Synthetic Economics

Synthetic Economics

Synthetic Economics

Synthetic Economics

Excerpt

The mathematical approach to economic theory bifurcated at an early point in its course. One road travelled chiefly by practical men intent upon the exigent business of the day, has led through a dreary region directly to practical, but unrelated, results; the other road, followed mainly by philosophers with primary interest in causes and relations, has ascended to picturesque heights affording distant views of the ensemble of economic activity, but has stopped short amid the enchanting scene and left the explorers in doubt as to what might be the real destination of so promising a beginning.

Two Approaches to Economic Theory

In 1874 when Léon Walras had just published the early instalment of his demonstration of the theory of general equilibrium, he wrote a letter to the aged Cournot which contains a sentence marking the divergence of the two roads to economic theory:

"Notre méthode est la même, car la mienne est la vôtre, seulement vous vous placez immédiatement au bénéfice de la loi des grands nombres et sur le chemin qui mène aux applications numériques. Et moi, je demeure en deçà de cette loi sur le terrain des données rigoureuses et de la pure théorie. . . ."

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