Editing General equilibrium theory (section)

==Other schools==
General equilibrium theory is a central point of contention and influence between the neoclassical school and other [[schools of economic thought]], and different schools have varied views on general equilibrium theory. Some, such as the Keynesian and Post-Keynesian schools, strongly reject general equilibrium theory as "misleading" and "useless". [[Disequilibrium macroeconomics]] and different [[non-equilibrium economics|non-equilibrium approaches]] were developed as alternatives. Other schools, such as [[new classical macroeconomics]], developed from general equilibrium theory.

===Keynesian and Post-Keynesian===
[[Keynesian economics|Keynesian]] and [[Post-Keynesian economics|Post-Keynesian]] economists, and their [[underconsumption]]ist predecessors criticize general equilibrium theory specifically, and as part of criticisms of neoclassical economics generally. Specifically, they argue that general equilibrium theory is neither accurate nor useful, that economies are not in equilibrium, that equilibrium may be slow and painful to achieve, and that modeling by equilibrium is "misleading", and that the resulting theory is not a useful guide, particularly for understanding of [[economic crises]].<ref>{{cite web |url=http://www.debtdeflation.com/blogs/2009/05/04/debtwatch-no-34-the-confidence-trick/ |title=Debtwatch No 34: The Confidence Trick |first=Steve |last=Keen |date=May 4, 2009 }}</ref><ref>{{cite web |url=http://www.debtdeflation.com/blogs/2008/11/30/debtwatch-no-29-december-2008/ |title=DebtWatch No 29 December 2008 |first=Steve |last=Keen |date=November 30, 2008 }}</ref><!-- The purpose of these references is to show that these quotes are taken to refer to general equilibrium theory. --><!-- Quotes used to demonstrate the range of criticisms. -->
{{quote|Let us beware of this dangerous theory of equilibrium which is supposed to be automatically established. A certain kind of equilibrium, it is true, is reestablished in the long run, but it is after a frightful amount of suffering.|[[Simonde de Sismondi]], ''New Principles of Political Economy,'' vol. 1, 1819, pp. 20-21.}}
{{quote|The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.|[[John Maynard Keynes]], ''A Tract on Monetary Reform,'' 1923, ch. 3}}
{{quote|It is as absurd to assume that, for any long period of time, the variables in the economic organization, or any part of them, will "stay put," in perfect equilibrium, as to assume that the Atlantic Ocean can ever be without a wave.|[[Irving Fisher]], ''The Debt-Deflation Theory of Great Depressions,'' 1933, p. 339}}

[[Robert Clower]] and others have argued for a reformulation of theory toward [[Disequilibrium macroeconomics|disequilibrium analysis]] to incorporate how monetary exchange fundamentally alters the representation of an economy as though a [[barter]] system.<ref>• Robert W. Clower (1965). "The Keynesian Counter-Revolution: A Theoretical Appraisal," in [[Frank Hahn|F.H. Hahn]] and F.P.R. Brechling, ed., ''The Theory of Interest Rates''. Macmillan. Reprinted in Clower (1987), ''Money and Markets''. Cambridge. [http://www.cambridge.org/catalogue/catalogue.asp?isbn=0521335604 Description] and [https://books.google.com/books?id=7CQ4AAAAIAAJ&q=robert+clower+monetary preview] via scroll down.
pp. [https://books.google.com/books?id=7CQ4AAAAIAAJ&dq=%22The+Keynesian+Counter+Revolution%3A+A+Theoretical+Appraisal%22&pg=RA1-PA34 34-58.]<br/>&nbsp; • _____ (1967). "A Reconsideration of the Microfoundations of Monetary Theory," ''Western Economic Journal'', 6(1), pp. [https://web.archive.org/web/20200308210419/https://www.ssc.uwo.ca/economics/grad/533b-001/Notes/Clower_1967.pdf 1–8] (press '''+''').<br/>&nbsp; • _____ and [[Peter Howitt (economist)|Peter W. Howitt]] (1996). "Taking Markets Seriously: Groundwork for a Post-Walrasian Macroeconomics", in David Colander, ed., ''Beyond Microfoundations'', pp. [https://books.google.com/books?id=1FuhaZkuBZoC&dq=%22Taking+Markets+Seriously%22+clower&pg=PA21 21–37.]<br/>&nbsp; • Herschel I. Grossman (1971). "Money, Interest, and Prices in Market Disequilibrium," ''Journal of Political Economy'',79(5), p [https://www.jstor.org/stable/1830266 p. 943]–961.<br/>&nbsp; • Jean-Pascal Bénassy (1990). "Non-Walrasian Equilibria, Money, and Macroeconomics," ''Handbook of Monetary Economics'', v. 1, ch. 4, pp. 103-169. Table of [https://archive.today/20130202034528/http://www.sciencedirect.com/science/article/B7P60-4FKY4SC-7/2/6be27fa8a177dcda4d4346123724cff4 contents.]<br/>&nbsp; • _____ (1993). "Nonclearing Markets: Microeconomic Concepts and Macroeconomic Applications," ''Journal of Economic Literature'', 31(2), pp. [http://www.pse.ens.fr/benassy/wdocuments/Benassy1993JEL.pdf 732–761] {{Webarchive|url=https://web.archive.org/web/20110516150053/http://www.pse.ens.fr/benassy/wdocuments/Benassy1993JEL.pdf |date=2011-05-16 }} (press '''+''').<br/>&nbsp; • _____ (2008). "non-clearing markets in general equilibrium," in ''[[The New Palgrave Dictionary of Economics]]'', 2nd Edition. [http://www.dictionaryofeconomics.com/article?id=pde2008_N000153&q=clower&topicid=&result_number=9 Abstract.]</ref>

