Tatonnement in quantities: truncation, equilibration, growth [1956

Abstract

This section was originally published in the form of an independent article as Morishima, 1956, which may, however, be regarded as an example of the negative counterpart of the text of this volume. In the text we are concerned with an economy in which equilibration is made in terms of prices, while quantities are assumed to depend on prices, whereas in this article it is made in terms of quantities, all prices being implicitly assumed to be kept constant. The problem of price adjustment versus quantity adjustment later became a topic of general equilibrium analysis in the 1960s and the early 1970s. As far as we measure the time t in an ordinary way by calendar time, the equilibrium to be established at t = ∞ is no more than a kind of utopia which is never realized at an actual point in time. Therefore, where we formulate a tatonnement process in terms of differential or difference equations, we should either transform the calendar time into a tatonnement time which tends to infinity at a certain point of the calendar time, as we have done so in the text, or we should truncate the tatonnement process at a certain point of the calendar time, as Walras did in his Elements .