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"The theories of individual behavior provide a complete set of inter-relationships within the economy, e.g. they give us the demand-and-supply relationships of every commodity in the system...A mathematical representation of [Walras's system] would probably involve several million equations in several million unknowns, an incomprehensible maze. To make any useful economic judgements, one must simplify this system into a manageable number of relationships among aggregates of the fundamental prices and quantities."
(Lawrence Klein, The Keynesian Revolution, 1947: p. 57)
"The general character and agreement in the periodic turn in movements of factors of circulation -- these are the specific problems of business cycle theory which have to be solved within the closed interdependent system....If a business cycle theory which is system-conforming cannot be built, then "general overproduction" will not only drive the economy but also economic theory into a crisis."
(Adolph Lowe, "How is Business Cyle Theory Possible at All?", Weltwirtschaftliches Archiv, 1926).
"[I]t is my conviction that if we want to explain economic phenomena at all, we have no means available but to build on the foundations given by the concept of a tendency towards an equilibrium. For it is this concept alone which permits us to explain fundamental phenomena like the determination of prices or incomes, an understanding of which is essential to any explanation of fluctuation of production."
(Friedrich von Hayek, Prices and Production, 1931, p.33-4)
"With perfectly free competition among work-people and labour perfectly mobile, the nature of the relationship [between wages and labor demand] will be very simple. There will always be at work a strong tendency for wage rates to be so related to demand that everybody is employed. Hence, in stable conditions every one will actually be employed. The implication is that such unemployment as exists at any time is due wholly to the fact that changes in demand conditions are continually taking place and that frictional resistances prevent the appropriate wage adjustment from being made instantaneously."
(Arthur C. Pigou, Theory of Unemployment, 1933: p.252)
"But if the classical theory is not allowed to extend by analogy its conclusions in respect of a particular industry to industry as a whole, it is wholly unable to answer the question what effect on employment a reduction in money-wages will have. For it has no method of analysis wherewith to tackle the problem. Professor Pigou's Theory of Unemployment seems to me to get out of the Classical Theory all that can be got out of it; with the result that the book becomes a striking demonstration that this theory has nothing to offer, when it is applied to the problem of what determines the volume of actual employment as a whole."
(J.M. Keynes , The General Theory, 1936: p.260)
"It is self-contradictory to discuss a process which admittedly could not take place without money, and at the same time to assume that money is absent or has no effect."
(Friedrich A. von Hayek, Pure Theory of Capital, 1941: p.31)
"Where...I do not go along with [Hayek] is in the view that the disturbances in question have a monetary origin. He had not emancipated himself from the delusion (common to many economists, even the greatest economists) that with money removed "in a state of barter", everything would somehow fit. One of my objects in writing this book has been to kill that delusion. It could only arise because the theory of the barter economy has been insufficiently worked out. There has been no money in my model; yet it has plenty of adjustment difficulties. It is not true that by getting rid of money, one is automatically in "equilibrium" -- whather that equilibrium is conceived of as a stationary state (Wicksell), a perfect foresight economy (Hayek) or any kind of steady state. Monetary disorders may indeed be superimposed on other disorders; but the other disorders are more fundamental."
(John Hicks, Capital and Time, 1973: p.133-4)
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