Farmer on Equilibrium vs. Optimality

In the recent back and forth about neoclassical and Keynesian macro models (for example here, here, and here), Roger Farmer highlights an important dimension of the debate-

The problem with classical models is not the equilibrium assumption; it is the optimality implication. The idea that the current state of affairs is socially optimal is so obviously at odds with the existence of mass unemployment that it has given equilibrium theory a bad name. In very simple models, equilibrium and optimality are the same thing. But that conclusion is a very special implication of some equilibrium models. It does not hold in general. That idea is key to reconciling Keynesian economics with equilibrium theory.

The most common attack on classical models is "how can an equilibrium have mass unemployment?" Since most people are concerned about optimality, it should be the bigger question, not defining whether or not we are "in" equilibrium or disequilibrium. This point gets lost in translation on the blogosphere and I'm glad Roger Farmer pointed it out the difference.

Nevertheless, I disagree with Prof. Farmer in one regard. Economics' modern obsession with equilibrium analysis misses the dynamic structure of the market-process that can only be included in disequilibrium analysis.

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