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General Equilibrium Theory - Walras versus post-Walras Economists: “Finding Equilibrium” - Losing Economics


  • Ezra Davar


This paper shows that the post-Walras general equilibrium theory is irrelevant to real contemporary economic life. The main achievement of modern General Equilibrium Theory is the proof of equilibrium’s existence. It might be that the proof of the equilibrium existence is a mathematical achievement, but the question is whether these proofs are harmonious with the economic situation in reality. This paper traces concisely how Walras’s theory has been became causing economic science to deviate in an erroneous direction and reaching a deep crisis; because post-Walras’s economists, since Pareto, have misunderstood and misinterpreted Walras’s economic theory. This group of Post-Walras authors (Pareto, Cassel, Schlesinger, Wald, and von-Neumann, Hicks, Keynes, Lange, and Patinkin) then recast Walras’s theory into incorrect and wrong form; their error further compounded when a later group of economist-mathematicians (Arrow, Debreu, Friedman, Samuelson, Solow and others) accepted their interpretation without reservation. Post-Walras’s economists ignore Walras’s less known assumptions and blame him for disregarding the problem of equilibrium existence, uniqueness and stability and comparative-static. Therefore, their main objective since the beginning of the 20th century was the rigorous proof of equilibrium existence. However, this proof was based on unrealistic assumptions and along the road the goal of economics was lost. The nine crucial, unrealistic assumptions will be considered and will illustrate that modern general equilibrium theory is irrelevant to real economics and is also far removed from Walras’s general equilibrium theory.

Suggested Citation

  • Ezra Davar, 2015. "General Equilibrium Theory - Walras versus post-Walras Economists: “Finding Equilibrium” - Losing Economics," Working Papers 46/2015, Institute of Economic Research, revised Apr 2015.
  • Handle: RePEc:pes:wpaper:2015:no46

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    More about this item


    Walras; post-Walras; General Equilibrium Theory; Modern Theory; Unrealistic Assumptions;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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