The Relevance of the Marshallian Concept of Normality in Interior and Inertial Dynamics as Revisited by Shackle and Kornai

Mehrdad Vahabi

Cambridge Journal of Economics, 1998, vol. 22, issue 5, 547-72

Abstract: This study endeavors to explicate the relevance of the Marshallian concept of normality in the evolution of supply curves and the price mechanism in time. This concept is based on the contradictory, or at least ambiguous, combination of an ex ante perspective of expectation formation and an ex post inertial dynamics. The author first explores the ex ante side of the contradiction by drawing upon the writings of Shackle. Subsequently, he examines Kornai's conception of the normal state as system-specific. The author identifies the relationship between normality and the coordination mechanism in Kornai's ex post approach which may be regarded as an alternative to Shackle's solution. Finally, the pertinence of the Marshallian concept of normality will be demonstrated, as will its divergent developments by Shackle and Kornai. This leads us to the conclusion that a further development of the concept is required in order to reconcile both ex ante and ex post approaches; this might be based on recent evolutionary analysis. Copyright 1998 by Oxford University Press.

Date: 1998
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