Marshall vs. Walras on Equilibrium and Disequilibrium

In this paper we contrast the received view according to which Walras' and Marshall's approaches to price theory, while differing in scope, are basically similar in their aims, presuppositions, and results. By focusing on a special kind of economy (the pure-exchange, two-commodity economy), which has been formally studied by both economists with the help of similar tools, we are able to precisely identify the differences between the two approaches. In the first place, the basic assumptions underlying Walras' analysis of the trading process and his conception of the working of a competitive market will be shown to be at variance with Marshall's assumptions and conception. In the second place, it will be shown that, starting from such different sets of assumptions, the two economists arrive at entirely different models of the pure-exchange, two-commodity economy. Precisely, by reducing the trading process to a purely virtual process in "logical" time, Walras is able to construct a well-defined notion of "instantaneous" equilibrium, which can be easily extended to more general contexts (such as multi-commodity exchange and production economies). On the contrary, by making a few further assumptions on the traders' characteristics and the nature of the commodities involved, one of which must be money or a money-like commodity, Marshall can indeed prove that a determinate (or almost determinate) equilibrium emerges from a process of exchange in "real" time with observable out-of-equilibrium trades; but his analysis cannot be significantly generalized beyond the partial equilibrium framework in which it is necessarily couched from the beginning.