Demonstrate the rational order of the market: reflections on an impossible project

Angela Ganem ()

Brazilian Journal of Political Economy, 1996, vol. 16, issue 2, 274-292

Abstract: The Walrasian approach in the neoclassical theory aims to explain a generaland stable equilibrium over time which is determined by the maximizing behaviour ofagents in the marketplace. This paper intends to highlight the main logical shortcomingsinherent to the General Equilibrium Theory, which have important implications at theresearch level. In this context, the main issues become: i) at the level of assumptions, theissue of stability introduces a fundamental indetermination in the model; ii) the well-knownmarket imperfections in the real world contribute to the impossibility of setting generalprinciples. The search to address the issues through a more realistic approach generates newindeterminations and makes it even more difficult to attain the Pareto Optimum. In orderto better understand the logical and methodological impossibilities of this theory, the article suggests referring the research program to the rational constructivist philosophy of modemtimes. JEL Classification: B20; B41.

Keywords: Economic methodology; history of economic thought; general equilibrium (search for similar items in EconPapers)
Date: 1996
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