The von Neumann model and the early models of general equilibrium

Abstract

The paper reconstructs the von Neumann model, comments on its salient features and critically reviews some of its generalisations. The issues related to the treatment of consumption, decomposability and uniqueness of the rate of growth and interest will be especially scrutinised. The most prominent models of general equilibrium that appeared before or roughly at the same time as von Neumann's model will be also reviewed in the paper and compared with it. It will be demonstrated that none of them had any noticeable influence on von Neumann's model, which is genuinely distinct, ideologically free and methodologically fresh and forward-looking. It will be argued that the model can be viewed as a brilliant mathematical metaphor of some deep-rooted old vision, pertaining to the core issues of commodity production. © 2004 Akadémiai Kiadó, Budapest.