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What's right with the neoclassical legacy? Allais' response

Olivier Baguelin ()
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Olivier Baguelin: EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Most important economic problems such as coordinating individual activities or providing correct incentives arise "far" from economic equilibrium; this is especially true within a context of general interdependence. And yet, the walrasian General equilibrium theory, as dominant legatee of neoclassical economics, is only coherent in the close neighborhood of some equilibrium (Foley, 2010). The marshallian approach is an appealing alternative to deal with "general disequilibrium" situations while incorporating neoclassical concepts. The trouble is that it betrays part of the neoclassical legacy when questioning an ordinal interpretation of utility. This paper draws the attention on Allais' General theory of surpluses (1981) as a valuable platform to coherently arrange fundamental neoclassical achievements. It offers a basic but integrative analytical framework: not only does it accommodate disequilibrium situations but it allows connections to such an important development in economic theory as the institutional approach.

Keywords: surplus; loss; general equilibrium; transaction costs JEL codes: D3; D5; D6 (search for similar items in EconPapers)
Date: 2020-04-13
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