Hemlock for economic students
(Putting effective demand in the long run and prices of production together)
Monday, December 23, 2013
Ariel Dvoskin on the limits of Walrasian equilibrium
Here is Ariel's PhD dissertation, which is well worth reading for those interested in the evolution and limitations of the marginalist (neoclassical) models. From the abstract:
"The marginalist approach is unable to satisfactorily incorporate capital goods within the supply and demand explanation of prices and distribution, and this seems to have condemned modern general equilibrium theory to face an unpleasant dilemma: either this theory is, like Hahn, truly consistent with its own theoretical object, a notion of equilibrium that must be silent on the issue of how actual economies work; or, alternatively, the theory attempts to provide some explanation of the working of actual economies and in so doing, it must inescapably rely on traditional gravitational ways of reasoning that must presume the illegitimate notion of capital in value terms. Either way modern general equilibrium theory runs into a blind alley, with the implication that, to predict with reasonable accuracy price, quantity and distributional trends as observed in actual economies, an explanation with different theoretical foundations is necessarily called for."