Economists miss the boat when they act if Arrow and Debreu’s general equilibrium model accurately describes markets in the real world of constant change. In contrast, the classical view on the market mechanism offers a helpful foundation on which to add modern insights about how markets create and coordinate information.

Sabiou M. Inoua is predoctoral research associate in the Economic Science Institute at Chapman University.
Vernon L. Smith is a member of Independent Institute’s Board of Advisors and Professor of Economics at Chapman University.
Economic History and DevelopmentEconomic PolicyEconomy
Other Independent Review articles by Vernon L. Smith
Summer 2024 The Economic Function of Inflation Is to Lower the Real Value of Wealth Assets Sufficiently to Pay for the Government’s Excess Spending Monetized by the Federal Reserve
Summer 2023 Adam Smith, Sociality, and Classical Liberalism
Spring 2016 Economic Modeling: Why the Standard Model Survives Bad Performance
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