Abstract
The idea of an equilibrium of forces is one which is common to many sciences, but there are few in which it plays a more important part than in theoretical economics. It has been implicit in our discussions since the time of the Physiocrats,1 and as the methods of economics have become more and more self-conscious it has become, in one shape or other, one of the main instruments of theoretical analysis. We describe the various forces we have to study by reference to their place in our conception of equilibrium. We measure their variations by reference to equilibrating norms. It is not too much to say that in so far as we pretend to enunciate economic laws at all it is the assumption that, within some limits, an equilibrium of some sort is conceivable that is the justification of our procedure.
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Notes
See Joseph Schumpeter, Epochen der Dogmen- und Methodengeschichte (Tübingen, 1914), pp. 45–8, for a very interesting discussion of the Physiocratic contribution viewed in this aspect.
The argument of this paper was first developed in lectures on the history of theory which I delivered at New College [Oxford] in the winter 1928–29. At that time I thought that the contrast which I drew between static states according to suppositions concerning the supply schedules of the factors of production, although, of course, obvious to anyone familiar with mathematical economics, had not been made by any “literary economist.” Since then, however, I have discovered a footnote in Professor [F.H.] Knight’s Risk, Uncertainty and Profit [Boston, 1921] (p. 143) in which this is done, and, as I had read that admirable work many times, I suppose I must have been unconsciously influenced by Professor Knight’s comment. Professor Knight’s note is, however, very brief, and I therefore venture to hope that my historical exegesis and contemporary applications may not be altogether otiose.
On the significance of the Tableau Economique, see August Oncken, Oeuvres Economiques et Philosophiques de François Quesnay, fondateur du système physiocratique (Berner Beiträge zur Geschichte der Nationalokonomie No. 3; Frankfurt and Paris, 1888), pp. 386–402
also E. Cannan, A Review of Economic Theory (London, 1929), pp. 25–34
See, e.g., The Collected Works of David Ricardo, ed. J.R. McCulloch (London, 1852), pp. 59, 104, 120.
There is an interesting passage in the Letters of David Ricardo to Thomas Robert Malthus 1810–1823, ed. James Bonar (Oxford, 1887), p. 188, in which the distinction between stationariness and stagnation is discussed.
R. Torrens, An Essay on the External Corn Trade (London, 1820), p. 68.
On the Principles of Political Economy and Taxation, ed. J.R. McCulloch (London, 1852), p. 55.
Principles of Political Economy, ed. W.J. Ashley (London, 1909), pp. 248–75.
Memorials of Alfred Marshall, ed. A.C. Pigou (London, 1925), p. 415.
Principles of Economics, 8th edn (London, 1920), p. 369. For an interesting discussion of the contrast between Marshall’s “statical method” and Clark’s “static analysis” see Redvers Opie, “Die Quasirente in Marshalls Lehrgebäude,” Archiv für Sozialwissenschaft und Sozialpolitik, vol. 60 (1928), pp. 251–79. I suspect Mr. Opie of the opinion that the aversion from heroic abstraction was a virtue in Marshall in that it made his constructions more realistic. Personally I should be inclined to urge that in certain connections (increasing returns, for example) it was responsible for a good deal of theoretical confusion. This is not to say that Clark’s static state is superior to Marshall’s statical method, but rather that, as suggested above, the stationary state itself is superior to the more limited conception.
See, e.g., [F.Y.] Edgeworth’s review of Böhm-Bawerk’s The Positive Theory of Capital, Economic Journal, vol. 2 (June 1892), pp. 328–37
(reprinted in Papers relating to Political Economy [London, 1925], Vol. 3, pp. 22–30)
E. von Böhm-Bawerk, “Der letzte Masstab des Guterwertes,” Gesammelte Schriften, ed. F.X. Weiss (Vienna and Leipzig, 1924), pp. 404–70
David I. Green, “Pain-cost and opportunity-cost,” Quarterly Journal of Economics, vol. 8 (January 1894), pp. 218–29
H.J. Davenport, Value and Distribution: a critical and constructive study (Chicago, 1908)
P.H. Wicksteed, The Common Sense of Political Economy (London, 1910), Chapter IX.
Mr. [H.D.] Henderson’s Supply and Demand (London and Cambridge, 1922) may be regarded as indicating the definite abandonment of the old absolute conception of real costs.
Professor Pigou’s treatment of the real costs of war (The Political Economy of War [London, 1921], Chapter III) also follows the Austrian conception. But Mr. Henderson does not show very clearly how, if the supply of capital and labour are to be taken as variable, the resistances are to be worked into the opportunity cost concept. This, I think, has been more satisfactorily worked out by Professor Knight (Risk, Uncertainty and Profit, Chapter III).
Thomas N. Carver, The Distribution of Wealth (New York, 1904).
M.H. Dobb, Wages (London and Cambridge, 1928), Chapters IV and V.
E.g. Adolphe Landry, whose L’Intérêt du Capital (Paris, 1904) is in many ways the best treatment of this important subject.
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Robbins, L. (1997). On a Certain Ambiguity in the Conception of Stationary Equilibrium. In: Howson, S. (eds) Economic Science and Political Economy. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12761-0_5
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