The Concept of Equilibrium in Different Economic Traditions

The Concept of Equilibrium in Different Economic Traditions

An Historical Investigation

Bert Tieben

This book deals with one of the most puzzling concepts in economic science, that of economic equilibrium. In modern economics, equilibrium is considered a key assumption, but its role is contested by economists both from within the mainstream and from rival schools of thought.

Chapter 8: Mathematical Revolution

Bert Tieben

Subjects: economics and finance, austrian economics, history of economic thought, methodology of economics, post-keynesian economics

Extract

INTRODUCTION One of the outstanding features of modern economic theory is the use of mathematical models. Moreover, this is a feature that is closely associated with the use of equilibrium concepts, especially in the neoclassical branches of economic theory. That is the reason why the mathematical formulation of economic equilibrium is often seen as a key development in the history of equilibrium economics, to the extent that this history is taken as the story of how economics became a mathematical science. As Ingrao and Israel (1990, 1) put it in their book The Invisible Hand: Economic Equilibrium in the History of Science: ‘From the outset it has been the aim of the theory whose historical development, main achievements, and state of art are chronicled in this book to use mathematics as its basic tool in describing and analyzing economic reality.’ The previous chapters showed that the history of equilibrium economics is much more than a development which pushed economic science towards mathematical theory. Still, the dominance of mathematical theories of economic equilibrium in modern economics raises some important questions about the connections between the historical development of, on the one hand, equilibrium economics and on the other hand mathematical economics. A first question is why economists turned towards mathematics as a tool of research. Was this the result of forces extraneous to economics? It has been argued that successful mathematical sciences, like physics and astronomy, set an example which economists tried to follow (Mirowski 1989). Or are the causes internal:...

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