The chart above is a summary of my history of thought class here at Bucknell. Over the last years I have used the Vaggi and Groenewegen textbook. The central divide in the history of economic thought is between the classical political economy tradition and the utilitarian-marginalist tradition. The classical tradition, running from Petty, Cantillon, and Quesnay through Smith, Ricardo, Marx, and later Sraffa, is organized around production, reproduction, surplus, accumulation, and distribution among social classes. Its object is the economy as a historically specific social system, marked by conflict over the surplus. By contrast, the Benthamite tradition, passing through John Stuart Mill, Jevons, Marshall, Pigou, and modern neoclassical economics, shifts the center of analysis toward utility, exchange, individual choice, scarcity, and the marginal calculus.
This divide in economics mirrors a broader division in social science, discussed by Randall Collins, between a conflict tradition, concerned with power, class, institutions, and historically evolving social structures, and a rationalist-utilitarian tradition, which begins from rational individuals and explains social order as the unintended or aggregate result of their choices (Collins has four traditions in sociology, and I'm simplifying here). In that sense, the Smith/Ricardo/Marx line belongs, despite its internal differences, to the conflict-centered political economy tradition, while the Bentham/Mill/Marshall line provides the economic counterpart to the rationalist/utilitarian strand of social theory.*
The same divide reappears in modern theories of value and distribution.** In the classical-Sraffian tradition, value is not derived from individual preferences or subjective scarcity, but from the technical conditions required for the reproduction of the system. In a Sraffa-Leontief framework, given the input-output relations of production and one distributive variable, such as the real wage or the profit rate, relative prices can be determined as prices of production. Distribution is therefore not solved by marginal productivity, but reflects a social and institutional determination of the division of the surplus.
By contrast, in the Arrow-Debreu intertemporal model, prices are equilibrium signals that reflect relative scarcities across commodities, dates, and states of nature, ultimately grounded in individual preferences, endowments, and technologies. In that framework, distribution is treated as the result of the initial allocation of resources and the competitive valuation of scarce factors, rather than as a historically specific conflict over the surplus.
Thus, the old contrast between classical political economy and marginalism survives in modern form as the contrast between reproduction, surplus, and distribution on the one hand, and scarcity, preference, and intertemporal exchange on the other.
* It is interesting that Friedman, in his classic Capitalism and Freedom, although he quotes Smith, mostly for rhetorical reasons, in my view, in his crucial chapter on the importance and antecedence of economic freedom over political rights, he only cites Jeremy Bentham as a precursor.
** On this, the kind of confusion in the profession is somewhat surprising. Some people (e.g. Cowen here) suggest that the classical tradition has no alternative to the simplistic labor theory of value (LTV), with prices proportional to the quantities of labor, and ignore the Sraffian model (see this). Alternative, some of the same people assume that the Marshallian, not even the general equilibrium version of say Knut Wicksell, has no problems, not considering the insurmountable issues with partial equilibrium shown by Sraffa's critique. The reasons for the change in the notion of equilibrium, noted by Garegnani go unnoticed by almost the whole profession.
PS: There are plenty of differences between authors in those two traditions. Clearly Friedman and Samuelson had many economic policy differences, and Samuelson and some left-Keynesians like Joan Robinson would agree on some of those. But on an analytical level, Samuelson was closer to Friedman.
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