Why were resources expunged from neo-classical economics?
Update: Read Martin Wolf’s conclusions on the debate
Something strange happened to economics about a century ago. In moving from
classical to neo-classical economics — the dominant academic school today —
economists expunged land — or natural resources. Neo-classical value theory —
based on marginalism and subjective valuation — still makes a great deal of
sense. Expunging natural resources from the way economists think about the world
does not.
In classical economics, land, labour and capital were the three factors of
production. With neo-classical economics, the standard production function had
just two factors of production: capital and labour. Land — by which we mean the
totality of natural resources — was then incorporated into capital.
http://blogs.ft.com/martin-wolf-exchange/2010/07/12/why-were-resources-expunged-from-neo-classical-economics/#more-456