A tangled though remarkable story behind the proof in the mid-1950s of the existence of a competitive general equilibrium (Arrow-Debreu, as it is known) is summarised in a recent posting on economicprincipals and revised (rather drastically, it must be said) here (scroll down to ‘A correction’).
There are strong echoes of the controversy over the proper academic credit for the discovery of the double helix structure of DNA. In the Economics case, the problem was compounded by a very slow refereeing process while rivals worked on a related research paper.
Economic Principals is itself an interesting website reporting on topical issues as well as presenting non-technical interpretative overviews of controversies in economics, often disentangling the intellectual, institutional and personal issues. One example, amongst many, relating to the 2011 Sargent-Sims Nobel Prize, is here. The full archive is online.
8 replies on “Disturbing Equilibrium”
The first two links just go to the main page of the Economic Principals site. It may be helpful to correct that; the two posts are:
The Startling Story behind a Famous Footnote: http://www.economicprincipals.com/issues/2014.08.11/1638.html
(In which Debreu gets a bit of a kicking.)
And:
Political Arithmetick Becomes Measurement Economics
http://www.economicprincipals.com/issues/2014.08.17/1640.html
(In which it is revealed that Debreu didn’t actually do anything especially bad.)
I think you forgot the close italics tag.
Ta for link.
A discipline at the toddler stage.
Another form of ‘disturbance’ at the macro level:
Engineering Failed States: The Strategy of Global Corporate Imperialism
Imperialism has long been a collective disease for humanity. In its current perverse capitalist incarnation, imperialism’s methods have become even more brutal and ruthless. If the physical destruction of a country’s infrastucture is still in the foreground, this is used in conjunction with the creation or revival of civil wars, ethnic or bloody sectarian conflicts in previously stable national entities. Corporate imperialism aims to break the national spirit. The few remaining sovereign nations are the final obstacles to the looming threat of a global transnational corporate empire. Corporate imperialism’s only concern is the bottom line: it is on a permanent quest to maximize profit. It is not about bringing the supposed gift of civilization to savages anymore, unlike the old-fashioned imperialist adventures. In this context, why bother to rebuild the shattered countries when the only goal is to plunder resources, either natural or human? Public resources are allocated to reconstruction, but these resources usually disappear in black holes of corporate war profiteers such as Halliburton in the US. Wrecked countries are never rebuilt because they are easier to exploit while they are in a shambles.
[…]
The model for transnational corporate imperialism was set up in Iraq, then applied to Libya. This global imperialist strategy is in the works in Syria, the Ukraine, Mali, Central African Republic, and Venezuela. The North Atlantic Treaty Organization (NATO) usually acts as the armed fist for this process, but sponsored proxy agents such as Jihadists in Syria or fascist factions in the Ukraine and Venezuela are also used to destabilize governments. In Venezuela on February 7, 2014, before the not so spontaneous protests started, Japanese car giant Toyota abruptly announced it was closing a plant employing 1,700 people. Is this pure coincidence or part of an overall ploy to crash Venezuela’s economy? There is a saying in Lebanon, that the country is “always five minutes away from civil war.” This tragic Lebanese reality has spread to the entire Middle East, Africa and is gaining ground in Eastern Europe. The old imperialist adage “divide and rule” is obsolete, the new motto seems to be “divide and steal from those divided.” The new strategy is to fuel ethnic or sectarian conflicts as much and as long as possible, and ideally maintain a permanent state of low-intensity civil war. In the Central African Republic, the clashes between the majority Christian population and the 15 percent Muslims gave France the perfect opportunity to send 2,000 troops. French troops are still in Mali to protect mining interests. In Iraq, the low-level sectarian warfare is a disaster for Iraqis but has worked well for corporate interests. The oil is flowing, and of course, just like in Syria, weapons dealers, mercenaries, and “reconstruction” contractors are making a killing.
– See more at: http://newsjunkiepost.com/2014/02/18/engineering-failed-states-the-strategy-of-global-corporate-imperialism/#sthash.EAmMheSF.dpuf
“There are strong echoes of the controversy over the proper academic credit for the discovery of the double helix structure of DNA.”
There are?
Even with the best will in the world with regard to the seriousness with which economists take their endeavours, the comparison is ridiculous!
It’s not my field/ discipline but an interesting, enormously important element of the continuation of this story is that DeBreu’s later work (along with that of others) exposed major (even potentially fatal) problems with general equilibrium theory.
The wikipedia summary of the Sonnenschein–Mantel–Debreu theorem is here:
http://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2%80%93Debreu_theorem
and a 2006 paper reviewing the issues is here:
http://www.umass.edu/preferen/Class%20Material/Readings%20in%20Market%20Dynamics/Risvi%20HOPE%202006.pdf
The implications as I understand it (based on secondary explanations) are that the macroeconomy may not reflect the individual demand curves – there is a significant aggregation problem that general equilibrium dynamics do not explain. The uniqueness and stability of general market equilibrium are thrown very much into question.
Seán, I think fatal is too strong. This class of result is largely about uniqueness. There may be multiple Equilibria. You can still consider small perturbations in the usual way provided they are not so big as to bump you to one of the other Equilibria.
Personally, I think the economies described in GE theory to be pretty arid anyway so I wouldn’t lose sleep over it.
On a more general note, debates about who got there first are endemic – and can get nasty. I read just recently that several periodic tables existed before Mendeleev who gets the kudos for example. As the low hanging fruits of research get scooped up, increasingly discoveries depend on many individuals. Although obviously I am the first to point this out 🙂
Kevin, I think that is probably right. The Denny Theorem.
What that means, it appears to me, is that equilibrium analyses work best in ‘local’ contexts but cannot explain the differences between those contexts or how economies shift from one to another. That is where institutions and political economy are crucial. Incidentally, to link to Liam Delaney’s thread, the focus on behavioural economics and ‘nudging’ seems to apply largely ‘within context’/’within equilibrium’.