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Edgeworth vs. Walras on equilibrium and disequilibrium

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  • Franco DONZELLI

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Abstract

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.

Suggested Citation

  • Franco DONZELLI, 2009. "Edgeworth vs. Walras on equilibrium and disequilibrium," Departmental Working Papers 2009-47, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2009-47
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    References listed on IDEAS

    as
    1. Franco Donzelli, 2007. "Equilibrium and Tâtonnement in Walras's Eléments," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 15(3), pages 85-138.
    2. Nicholas Kaldor, 1934. "A Classificatory Note on the Determinateness of Equilibrium," Review of Economic Studies, Oxford University Press, vol. 1(2), pages 122-136.
    3. Creedy, John, 1979. "Edgeworth's Contribution to the Theory of Exchange," Scottish Journal of Political Economy, Scottish Economic Society, vol. 26(2), pages 163-181, June.
    4. Roberto Marchionatti, 2007. "On the application of mathematics to political economy'. The Edgeworth--Walras--Bortkievicz controversy, 1889--1891," Cambridge Journal of Economics, Oxford University Press, vol. 31(2), pages 291-307, March.
    5. Walker, Donald A, 1973. "Edgeworth's Theory of Recontract," Economic Journal, Royal Economic Society, vol. 83(329), pages 138-149, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Edgeworth; Walras; equilibrium; disequilibrium; statics; dynamics;

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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