Introduction

All the great intellectual pioneers held a skeptical, almost iconoclastic, attitude toward traditional ideas and maintained an open, almost naive, credulity toward new concepts. The creative process is always a wrenching away of a concept from its traditional context or meaning. Some students will find the abstract theory of economics more palatable – indeed, more understandable – when it is presented in a historical context. The emphasis is on the pre-1970 mainstream literature on production and the firm. The questions the theory seeks to answer have changed from being about how the firm acts in its various markets, how it prices its outputs or how it combines its inputs to questions about the firm’s existence, boundaries and internal organisation. The focus is on the mainstream microeconomic theory of production and the firm, and both the ‘mainstream’ and ‘microeconomic’ terms matter. The chapter also presents an overview of the key concepts discussed in this book.