On the Notion of Equilibrium or the Center of Gravitation in Economic Theory

The notion of equilibrium has played a critical role in economic theory since Adam Smith. It is in the theories of value that the notion of equilibrium has played a crucial role, and to the extent that a theory of value is fundamental to any economic theory of the capitalist market economy, it has remained critical to economic theorizing in general. In the classical tradition, the theory of value is concerned only with the commodities that are produced and the supplies of which can be increased or decreased by changing the labor and materials allocated to their production. In the neoclassical tradition, however, the theory of prices is built on the paradigm of pure exchange, and, therefore, it can determine prices without invoking the condition of the uniformity of the rate of profits. This chapter examines the notion of a “center of gravitation” in the classical tradition, which includes Piero Sraffa.