Dynamics in General Equilibrium Theory

Abstract

The author finds himself something of an outsider in writing this article, and for a mathematician to write a paper with no technical mathematics is a real confrontation with the problem of communication. What the author hopes to achieve here is to convey some of his ideas on the relation between dynamics and the traditionally static, economic equilibrium theory. Since the author have been working in mathematical economics, he have been struck by the number of attacks on general equilibrium theory, on mathematical economics and even economic theory in general. The role of theory per se hardly requires defense; theory can give a deeper understanding of any subject, subtle relations are seen, inconsistent ideas are exposed, new horizons are revealed. A criticism commonly made of economic theory is its failure to make predictions of crises in the country or to anticipate correctly unemployment or inflation. One must be cautious in the social sciences about looking toward physics for answers. However, some comparisons with the physical sciences seem profitable.