Abstract
This chapter describes the method of inter-temporal equilibrium. A striking feature of contemporary economic theory is the widespread use of the notion of inter-temporal equilibrium. This notion consists of analyzing the short-period positions of a market economy in sequence over time: A procedure that is customarily regarded as being a formalization of the notion of equilibrium. The chapter presents the argument that this characterization of the development and role of the notion of inter-temporal equilibrium is mistaken. The chief impetus towards the formulation of this new notion of equilibrium resided in a growing realization that if the demand-and-supply approach to the theory of capital and interest is to be retained, something would have to be done to free it from the bounds imposed by its need to deal in terms of a quantity of capital. It is also argued that it is not possible to claim that this change has anything to do with what Keynes actually said in the General Theory.
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