ABSTRACT
The development of economic analysis throughout the twentieth century has been focused on better understanding the properties of economic equilibrium. In microeconomics the Pareto optimal unique and stable competitive general equilibrium has been depicted as the welfare-maximizing benchmark for economic efficiency, and in macroeconomics the policy goal has been to design policies that arrive at an equilibrium with full employment and low inflation. The Keynesian macro framework in particular admits the possibility that the economy could rest at an underemployment equilibrium, and macroeconomic analysis in general sets the policy goal of finding policies that can lead the economy to that full employment low inflation equilibrium. Similarly, from a microeconomic perspective, factors keeping an economy from a competitive equilibrium are referred to as market failures which, if corrected, produce the welfare-maximizing Pareto optimal allocation of resources. Toward the end of the twentieth century, macroeconomic models began investigating economic growth, but even then in an equilibrium framework. 1 A major part of core economic theory rests on the idea that there are market forces pulling the economy toward a stable equilibrium, and that left free of outside disturbances that equilibrium will persist.
