ABSTRACT
Neoclassical macrotheorists cannot accept explanations of unemployment involving exogenously fixed prices since a fixed price violates methodological individualism. Nevertheless, one can readily understand the neoclassical rejection of Keynesian macroeconomic models whenever the existence of a fixed price is used to distinguish Keynesian from neoclassical models. The first question that must be addressed is whether any acceptable neoclassical model could ever explain the persistence of a disequilibrium. In neoclassical theory any disequilibrium always implies that someone is failing to maximize short-run utility or profit. Liquidity is not usually considered in a typical neoclassical theory of the firm or individual. To appreciate the significance of stressing the desirability of liquidity we need to see why it is not part of the usual neoclassical model. Every neoclassical explanation must view the disequilibrium as being the consequence of the intentional acts of autonomous individuals.
