"Once the equilibrium has been established in principle, exchange can take place immediately. Production, however, requires a certain lapse of time. We shall resolve the second difficulty purely and simply by ignoring the time element at this point."
(Léon Walras, Elements of Pure Economics, 1874, p 242)
"Prices are paid for the factors of production in accordance with the general principle of scarcity, because it is necessary to restrict demand for them in such wise that it can be met with the available supplies. The costs of production of a commodity are, from this standpoint, simply an expression of the scarcity of those factors of production required to make it."
(Gustav Cassel, Theory of Social Economy, 1918: p.168)
"Until the laws of thermodynamics are repealed, I shall continue to relate outputs to inputs -- i.e. to believe in production functions. Until factors cease to have their rewards determined by bidding in quasi-competitive markets, I shall adhere to (generalized) neoclassical approximations in which relative factor supplies are important in explaining their market remunerations"
(Paul A. Samuelson, Collected Scientific Papers, 1972: p.174)
"I am trying to find what are the assumptions implicit in Marshall's theory; if Mr. Robertson regards them as extremely unreal, I sympathize with him. We seem to be agreed that the theory cannot be interpreted in a way which makes it logically self-consistent and, at the same time, reconciles it with the facts it sets out to explain. Mr. Robertson's remedy is to discard mathematics, and he suggests that my method is to discard the facts; perhaps I ought to have explained that, in the circumstances, I think it is Marshall's theory that should be discarded."
(Piero Sraffa, 1930, "Symposium", Economic Journal, p.93)
"The firm fits into general equilibrium theory as a balloon fits into an envelope: flattened out! Try with a blown-up balloon: the envelope may tear, or fly away: at best, it will be hard to seal and impossible to mail....Instead, burst the balloon flat, and everything becomes easy. Similarly with the firm and general equilibrium - though the analogy requires a word of explanation."
(Jacques H. Drèze, "Uncertainty and the Firm in General Equilibrium Theory", Economic Journal, 1985, p.1)
All rights reserved, Gonçalo L. Fonseca
