The Illusion of the Economic Margin

The concept of the margin, its place in economic optimization analysis, and its canonicity in decision-making criteria lie at the heart of the neoclassical system of thought. In a remarkably clear manner following the Ricardian methodological revolution at the beginning of the 19th century, when the notion of the margin found its way into the theory of production and rent, it became a central building block in the neoclassical edifice.1 The concept of the margin has been combined, in a wide variety of analyses and applications, with two other ideas or assumptions: first, the notion of rational behavior by economic agents and decision-makers; and second, that of the equilibrium position or conjuncture of rest to which economic forces could be expected to drive the system. Rationality, equilibrium, and the economic margin have forged an analytical commonalty among the practitioners of the discipline and have acquired a sacrosanct, if not a sine qua non, status (Bausor, 1985). Our objective in this note is not to survey developments under any of these headings. A sharper focus is in view. Our central question follows from an examination of the meaning and the analytical usefulness of the behavior functions from which the significance of the margin is generally