===New classical macroeconomics===
While general equilibrium theory and neoclassical economics generally were originally microeconomic theories, [[new classical macroeconomics]] builds a macroeconomic theory on these bases. In new classical models, the macroeconomy is assumed to be at its unique equilibrium, with full employment and potential output, and that this equilibrium is assumed to always have been achieved via price and wage adjustment (market clearing). The best-known such model is [[real business-cycle theory]], in which [[business cycle]]s are considered to be largely due to changes in the real economy, unemployment is not due to the failure of the market to achieve potential output, but due to equilibrium potential output having fallen and equilibrium unemployment having risen.

===Socialist economics===
Within [[socialist economics]], a sustained critique of general equilibrium theory (and neoclassical economics generally) is given in ''Anti-Equilibrium'',<ref>{{Cite book |last=Kornai |first=János |title=Anti-Equilibrium: On Economic Systems Theory and the Tasks of Research |url=https://archive.org/details/antiequilibriumo0000korn |url-access=registration |location=Amsterdam |publisher=North-Holland |year=1971 |isbn=978-0-7204-3055-4 }}</ref> based on the experiences of [[János Kornai]] with the failures of Communist [[central planning]], although [[Michael Albert]] and [[Robin Hahnel]] later based their [[Parecon]] model on the same theory.<ref>{{Cite book |last1=Albert |first1=Michael |first2=Robin|last2=Hahnel |title=The Political Economy of Participatory Economics |location=Princeton |publisher=Princeton University Press |year=1991 |pages=7 }}</ref>

===New structural economics===
The structural equilibrium model is a matrix-form computable general equilibrium model in new structural economics. <ref>{{Cite web |url=https://www.nse.pku.edu.cn/ |title= New Structural Economics |website=Institute of New Structural Economics |access-date=2024-12-08}}</ref>
<ref>{{Cite book
| last = Li
| first = Wu
| title = General Equilibrium and Structural Dynamics: Perspectives of New Structural Economics
| year = 2019
| publisher = Economic Science Press
| location = Beijing
| isbn = 9787521804225
| language = zh
}}</ref>
This model is an extension of the [[John von Neumann]]'s general equilibrium model (see [[Computable general equilibrium]] for details). Its computation can be performed using the R package GE. <ref>{{Cite web |url=https://cran.r-project.org/web/packages/GE/index.html |title= CRAN: Package GE |website= The Comprehensive R Archive Network |access-date=2024-12-08}}</ref>
The structural equilibrium model can be used for intertemporal equilibrium analysis, where time is treated as a label that differentiates between types of commodities and firms, meaning commodities are distinguished by when they are delivered and firms are distinguished by when they produce. The model can include factors such as taxes, money, endogenous production functions, and endogenous institutions, etc. The structural equilibrium model can include excess tax burdens, meaning that the equilibrium in the model may not be Pareto optimal. When production functions and/or economic institutions are treated as endogenous variables, the general equilibrium is referred to as structural equilibrium.