Edgeworth vs. Walras on equilibrium and disequilibrium
In a brief review of the second edition of Walras’s Eléments, published in 1889, Edgeworth criticizes Walras’s theory of tâtonnement, viewed as a misplaced and misleading attempt at explaining the equilibration process in a multi-market economy. Edgeworth’s attack sets off a controversy, raging over the 1889-1891 period, and then smouldering over the entire lives of both economists. The chief aim of this paper is to analyze the joint evolution of Edgeworth’s and Walras’s ideas on equilibrium and equilibration from the 1889-1891 controversy onwards. Even if Edgeworth’s original critique concerns Walras’s tâtonnement only, it will be proved that the fundamental divide between the two authors involves not only the dynamic, but also the static part of their respective theoretical systems. The Edgeworth-Walras controversy will be shown to produce major effects on both Walras and Edgeworth: both of them will partially revise their ideas on statics and dynamics; further, either one will take in some hints originating from the other. Yet, in spite of their reciprocal influences, their mutual communication will turn out to be quite limited. For Edgeworth will prove unable to understand the central, and unsolvable, problem of tâtonnement from Walras’s own standpoint: how to preserve a “realistic” and comprehensive picture of an observable disequilibrium process in “real” time, without disrupting the assumption of data invariance during the equilibration process. At the same time Walras will prove unable to grasp the essence of Edgeworth’s critique: that bargaining is more “fundamental” than price-taking behavior, so that the core is a broader solution concept than competitive equilibrium and recontracting a more general equilibration process than tâtonnement.
|Date of creation:||27 Nov 2009|
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