TITLE:
Walras and Contemporary Financial-Economic Crisis
AUTHORS:
Ezra Davar
KEYWORDS:
Financial-Economic Crisis, Walras’s and Modern Approaches, The Use of Mathematics in Economic Theory, Money Commodity, Fiat Money
JOURNAL NAME:
Modern Economy,
Vol.5 No.5,
May
29,
2014
ABSTRACT: This paper shows that one of crucial causes of contemporary financial-economic crisis is an abandonment of the classic and Walras’s theories, in particular the monetary theory. Therefore, it discusses three fundamental differences between Walras’s and modern economists’ approaches: 1) the relationship between theory and reality; 2) the use of mathematics in economic theory; and 3) the monetary theory. The paper demonstrates that the modern approach is even incompatible with hypothetical economics because of unrealistic assumptions, for example, there is only one type of money—fiat money; whilst Walras’s approach applies well to its era’s reality.