Subjectivism and Economic Analysis: Essays in memory of Ludwig ...

ENDOGENOUS CHANGEwords, is it possible to tell a model of provisional equilibrium apartfrom a model of static or final equilibrium? Can the notion ofprovisional equilibrium make any difference for actual theorising?A tentative answer to this question will be given below.Models of provisional equilibriumWhen the theorist comes to construct a model of provisionalequilibrium, the difference between endogenous change in the senseof this chapter and endogenous change of the pre-reconciled typebecomes more striking. Unlike the change of the pre-reconciled type,endogenous change does not imply any actual change: no change isgenerated by a model of provisional equilibrium. In this respect amodel of provisional equilibrium is more similar to a model of staticequilibrium, where change can only be imposed from outside themodel. What is different in a model of provisional equilibrium is theinterpretation of equilibrium; equilibrium is no longer thought to bea state of affairs which can be disrupted only by exogenousoccurrences. Thus the concept of provisional equilibrium iscompatible with the proposition that change will occur, while theconcept of static or final equilibrium is not.However, different interpretations are relevant in so far as theycarry implications for actual theorising. Just a differentinterpretation of the positions of provisional and final equilibriumwould not by itself take us very far. It is argued here that one can gofurther than that. Since provisional equilibrium is based on a nonfullycomprehensive theory, that is a theory with a clearly limitedscope, it becomes possible to associate different non-fullycomprehensive theories with different models. This possibility is notwithout consequences.Despite the fact that each model will carry on lookingindistinguishable from a static model, the simple fact that a number ofalternative models is simultaneously considered carries importantimplications. It shows that there is a higher level of analysis where theindividual models and their relations can be understood as parts of asingle conceptual framework. The different models, however, will notbe related to each other in the same way as short-term models arerelated to long-term models: there will be no hierarchy among them.Shifting from one model to another will not be due to the relaxationof some previously fixed variable. It is not simply a matter of makingendogenous what was previously exogenous. That would certainlynot disturb the above-mentioned novelty-versus-explanation113