Smith and Newton: Some Methodological Issues Concerning General Economic Equilibrium Theory

Abstract

There is general consensus that in economics Adam Smith is, in the words of Jevons, the ‘father of the science’. In this setting it has regularly been argued that neoclassical and modern mainstream economics carry through the methodological impetus brought into the discipline by Smith. Moreover, economists conventionally take it for granted that Smith applied Newton’s method to political economy. Because Newton’s method is thought to be similar to that of modern mainstream economics, the association of Smith with Newton is taken to further bolster the claim that modern mainstream economics continues the Smithian tradition. Support for this commonly accepted view is gathered from Smith’s panegyric attitude to Newton’s conception of philosophy. This shared conviction among economists underpins some interpretations of the ‘invisible hand’ and of the intention behind the controversial chapter 7 of Book I of the WN, baptising Smith as a forerunner, if not the founder, of theories of general economic equilibrium (e.g. Robbins, 1962 [1932]; Schumpeter, 1994 [1954]; Arrow-Hahn, 1971; Jaffé, 1977; Hollander, 1973, 1987; Samuelson, 1977, 1992). As an offspring of the same tradition Walras, the architect of the ‘equilibrium system’, has been set alongside Newton, the discoverer of the ‘world system’ (Samuelson, 1952, p. 61).