Agreement on Demand: Consumer Theory in the Twentieth Century

Agreement on Demand: Consumer Theory in the Twentieth Century. 2006. Edited by Philip Mirowski and D. Wade Hands. Supplement to volume 38 of HOPE. Durham, NC: Duke University Press.

"Introduction to Agreement on Demand: Consumer Theory in the Twentieth Century," by Philip Mirowski and D. Wade Hands (pp. 1–6). The history of demand theory, like that of most scientific ideas, is not as straightforward as the discipline's brief and stylized narratives would suggest.

Part 1. Disagreement on Demand: Studies in Early-Twentieth-Century Stabilization of Demand Theory

"The Other Economics Department: Demand and Value Theory in Early Agricultural Economics," by H. Spencer Banzhaf (pp. 9–31). Agricultural economics was always focused on practical results that had the potential to improve the lot of farmers, even when it turned its attention to farm prices and demand in the 1920s.

"Disaggregating the Components of the Hicks-Allen Composite Commodity," by Manuel Fernandez-Grela (pp. 32–47). An alternative interpretation of Hicks and Allen's 1934 paper shows that Allen, more so than Hicks, was interested in the role of demand theory in relation to empirical applications.

"Complementarity and Demand Theory: From the 1920s to the 1940s," by Jean-Sébastien Lenfant (pp. 48–85). Economists debated the need for a "good" concept of complementarity and eventually adopted a definition that fit the needs of econometric modeling and a theory of market interdependencies.

"Jean Ville's Contribution to the Integrability Debate: The Mystery of a Lost Theorem," by François Gardes and Pierre Garrouste (pp. 86–105). Ville was an underappreciated contributor to the development of revealed preference theory, the weak axiom, and integrability.

"Aggregation and Estimation in the Theory of Demand," by John S. Chipman (pp. 106–29). The problems of aggregation of demand functions have been studied quite extensively in the literature on the estimation of systems of demand functions.

"More Fiber Than Thread? Evidence on the Mirowski-Hands Yarn," by J. Daniel Hammond (pp. 130–52). The Chicago strand of Hands and Mirowski's account of the development of price theory is drawn more tightly and straighter than the historical evidence allows.

"Integrability, Rationalizability, and Path-Dependency in the History of Demand Theory," by D. Wade Hands (pp. 153–85). Integrability has meant different things, in some cases offering a radical critique of standard choice theory and in others offering connections between recent theoretical work and the critical concerns of early-twentieth-century theorists.

Part 2. Agreement on Demand: Mid-Twentieth-Century Walrasian Theory

"Disequilibrium Dynamics and Aggregate Excess Demand: On a Homunculus Fallacy in Economic Theory," by Maarten Pieter Schinkel (pp. 189–212). Economics lacks a theory of disequilibrium because neoclassical economics largely fails to see or accept that it offers a homunculus explanation for the workings of the market process by postulating what it tries to explain.

"Rolf Mantel and the Computability of General Equilibria: On the Origins of the Sonnenschein-Mantel-Debreu Theorem," by Fernando Thomé (pp. 213–27). Mantel's approach to general equilibrium theory was driven by a desire to tightly connect economic theory and practice, especially in policymaking.

"The Sonenschein-Mantel-Debreu Results after Thirty Years," by S. Abu Turab Rizvi (pp. 228–45). Donald Brown and Rosa Matzkin show that it is in principle possible for general equilibrium theory to generate refutable restrictions, although a carefully stated claim based on the Sonenschein-Mantel-Debreu results on refutability remains true, and many of the problematic outcomes from the Sonenschein-Mantel-Debreu theory remain entrenched.

"Demand Theory and General Equilibrium: From Explanation to Introspection, a Journey down the Wrong Road," by Alan Kirman (pp. 246–80). General equilibrium theory and the demand theory contained in it have not provided a model that has empirically testable content.

Part 3. Demand Goes Transcendental: Some Modern Issues

"Mechanism Design Theory Embodying an Algorithm-Centered Vision of Markets/Organizations/Institutions," by Kyu Sang Lee (pp. 283–304). Mechanism design theory provides the dominant Walrasian general equilibrium tradition with a new transpersonal, algorithm-centered vision of markets and institutions while leaving unsolved the lingering probems associated with that tradition.

"The Tricks of the (No-)Trade (Theorem)," by Esther-Mirjam Sent (pp. 305–21). No-trade theorems may be not so much a neoclassical problem as an artifact of treating knowledge in a certain algorithmic manner.

"Economic Theory: Structural Abstraction or Behavioral Reduction?," by Shyam Sunder (pp. 322–42). The predictive validity of Marshallian supply and demand theory need not depend on the theory's assumptions being literally descriptive of cognitively bounded human agents.

"Twelve Theses concerning the History of Postwar Neoclassical Price Theory," by Philip MIrowski (pp. 343–79). The story of the neoclassical profession in the twentieth century is a long sequence of attempts to shore up analytical foundations, resulting in a fragmented and motley microeconomics.