Abstract
Market is in many respects distinct from barter. This distinction needs to be emphasized, because the conventional theory treats market and barter erroneously as the same.
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Notes
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- 2.
The metaphore of Robinson Crusoe was introduced by Eugen von Böhm-Bawerk (1889, p. 109).
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It should be noted here that a clear distinction has to be made between the dynamisation of economic theory through the inclusion of money and the “dynamization” of Walrasian equilibrium on the part of Arrow and Debreu (1954), Debreu (1959), and Arrow and Hahn (1971). Arrow and Debreu do start out from the principle that there is a market not only for present but also for future goods. To this extent they do include time. However, trading in the market for future goods occurs in just the same way that trading in the market for present goods. These markets “‘telescope’ the future into the present” (Arrow and Hahn 1971, p. 33). The prices of all present and future goods come together into equilibrium in the present simultaneously. This excludes any genuine dynamics resulting from the successive variation from period to period of the quantities of resources employed and the composition of goods, both of these variations being the outcome of the actions and reactions of competitors in a historical process. The “dynamic” of Arrow and Debreu is a pseudo-dynamic. It remains stuck in a static model. Mark Blaug commented on the formalism of Arrow and Debreu as follows: “The Arrow–Debreu paper was devoted to a rigorous proof of the existence of a competitive general equilibrium of prices and quantities for a world in which commodities are produced and sold in every possible period and in all possible circumstances. … It employed set-theoretical mathematical techniques and the then relatively new theory of games and was almost immediately hailed as the alpha and omega of mathematical economics. … It took years if not decades to recognize that such a proof for a hopelessly abstract economy, however accomplished as an exercise in mathematics, teaches almost nothing about the substantial operation of a market economy; it is empirically empty” (Blaug 1999, p. 271).
References
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Binswanger, H.C. (2013). The Difference Between Market and Barter: Money and the Making of Markets. In: The Growth Spiral. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-31881-8_2
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DOI: https://doi.org/10.1007/978-3-642-31881-8_2
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