The Disequilibrium Economists


Economics faces six fundamental questions: (i) will the society organized on the principles of exchange (the Market Economy) stay composed or will it fall apart (the question of existence of equilibrium)?, (ii) will such an equilibrium be unique (a multiplicity of equilibria poses difficult and embarrassing questions)?, (iii) will such an equilibrium be robust (the question of stability of equilibrium)?, (iv) will such an economy (society) be efficient?, (v) will it grow or expand forever?, and (vi) will it be just? The classical economists, Adam Smith in particular, answered all these questions affirmatively using a characteristic methodology. However, Karl Marx challenged the entire structure of faith in the merits of the exchange economy and shattered all optimism regarding the said order. The neoclassicists, mostly using their own new (mathematical, marginalist, rationalistic, atomistic, hedonistic, etc) methodology set out to prove that answers to all those six questions were in affirmative. They restructured the faith in the said order. In so doing, they had to distance themselves from the reality and they did not mind doing so. This endeavour made neoclassical economics dogmatic and religious in nature.

Disequlibrium Economics emphatically denies the relevance of the concept of equilibrium (especially its conventional stability) to understanding the functioning of an economic system. They hold that, as a matter of fact, the economy (or the market) moves from the one to another disequlibrium and the entire trjectory of this movement is a chain of disquilibria. Keynes believed that an economy has a natural inclination towards disequilibrium. The Keynesian and Post-Keynesian economists, strongly reject general equilibrium theory as "misleading" and "useless". Non-Equilibrium economics (such as the Institutional economics and the Evolutionary economics) abandons the use of equilibrium concept altogether.

The Classical Tradition
János Kornai Franklin M. Fisher
Hyman P. Minsky Albert O. Hirschman
Robert W. Clower John D. Hey
William A. Brock Joost Van Doorn
Institutional Economists Evolutionary Economists

 

 

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