>>     In other words you are attacking strawmen --

> No. Perhaps I was unclear.
> 
> I say that Bliss and Hahn, for example, say that the Cambridge
> Criticism does not affect general equilibrium theory, and it is
> general equilibrium theory that, for them, is the rigorous
> neoclassical theory. See the text around footnotes 5, 6, 7, and
> 8 in the previously linked paper.
> 
> I am interested in ultimately attacking this position.

   So in other words, there is no accepted refutation of this "Bliss
and Hahn" position, namely that the Cambridge criticism does not affect
general equilibrium theory, nor do you have a refutation of it -- it is
good that you agree to that.

[...]


>> It would thus be disingenuous to
>> claim that those critiques somehow mean the "failure of the
>> neoclassical theory of value," as your title suggest...

> No. The mainstream response to the Cambridge capital controversy
> was to drop the neoclassical theory of value. Mainstream economics
> has some mathematics left, which is not the same thing.

    That depends on what you define to be the "neoclassical theory of
value" -- I see no reason to accept your idiosyncratic definition of
what this was supposed to be, especially since under "neoclassical
theory" we have grouped a very wide range of research programs.
     I can certainly accept that at one time, hopes were high for very
simple and straightforward theoretical results -- but I don't see why
the complexity of the economy as revealed by general equilibrium
represents a failure of neoclassical economics. Real world economics is
a complex affair -- it should be no surprise that the models of
economics should display such a complexity in both formulation and
prediction.

[...]

>>> By explicitly making the above statement, Alex is being more honest
>>> than my experience has been with most economists in sci.econ.


>>>>    That partial equilibrium theory is just an approximation -and it
>>>> works as an approximation only under certain circumstances-is,
>>>> however, MAINSTREAM economic theory.


>> [...]

> Alex has deleted, among other comments:
>
>   "I notice Alex does not specify those circumstances."

   You have the habit of repeating the same point in different
paragraphs -- hence I delete the repetitive paragraphs and I try to
answer what I perceive to be the objection at one location; and I will
continue to do this. Apparently you don't like this -- but I think that
this helps clarity and I suggest that your habit is one of the reasons
that you express your points so poorly.

    Regarding the circumstances under which PE works as an
approximation of GE -- I don't think that there is a closed form
expression for when this is so. I have already stated my opinion that
each particular application should justify why, in the particular
circumstances under study, PE --or whatever model is applied-- can be
seen as a reasonable approximation of rigorous GE. Thus, even though in
general no closed form expression exists for clarifying when PE is a
good approximation, in particular circumstances this justification
might be easier, due to the particular nature of the problem.
    If the particular application can provide such a justification,
then it is rigorous economics -- if it can not provide it, then it is
not.

   I will delete further references to the justification of PE
applications by GE, since my answer to these is contained above.


[...]


>>    GE models formalize the dependence of prices on production functions
>> and subjective preferences. As such, they have much to say about
>> capitalist economies.

>  This ignores arguments about the structure of that formalism. For
>  example, in the previously linked paper, I say:
> 
>    "The critics have pointed out that the reliance on such short
>    period models is a major change in economic method, and
>    have questioned whether such models can tell us anything
>    about actual economies. In any approach to equilibrium in
>    historical time, expectations and endowments of some
>    capital goods would change; since expectations and endowments
>    are among the data of such models, an equilibrium path in these
>    models, as determined by the data, is of no relevance for the
>    actual path of actual economies."
> 
>  Since I am just echoing the literature, I give references such
>  as the reference by Fabio Petri that Alex deleted. You can see
>  Petri quoting Franklin Fisher to the same purpose in the Wikipedia
>  entry on General Equilibrium.
> 
>  When will Alex address arguments in the text supposedly under
>  discussion or in the broader literature? His answer probably will
>  be, "Never. How about never? Is never a good time for you?"

     I am not sure that I understand the objection. In GE models with
sequential trade, the endowments do depend on the state or event that
is realized -- and expectations also change depending on what state or
event is realized.
     As far as I can tell, the objection is to the assumption of
rational expectations -- or alternatively, to the limitation of such
models to risk, without dealing with genuine  uncertainty.

     That might be a way to go about criticizing GE but it seems like a
last ditch effort -- besides the fact this does not amount to an
internal criticism of GE, the rational expectation assumptions remain
the best there are to deal in a systematic way with how individuals
make decisions.

[...]


>>    Additionally, and contrary to what you previously claimed on this
>> subject, GE does make strong testable predictions about the economy --
>> i.e. it is falsifiable in non-trivial ways.
>>    Because of practical and ethical constraints, it might be extremely
>> difficult to test the model in its full generality. But that is simply
>> the cross that economists --as students of an extremely complex subject
>> in which it is hard to make experiments-- have to bear.

