critique of microeconomics

boddhisatva kbevans at panix.com
Thu May 23 06:47:15 MDT 1996





		Rakesh,



	This passage is no help, and full of jumps and holes.  The first
sentences:

"Since individuals can only react to given prices and prices changes
(according to the demand and supply curves model), the aggregation of
individual behaviours (that is of the individual demand and supply curves)
cannot explain price formation.  Neither the individual nor the collective
demand and supply curves can explain the formation of prices, including the
equilibrium ones."


are clearly wrong.  If demand exists prior to supply, then some unformed
purchasing tendency for an individual good, roughly mimicking the classical
demand curve, governs return on production.  Oversupply causes producers to
compete because they must keep the production process going, as it allows
consumers to pick and choose.  The reward for any particular investment
becomes more uncertain both because of an increased universe of goods, and
because picking and choosing essentially creates a greater possible time lag
between any particular act of productions and consumption.


	Also, the assertion that the rise and fall of the "business cycle"
argues against a demand curve on the micro scale relies on the very
equillibrium universe the authors argue against, as does the "purchasing
power" argument.  Increases in demand are increases in independent purchasing
events.  They cannot simply be added up in an economy that, as the authors
point out, moves forward in time.  Likewise producer demand and payment are,
as the authors explicitly point out, separated in time, are thus independent,
and cannot be treated as a quid pro quo.





	I'm sure the authors are trying to debunk equillibrium analysis, but
the way they are presented here, it seems as though they rely on it at the
same time.





	peace




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