Personally I think that the Freeman-Carchedi book contains
a lot of interesting material (you've got two papers cited in it,
Jim D., not that that proves anything, :-)). But the arguments
quoted on this list pointed in the direction of a very serious
problem that the neoclassicals are aware of but which is gotten
at nowhere in the book. This is the Sonnenschein-Mantel-Debreu
Theorem. The problem has to do with aggregation and the shape
of the excess demand function.
In a nutshell, and without getting too technical, under the
usual conditions, the excess demand function can take any arbitrary
shape as long as it is continuous and suitably homogeneous. This
would seem to be the kind of bottom line about the shape of the
demand curve that was being driven at. There have been more recent
efforts by people like Grandmont and Hildenbrand to come up with
conditions that would exorcise this new demon. Sufficient heterogeneity
of consumers may do the trick, but this potential problem has very
serious implications for stability, multiple equilibria, dynamic
adjustment, etc. (anybody wanting to see further discussions of such
issues can check out the archives for the recently completed "Rosser
seminar" over on pkt).
Barkley Rosser
