General Equilibrium Theory and Professor Blaug
AbstractIn a series of recent papers professor Mark Blaug accuses the Formalist Revolution of the 1950s of having greatly damaged economic science by burying the conception of 'competition as a process' in favour of a conception of 'competition as an end-state', incompatible with realistic studies of stability. The paper argues that the criticism is convincing and in fact addressed at the Arrow-Debreu conception of equilibrium, which is a very-short-period conception due to the Walrasian treatment of the capital endowment. Given the unreality of the resulting model, which assumes complete futures markets and can study stability only under the auctioneer, the question arises of why the Arrow-Debreu model and its conception of equilibrium were so successful, given that traditionally the dominant conception of equilibrium had been a long-period one (even in Walras: new evidence is adduced in support of this last thesis). The answer is found in the problems of neoclassical capital theory. The conclusion is that professor Blaug's criticisms point to a necessity to return to the long-period method, but this requires abandoning the marginalist or supply-and-demand approach to value and distribution, because it was precisely the inability of the latter approach satisfactorily to determine long-period positions that motivated the switch to the sterile modern versions of general equilibrium
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Bibliographic InfoPaper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 486.
Date of creation: Aug 2006
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Find related papers by JEL classification:
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Stockholm School)
- B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
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- Weintraub, E. Roy & Gayer, Ted, 2001. "Equilibrium Proofmaking," Journal of the History of Economic Thought, Cambridge University Press, vol. 23(04), pages 421-442, December.
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