Provide a series of essays on each of the following topics.
1. (Semi-short essay) Wicksteed made a significant contribution to value theory during the marginal utility revolution. This contribution was the "Exhaustion of the product" which we derived in class. Explain the importance of this contribution. Explain the significance of the Euler theorem and the assumption of constant returns to scale in deriving the solution. In what ways is this contribution similar to Marx's Transformation Problem, in what ways is it different?
2. (Short essay) Adam Smith rejected utility as a foundation for value. He illustrates this rejection in his famous diamonds and water paradox. Briefly explain how the cognitive switch from total utility to marginal utility resolves this paradox.
3. (Long essay) The stability of the economic system and the laissez-faire doctrine has been a theme throughout the course. Trace the evolution of work on this topic. You will have two archs to trace. First those theorists who are trying to prove that the system is stable. Secondly those who are trying to prove that the system is inherently unstable. For each scholar provide their position on the issue as well as the theoretical mechanism that drives stability/instability. Be sure to include each of the following:
- A. Smith (Invisible hand)
- L. Walras (Walrasian Auctioneer)
- K. Marx (Laws of Motion)
- Edgeworth (Edgeworth Box)
- Keynes (Animal Spirits)
- Schumpeter (Creative Destruction)