words of Adam Smith are no longer how our economy operates. ?His “invisible hand” doctrine declared that the voluntary self-interest of millions of individuals creates a stable, prosperous society (what Smith called “natural harmony”) without the need for central direction by the state.”