publication . Preprint . 2010

On the Notion of Equilibrium or the Centre of Gravitation in Economic Theory

Ajit Sinha;
Open Access
  • Published: 01 Jul 2010
Abstract
This paper is a critical examination of the notion of equilibrium in the classical theory of value. It highlights the theoretical importance as well as the problems associated with the notion of equilibrium in the classical theory and goes on to argue that Sraffa presents a theory of value within the classical tradition that does not require a notion of equilibrium of demand and supply, which succeeds in dissolving the problems associated with the classical theory of value. It also discusses the importance of the notion of equilibrium in the modern general equilibrium theory for the sake of continuity and completeness of the story.
Subjects
free text keywords: Equilibrium, Centre of Gravitation, Price Theory, Theory of Value, Classical Economics, Neoclassical Economics, Sraffa, jel:B3, jel:B4, jel:B1, jel:B2, jel:B5
42 references, page 1 of 3

Arrow, K. and G. Debrue. 1954. 'Existence of an Equilibrium for a Competitive Economy', Econometrica, 22: 265-290.

Arrow, K. and F. Hahn. 1971. General Competitive Analysis, Holden-Day: San Francisco.

Baldone, S. 2006. 'On Sraffa's Standard commodity: is it price invariant with respect to changes in income distribution?', Cambridge Journal of Economics, 30(2), pp. 313-319.

Bharadwaj, K. 1978. Classical Political Economy and the rise to dominance of Supply and Demand Theories, R.C. Dutt Lecture, New Delhi: Orient Longmans..

Boggio, L. 1992. 'Production Prices and Dynamic Stability: Results and Open Questions', The Manchester School, vol. 60 (3), pp. 264-294.

Duménil, G. and Lévy, D. 1985. 'The classicals and the neoclassicals: a rejoinder to Frank Hahn', Cambridge Journal of Economics, vol. 9, pp. 327-345.

----. 1987. 'The Dynamics of Competition: a Restoration of the Classical Analysis', Cambridge Journal of Economics, vol. 11 (2), pp. 133-164.

Dupertuis, M.-S. and A. Sinha. 2009. 'A Sraffian Critique of the Classical Notion of Centre of Gravitation', Cambridge Journal of Economics, 33, pp. 1065-87. [OpenAIRE]

Eatwell, J. 1987. 'Competition, Classical', The New Palgrave Dictionary of Economics, London: Macmillan.

Flaschel, P. and Semmler, W. 1987. 'Classical and Neoclassical Competitive Adjustment Processes', The Manchester School, vol. 55 (1), pp. 13-37.

Franke, R. 2000. 'Optimal Utilization of Capital and a Financial Sector in a Classical Gravitation Process', Metroeconomica, vol. 51 (1), pp. 40-66.

Gale, David. 1963. 'A Note on Global Instability of Competitive Equilibrium', Naval Research Logistics Quarterly, 10: 81-87.

Garegnani, P. 1976. 'On a change in the Notion of Equilibrium in Recent Work on Value and Distribution: A Comment of Samuelson', in Murray Brown, Kazuo Sato and Paul Zarembka (eds.), Essays in Modern Capital Theory, Amsterdam: North Holland, pp. 25- 45. [OpenAIRE]

Garegnani, P. 1997. 'On Some Supposed Obstacles to the Tendency of Market Prices Towards Natural Prices', in G.A. Caravale (ed.) Equilibrium and Economic Theory, London and New York: Routledge.

Groenewegen, P.D. 1982. 'History and Political Economy: Smith, Marx and Marshall', Australian Economic papers, vol. 21 (38): 1-17.

42 references, page 1 of 3
Abstract
This paper is a critical examination of the notion of equilibrium in the classical theory of value. It highlights the theoretical importance as well as the problems associated with the notion of equilibrium in the classical theory and goes on to argue that Sraffa presents a theory of value within the classical tradition that does not require a notion of equilibrium of demand and supply, which succeeds in dissolving the problems associated with the classical theory of value. It also discusses the importance of the notion of equilibrium in the modern general equilibrium theory for the sake of continuity and completeness of the story.
Subjects
free text keywords: Equilibrium, Centre of Gravitation, Price Theory, Theory of Value, Classical Economics, Neoclassical Economics, Sraffa, jel:B3, jel:B4, jel:B1, jel:B2, jel:B5
42 references, page 1 of 3

Arrow, K. and G. Debrue. 1954. 'Existence of an Equilibrium for a Competitive Economy', Econometrica, 22: 265-290.

Arrow, K. and F. Hahn. 1971. General Competitive Analysis, Holden-Day: San Francisco.

Baldone, S. 2006. 'On Sraffa's Standard commodity: is it price invariant with respect to changes in income distribution?', Cambridge Journal of Economics, 30(2), pp. 313-319.

Bharadwaj, K. 1978. Classical Political Economy and the rise to dominance of Supply and Demand Theories, R.C. Dutt Lecture, New Delhi: Orient Longmans..

Boggio, L. 1992. 'Production Prices and Dynamic Stability: Results and Open Questions', The Manchester School, vol. 60 (3), pp. 264-294.

Duménil, G. and Lévy, D. 1985. 'The classicals and the neoclassicals: a rejoinder to Frank Hahn', Cambridge Journal of Economics, vol. 9, pp. 327-345.

----. 1987. 'The Dynamics of Competition: a Restoration of the Classical Analysis', Cambridge Journal of Economics, vol. 11 (2), pp. 133-164.

Dupertuis, M.-S. and A. Sinha. 2009. 'A Sraffian Critique of the Classical Notion of Centre of Gravitation', Cambridge Journal of Economics, 33, pp. 1065-87. [OpenAIRE]

Eatwell, J. 1987. 'Competition, Classical', The New Palgrave Dictionary of Economics, London: Macmillan.

Flaschel, P. and Semmler, W. 1987. 'Classical and Neoclassical Competitive Adjustment Processes', The Manchester School, vol. 55 (1), pp. 13-37.

Franke, R. 2000. 'Optimal Utilization of Capital and a Financial Sector in a Classical Gravitation Process', Metroeconomica, vol. 51 (1), pp. 40-66.

Gale, David. 1963. 'A Note on Global Instability of Competitive Equilibrium', Naval Research Logistics Quarterly, 10: 81-87.

Garegnani, P. 1976. 'On a change in the Notion of Equilibrium in Recent Work on Value and Distribution: A Comment of Samuelson', in Murray Brown, Kazuo Sato and Paul Zarembka (eds.), Essays in Modern Capital Theory, Amsterdam: North Holland, pp. 25- 45. [OpenAIRE]

Garegnani, P. 1997. 'On Some Supposed Obstacles to the Tendency of Market Prices Towards Natural Prices', in G.A. Caravale (ed.) Equilibrium and Economic Theory, London and New York: Routledge.

Groenewegen, P.D. 1982. 'History and Political Economy: Smith, Marx and Marshall', Australian Economic papers, vol. 21 (38): 1-17.

42 references, page 1 of 3
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publication . Preprint . 2010

On the Notion of Equilibrium or the Centre of Gravitation in Economic Theory

Ajit Sinha;