The Marshallian Market and the Walrasian Economy. Two Incompatible Bedfellows

The aim of this paper is to question a view which is usually taken for granted, namely that the Marshallian partial equilibrium and Walrasian general equilibrium analysis stand in a relationship of continuity. It will be claimed that the contrary is true : the generalisation of the Marshallian market does not lead to a Walrasian economy or, conversely, the Walrasian economy is not composed of Marshallian markets. To bring this point home, the basic methodological choices underpinning the analysis of the Marshallian market and of the Walrasian economy will be compared. The issue of why no full-fledged Marshallian representation of the economy has arisen which might stand as an alternative to the Walrasian account will also be investigated and a series of reasons for this lack of generalisation of the Marshallian market will be considered. It will be shown that the very assumptions which serve to make the market equilibrium result tractable constitute the stumbling-blocks to its generalization. Finally, it will be claimed that if the Marshallian economy concept has no explicit existence, it has nonetheless an implicit one. It forms the background against which a series of reasoning about the working of the economy as a whole, which cannot fit the Walrasian economy framework, are developed. No less prestigious names than those of Keynes, Hicks, Patinkin, Friedman, Clower and Leijonhufvud will be adduced as witnesses.