M. Leon Walras, and the “Curvature” of the Exchange Equations [Brief Item #78]

[2/23/20] M. Leon Walras developed the conception of the markets as exchange equilibria. Concentrate all markets into a single hall. Place entrepreneurs behind a central counter.  Let all agents of supply offer their services, and the same individuals, as purchasers, state their demands.  Then the function of the entrepreneur is to find the equilibrium between these demands and potential supply. … The conception is exact, but it is not complete.  It follows from the idea of exchange, but it does not take into account the phases of the productive rhythms. As has been shown, economic activity moves through a series of transformations and exploitations; and this series generates the succession of (point-to-line, point-to-point, cultural, and static phases.)  Now each phase in the exchange economy will have its exchange equilibrium, but the equilibria of the different phases differ radically from one another.  By this cyclic variation within the exchange equilibria there is effected the “curvature” of the exchange equations. [CWL 21, 51-52] [#78] (Click here for previous “Single Paragraphs” or “Brief Items”)

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