Classical and neoclassical economic theory: Fundamentals of regulation for the agricultural sector

Russian State Agrarian University – Moscow Timiryazev Agricultural Academy, Moscow, Russia

^* Corresponding author: migunov@rgau-msha.ru

Abstract

The work is devoted to the complex issues of the influence of the theoretical assumptions of classical and neoclassical economic theory on the sustainable development of the agricultural sector. The purpose of the work is to substantiate the scientific theoretical foundations of classical and neoclassical economic theory as the basis for regulating the agricultural sector. The methodological basis of the study is an integrated approach, in which the approaches of classical and neoclassical economic theory to the regulation of the agricultural sector are considered. The scientific foundations of classical economic theory are studied from the point of view of three concepts: “economic man”, “natural order”, and equilibrium economics. It is shown that from the point of view of the economic theory classics, the market appears to be a self-regulating mechanism that leads to maximum efficiency in production and allocation of goods, the concept: the state is a “night watchman”. The scientific foundations of neoclassical economic theory are investigated from two major methodological bases: the marginalism principle and descriptive models of economic behavior of people. The automatic mechanism of the best use of market resources is shown and, according to neoclassical theories, the competitive market, without government intervention, is able to lead to the best equilibrium results. Recommendations are given for improving market relations to ensure the economic growth of the agricultural sector in terms of intracompany and intersectoral competition.