General equilibrium: Theory and reality

A. D. Chigrin ()

Voprosy Ekonomiki, 2024, issue 10

Abstract: The General Equilibrium Theory (GET) remains the cornerstone of the foundation of economic science. It is associated with the concept of the economy as a self-regulating system. However, its widespread application in economic analysis has not been observed. The theory does not allow one to find out the equilibrium point, a deviation and the relative direction of motion. The theoretical and practical value of such a theory is not obvious. The analysis of causal links underlying the GET does not give confidence in their sustainability, which deprives it of an empirical basis. Meanwhile, the classics described the basic mechanisms of self-regulation and defined the criterion of equilibrium, but the results were not formalized into a coherent theory. The equilibrium conditions of the classical and neoclassical approaches partially coincide. An example of the application of classical criteria is the analysis of some ambiguously interpreted problems. Against the backdrop of the uncertainty of the conclusions of the mainstream, classical approach gives a fundamentally different, dynamic and non-equilibrium picture of economic phenomena.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprec:y:2024:id:5053

DOI: 10.32609/0042-8736-2024-10-28-41

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