>  Maybe Alex should take this up with Alan Kirman ("The Emperor Has
>  No Clothes") or perhaps, Mas-Colell. In the standard graduate text,
>  Mas-Colell et al. title the section on the Sonnenschein-Debreu-Mantel
>  results "Anything Goes". In a paper referenced in the previously
>  linked text, Mas-Colell refers to the Capital Theory Paradoxes as
>  demonstrating "Anything Goes".
> 
>  So Alex's mere assertion about General Equilibrium's testable
>  predictions, as usual, is, to be nice, in tension with what the
>  literature argues. And Alex ignores arguments previously given on
>  this thread, or, rather, its predecessors (e.g., by  H. Economicus).

      I am perfectly aware of the discussion of
Sonnenschein-Debreu-Mantel results in Mas-Colell -- but unlike you, I
am also aware of the fact that the interpretation of those results as
implying that general equilibrium does not have testable predictions
has been proved wrong.

	The Sonnenschein-Mantel-Debreu results _do_ _not_ imply that general
equilibrium does not have empirically testable implication. This
interpretation of the results has been shown to be rubbish for some
time now.

See for instance:

Chiappori, P.-A., I. Ekeland, F. Kubler (2002) "Testable implications
of general equilibrium theory: a differentiable approach" Working
Paper No. 02-10

 which is available in full here:

http://www.brown.edu/Departments/Economics/Papers/2002/wp2002-10.pdf

and see the references in that paper for more work on the testable
implications of GE.

Here are some relevant extracts from that work:

  "Our main claim in the present paper is that this view is overly
  pessimistic, and that general equilibrium theory can actually generate
  strong testable predictions, even for large economies. The main idea is
  in the line of recent contributions by Brown and Matzkin (1996) and
  Brown and Shannon (2000), and can be summarized as follows. The
  Sonnenschein-Debreu-Mantel approach concentrates on the properties of
  excess (or market) demand as a function of prices only. However, this
  viewpoint is not the only possible one, and actually not the most adequate
  for assessing the testability of GE theory.1 As far as testable
  predictions are concerned, the structure of aggregate excess demand is
  not the relevant issue, if only because excess demand is, in principle,
  not observable, except at equilibrium prices - where, by definition,
  it vanishes. However, prices are not the only variables that can be
  observed to vary. Price movements reflect fluctuations of fundamentals,
  and the relationship between these fundamentals and the resulting
  equilibrium prices is the natural object for empirical observation. One
  of the goals of general equilibrium theory is precisely to characterize
  the properties of this relationship. As it turns out, this characterization
  generates strong testable restrictions."

  [...]

  "These results indicate that the two lines contrasted above -- the
  'manifold' point of view versus the SDM excess demand approach -- 
  generate totally different (and in a sense opposite) conclusions. How
  can this striking discrepancy be explained? Our interpretation
  emphasizes a crucial difference: in the manifold approach, individual
  data (initial endowments) are available, whereas only aggregate variables
  can be observed in the SDM setting. In other words, we understand our
  results as suggesting the important conclusion that ***whenever data
  are available at the individual level, then utility maximization generates
  very stringent restrictions upon observed behavior, even if the observed
  variables (equilibrium prices in our case) are aggregate.*** From this
  perspective, whether individual transactions can be observed is
  irrelevant. Individual determinants of individual choices (such as
  initial endowments or individual incomes) may do just as well."

	So yet another of your often repeated claims, that GE has no empirical
implications, bites the dust.
[...]


>>     It might be of value to do that -- use capital-theoretic paradoxes
>> to "overthrow the GE model" -- except that you've done no such thing.

>I thank Alex for his agreement. Now whether, for example, Bertram
>Schefold and Pierangelo Garegnani have is another matter
>entirely.

[I leave the above in the text only to make clear that my paragraph
immediately bellow is also intended as a criticism of the attempts by
Schefold and Garegnani to "overthrow GE"]

[...]

> I would think that if the structure
> of the model required stability to be empirically applicable, as
> some (Debreu?) think GE does, a failure to specify assumptions
> that yield stability is a problem.

    But as we've seen above, the claims about the lack of testable
prediction of GE are highly exaggerated. As such, instability is not a
theoretical problem for GE, although it might be a problem for models
of reality that envision a simple behavior for economic systems.
    Given this, the efforts of Schefold and Garegnani, to the extent
that they are related to stability problems, would not form an internal
critique of GE, even if they are successful in their endeavors.

[...]

> Somehow it must just be an oversight that Alex overlooked the following
> in the post to which he is pretending to respond:
>
>   "The reader might notice that Alex does not comment on what's
>   taught to undergraduates. I expect my reaction to Krugman's new
>   text will be that I preferred it when he wrote about politics."

    As far as microeconomics goes, undergraduates are taught PE -- and
sometimes they are taught GE in "intermediate" classes. I don't see
what is so outrageous about this.
    About macroeconomics though, I tend to agree that they tend to be
taught mostly nonsense.



>> you are just refuting a
>> dubious historical interpretation of what "the neoclassical vision" is
>> supposed to be.

> No. Mas-Colell et al., for example, are not clear on the structure
> of the theory they present. See H. Economicus' post for a
> demonstration that they mistakenly call land, "capital", for
> example.

   None of this contradicts my point that you are refuting simply a
dubious interpretation of what the neoclassical vision is supposed to
be. GE stands unrefuted as the rigorous neoclassical economics.

Cheers