The Past and Present of the Invisible-Hand Proposition: From Scottish Political Economy to General Equilibrium Analysis

117 Pages Posted: 5 Jun 2012 Last revised: 7 Feb 2015

See all articles by Arash Molavi Vasséi

Arash Molavi Vasséi

University of Hohenheim, Department of Economics

Date Written: February 6, 2015

Abstract

The present study raises the following questions: To what extent is axiomatic general equilibrium analysis a rational reconstruction of Scottish Political Economy as defined by the writings of David Hume and Adam Smith? How much is gained and how much lost by the axiomatic transformation of the invisible-hand proposition? What are the implications of negative results like the Sonnenschein-Mantel-Debreu demonstrations for the Scottish point of view? Did it reach deadlock, or is there still hope for the dominant trajectory in the history of economics? In contrast to the rich historical literature on the invisible-hand proposition, the present study does not level any paradigmatic criticism at neo-Walrasian analysis. Rather, by focalizing the most important results against the backdrop of Scottish Political Economy, it provides some flesh to the bones of axiomatic economics and, insofar, may inform theory choice within the neo-Walrasian paradigm. Naturally, the answers to the questions raised are complex and do not fit into an abstract. Instead, the reader is referred to the final section, which lists, interrelates, and discusses the major results of the study.

Keywords: Invisible Hand, David Hume, Adam Smith, Scottish Political Economy, Walras’s law, general equilibrium analysis, SMD results

JEL Classification: B12, B21, B23, B31

Suggested Citation

Molavi Vasséi, Arash, The Past and Present of the Invisible-Hand Proposition: From Scottish Political Economy to General Equilibrium Analysis (February 6, 2015). Available at SSRN: https://ssrn.com/abstract=2077695 or http://dx.doi.org/10.2139/ssrn.2077695

Arash Molavi Vasséi (Contact Author)

University of Hohenheim, Department of Economics ( email )

Fruwirthstr. 48
Stuttgart, 70599
Germany
0049 711 459 22594 (Phone)
0049 711 459 22598 (Fax)

HOME PAGE: http://economics.uni-hohenheim.de/71294.html

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