Mr Marx and the Neoclassics

This article, presented to the Annual Conference of the History of Economics Society, Vancouver July 1996, gives a historical analysis of the origins of the general equilibrium or comparative static approach and demonstrates that economic thought as a whole is divided, in each of its schools of thought, between the equilibrium paradigm and its alternative, the temporal paradigm. This applies across the board with, for example, the divergence between Post-Keynesian or Kaleckian economics, between Austrian economics and Walrasian general equilibrium, and in many other contexts. The article demonstrates the difference between the equilibrium and temporal approach using a demonstration of ‘adjustment’ effects in a simple corn-cycle model. It goes on to analyse the reasons why, in the history of thought, adjustment or dynamic effects have been considered as ignorable when in fact they are not. It suggests that the traditional division of the succession of ideas in economic thought – physiocracy, the classics, Marx, marginalism – needs to be reviewed in this light, and argues for a reconsideration of the contribution of Marx to economics, placing him as the first and in many ways the most consistent in a suppressed non-equilibrium tradition in economic thought. It suggests that in this light, Marx has more in common with Austrian and Post-Keynesian thinking than with Ricardo and Smith, among whose ranks he is normally and commonly grouped.