Marshall vs. Walras on Equilibrium and Disequilibrium

In this paper I critically analyse the view that John Hicks sought to establish, according to which Walras’ and Marshall’s approaches to price theory, while differing in scope (that is, general vs. partial analysis), are basically similar in their aims, presuppositions and results. By focusing on a special kind of economy (the pure-exchange, two-commodity economy), which has been formally studied by both economists with the help of similar tools, we can precisely identify the differences between the two approaches. In particular, I am able to prove that there exists a definite trade-off between observability of the disequilibrium process and generality of the equilibrium concept: for Marshall can succeed in modelling a process of exchange in ‘real’ time with observable out-of-equilibrium trades only at the cost of confining his analysis to a partial equilibrium framework; whereas Walras can succeed in developing a truly general equilibrium model only at the cost of accepting that the underlying equilibration process be downgraded to a virtual process in ‘logical’ time.