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1We are grateful to Goulven Rubin for taking the time to engage so carefully with our book [Backhouse and Boianovsky, 2013] and for the positive things he says about it. He has raised a number of points where, should we have the opportunity to produce a second edition, we should fill out our story and, no doubt, amend some of the details. However, he has not persuaded us that the main thrust of our interpretation needs to be modified. Our starting point was that we wanted to understand the explosion of interest in disequilibrium theory in the late 1960s and early 1970s—the literature associated above all with Robert Clower, Axel Leijonhufvud, Robert Barro and Herschel Grossman. We thought, initially, that this was a story we could tell in one or two journal articles but as we got into the topic we realized it needed to become a book, for it was much bigger story than we had anticipated. One direction in which we needed to extend our work was to take the story back in time, from Clower and Leijonhufvud to Don Patinkin and, before him, Oskar Lange.

2Rubin, who has studied Lange much more closely than we have, shows that there is more to tell, and that we may not have paid sufficient attention to the extent to which Walrasian general equilibrium theory provided the framework for thinking about Keynesian problems in the aftermath of the General Theory. This raises a problem that is universal in writing the history of economics: where does one begin when all ideas can be traced back in time, typically changing their context the further back one goes from one’s starting point. Perhaps we should have tried to tell a much more comprehensive story about Lange instead of using him as the prelude to Patinkin’s work, which is where the main act in our drama began. Doing so would have filled out the picture, but it would have changed the overall focus of the book in ways that would have had costs as well as benefits. If we were to expand out treatment of Lange significantly, it would no doubt force us to amend some of the remarks we make about the early period.

3Rubin’s criticism of our treatment of Patinkin, arguing that we should have paid him much more credit for anticipating ideas that came later, draws attention to details of his work that were left out of our story. Nevertheless, part of the Patinkin story had been discussed in a couple of papers by one of the authors [Boianovsky, 2002; 2006], and we tried in the book to avoid repetition as much as possible. Patinkin’s view (in his 1947 PhD thesis and in a few 1946 typescripts), that involuntary unemployment is a manifestation of an overdetermined model where workers face an additional (effective demand) constraint, is documented in Boianovsky [2002: 230 and n. 3; 2006: 205 and 208]. However, the absence from our book of detailed discussion of Patinkin’s ideas as a PhD student in Chicago is less damaging to our thesis than Rubin suggests. We attach great weight to the fact that Patinkin did not see the parallels between Clower’s dual-decision hypothesis and his own Chapter XIII. If further evidence can be produced that disequilibrium and quantity constraints were more deeply rooted in Patinkin’s thinking than we claimed, it only strengthens the paradox of Patinkin’s failing to see the full significance of Clower’s work. In retrospect, the ideas that lay beneath enthusiasm for disequilibrium macroeconomics in the early 1970s were staring people in the face several years earlier, and perhaps, if Rubin is right, even earlier than we claimed. As one reader of our work has put it, there was a lot of sleepwalking going on.

4That is related to the broad historiographical question of how to read past theories. The issue came up in an exchange between Mark Blaug and Paul A. Samuelson in the early 1990s about “historical” vs. “rational” reconstructions in the history of economic thought [Maas, 2013; and references cited there]. According to Samuelson, if an idea can logically be derived from someone’s theory you should treat as the author had understood it. This would prevent the sin of not recognizing the equivalent content in older writers only because they do not use modern terminology. Against that it was argued that it is important that people can have ideas and fail to see their significance. Clower certainly read and referred to Patinkin’s 1956 classic book and the notion of “spillover effects”, but in a critical way. Patinkin [1952] had introduced that concept as part of his criticism of Samuelson’s “correspondence principle”. According to Clower [1965], Patinkin’s spillover effects did not offer an adequate way to bring current transactions into general equilibrium theory [Boianovsky, 2002: 244–5]. Hence, Patinkin felt vindicated when, as discussed in our book, Barro and Grossman eventually put together Clower’s consumption function and Patinkin’s labour demand function in a single general disequilibrium model. As we explained, Clower and Leijonhufvud were never convinced that the route taken by Barro and Grossman was the one to follow.

