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Published online by Cambridge University Press: 09 August 2023
INTRODUCTION
“Adam Smith, who has strong claim to being both the Adam and the Smith of systematic economics, was a professor of moral philosophy and it was at that forge that economics was made.”
Kenneth Boulding, twentieth-century economic polymath“[W]e can give an optimistic answer to the logical purist who asks the embarrassing question: “Your economic system isn’t determinate until you have found conditions to determine a price and a quantity for each output and for each input. Do you have enough simultaneous conditions (or equations) to make your interdependent equilibrium system determinate?”
Fortunately, we can answer: “We do have for each output or input both a supply and a demand condition. So we can hope that the system will by trial and error in the market place finally settle down – if left undisturbed! – to a determinate competitive equilibrium.”
… [E]ven in Adam Smith you can find the germ of the idea if you look hard enough.”
Paul Samuelson, EconomicsIn general, the development of the market concept within economic theory has been from the less to the more abstract, and as we move through different levels of abstraction we should probably expect to encounter entirely different types of market concept. Not that this is revealed in the economics textbooks too often. They tend instead to present students with only one market model, that based on neoclassical demand-and-supply dynamics. It is conventionally known as the partial equilibrium model to denote the way in which it depicts how the pricing structure might balance demand and supply in one market alone at one moment in time. Sometimes the textbooks will use this as a precursor to introducing the general equilibrium model, a much more abstract model that explains the conditions that would have to be in place for demand and supply to be brought into perfect harmony in every conceivable market at all moments in time. But this is by no means the norm.
It is only on occasions, then, that there is some attempt to show what came after the neoclassical demand-and-supply model in the long march towards the highest imaginable level of abstraction. However, this is typically not mirrored in attempts to show what preceded it.
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