May 2, 2015

Walras is long gone

Comment on Lars Syll on ‘On the irrelevance of general equilibrium theory’


Let me start with your summary. You [Ezra Davar] say: “In development of any science a continuity plays crucial role. So, it is impossible to neglect achievement of such authors as Smith, Marx, Walras, Marshall and so many others eminent authors.”

Since economics is scientifically in secular stagnation most economists, you included, have obviously lost sight of the idea of the scientific revolution: “... most economists neither seek alternative theories nor believe that they can be found.” (Hausman, 1992, p. 248)

Apply your argument to Copernicus, Kepler, and Galileo in their relation to Ptolemy and you immediately see that continuity is not exactly the top priority of great scientists. This is especially so when they are confronted with savants (instead of real scientists): “These savants, as Galileo put it, first decided how the world should function in accordance with their preconceived principles. ... He openly criticized scientist and philosophers who accepted laws which conformed to their preconceived ideas as to how nature must behave. Nature did not first make men’s brains, he said, and then arrange the world so that it would be acceptable to human intellects.” (Kline, 1982, p. 48)

So let us, first of all, put the authors Smith, Marx, Walras, and Marshall into the category of savants and place them next to Ptolemy in the scientific Walhalla.

With regard to economics, the most deleterious of the preconceived ideas has been equilibrium: Wherever economics is used or thought about, equilibrium, is a central organising idea.” (Hahn, cited in Boland, 2003, p. 99)

In a previous post, I summarized ‘Because equilibrium is a NONENTITY all equilibrium models are methodologically unacceptable.’ And this means that the differences between the multitude of variants of equilibrium models play no role at all.

So your attempt to argue 'What Walras really meant’ is futile because if anything is indisputable then that Walras was an equilibrist. Of course, I agree with you that there are differences and overlaps between the original Walrasian, the input-output, and the Neo-Walrasian approach (see Mitra-Kahn 2008) but these are only of historical interest.

“At long last, it can be said that the history of general equilibrium theory from Walras to Arrow-Debreu has been a journey down a blind alley, and it is historians of economic thought who seem to have finally hammered down the nails in this coffin ...” (Blaug, 2001, p. 160)

Let Walras rest in peace and equilibrium with him.

Equilibrium in whatever definition must not be taken into the premises. Methodologically, this amounts to a petitio principii (cf. Mill, 2006, pp. 819-827). Not admitted are, in addition, utility, optimization, and rational expectation. The first rule of theory-building says: never put NONENTITIES into the axiomatic premises (2014, p. 11).

Egmont Kakarot-Handtke

Blaug, M. (2001). No History of Ideas, Please, We’re Economists. Journal of Economic Perspectives, 15(1): 145–164.
Boland, L. A. (2003). The Foundations of Economic Method. A Popperian Perspective. London, New York: Routledge, 2nd edition.
Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.
Kakarot-Handtke, E. (2014). The Logic of Value and the Value of Logic. SSRN Working Paper Series, 2399550: 1–20. URL
Kline, M. (1982). Mathematics. The Loss of Certainty. Oxford, New York: Oxford University Press.
Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, Vol. 8 of Collected Works of John Stuart Mill. Indianapolis: Liberty Fund.
Mitra-Kahn, B. H. (2008). Debunking the Myths of Computable General Equilibrium Models. CEPA Working Paper 2008-1, 1–93. URL

For the correct and complete set of macrofoundations — structural axioms and behavioral propensity function — see Wikimedia AXEC137b.