5Rubin challenges our division of the material into separate chapters on macro and micro modeling. This was in part an expositional necessity. As we have said, the literature turned out to be far more complex than we initially anticipated and ways had to be found to divide it into meaningful elements. The boundaries were not sharply defined and Rubin has added to the links that we could, and in some cases should, have mentioned. We were very conscious that in the background to these discussions was a literature on money to which several of our subjects (e.g. Frank Hahn, Jean-Michel Grandmont) contributed in ways that went outside what we considered to be the boundaries of disequilibrium macroeconomics. Rubin has reasons to take a different view, but our position remains that, even though the dividing line between the micro and macro literatures may have been fuzzy it was nonetheless a real one, and that our attempt to use it to make sense of the literature was legitimate.

6It is certainly the case that commitment to “disequilibrium macroeconomics” weakened towards the end of the 1970s and during the 1980s. Following the arguments of Edmund Phelps, Robert Lucas and others, it became conventional to take the view that theories needed to be framed in terms of a suitably defined equilibrium, for otherwise they failed to explain what was happening. Rubin cites Diamond [1984] as presenting an explicitly “equilibrium” theory; we do not deny that. Several years earlier, Edmond Malinvaud [1977] had made exactly the same point about his own theory: it was an equilibrium theory using a specific concept of equilibrium. There was a move towards using models of imperfect competition, in part on the grounds that such models were seen to offer explanations, and talking in terms of disequilibrium was thought to leave something unexplained. However, and this is a point we tried to explain, this was a complex process taking many years: in the course of it some features of the “disequilibrium macroeconomics” literature were lost, including the terminology of disequilibrium, but others were retained.

7There is undoubtedly more to the demise of disequilibrium macroeconomics than we manage to capture. A complete history of the subject would, no doubt, need to be integrated with the history of policy making, and the questions that policy analysts were expecting macroeconomic models to answer. We argue that the conventional story – that the emergence of stagflation in the 1970s was enough to make disequilibrium theory patently inadequate – is wrong, but to say that is not to say that the need to analyze inflation did not play a very significant role. We touch on the history of the Phillips curve when we discuss Phelps, but the wider history of the Phillips curve [Forder, 2014] will no doubt have to be taken into account. It is also likely that the history of econometric modeling should play a bigger part in the story (unusually, our book does draw attention to some of the econometric work on disequilibrium modeling, though we acknowledge that there is more). Rubin would like us to have done more to fill out this story and he has some interesting suggestions. We are happy to agree that there is much for future historians of economics to do.


  • Backhouse Roger E. and Boianovsky Mauro [2013]. Transforming Modern Macroeconomics: Exploring Disequilibrium Microfoundations, 1956-2003. Cambridge: Cambridge University Press.
  • OnlineBoianovsky Mauro [2002]. Patinkin, the Cowles Commission, and the theory of unemployment and aggregate supply. The European Journal of the History of Economic Thought 9(2): 226–59.
  • Boianovsky Mauro [2006]. The making of chapters 13 and 14 of Patinkin’s Money, Interest, and Prices. History of Political Economy 38(2): 194–249.
  • Clower, Robert W. [1965]. The Keynesian counterrevolution: a theoretical appraisal. In F. Hahn and F. Brechling (ed.) The Theory of Interest Rates. London: Macmillan: 103–25.
  • Diamond Peter [1984]. A Search Equilibrium Approach to the Micro Foundations of Macroeconomics. Cambridge: MIT Press.
  • OnlineForder James [2014]. Macroeconomics and the Phillips Curve Myth. Oxford: Oxford University Press.
  • OnlineMaas Harro [2013]. A 2x2=4 hobbyhorse: Mark Blaug on rational and historical reconstructions. Erasmus Journal for Philosophy and Economics, 6(3): 64–86.
  • Malinvaud Edmond [1977]. The Theory of Unemployment Reconsidered. Oxford: Blackwell.
  • OnlinePatinkin Don [1952]. The limitations of Samuelson’s ‘correspondence principle’. Metroeconomica 4(2): 37–43.
Roger E. Backhouse [1]
Mauro Boianovsky [2]
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