Economic Transition As a Crisis of Vision: Classical versus Neoclassical Theories of General Equilibrium

John Peters, John Elliot and Stephen Cullenberg ()
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John Peters: University of Southern California
John Elliot: University of Southern California
Stephen Cullenberg: Economics Department, University of California, Riverside

Eastern Economic Journal, 2002, vol. 28, issue 2, 217-240

Abstract: In this paper we compare the classical general equilibrium framework of Smith and Marx with the neoclassical one of Arrow and Debreu, and find that these competing paradigms of equilibrium clash on a number of critical issues--efficiency, power, the role of markets, time, the nature of exchanges, and the importance of institutions. We argue that it is primarily a neoclassical, Arrow-Debreu vision of the economy that underlies current shock therapy policy recommendations, and that such policy advice has often had devastating effects on the transitional economies. As an alternative, we re-examine transition and economic reform through the theories of the classical economists to suggest policy recommendations.

Keywords: Arrow Debreu; Equilibrium; General Equilibrium; Neo Classical; Neoclassical (search for similar items in EconPapers)
JEL-codes: B12 B13 D50 P16 P21 P26 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:28:y:2002:i:2:p:217-240

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