On the Comparison of the Stability Implications of Marshallian and Walrasian Adjustment Schemes: Note.

The article discusses stability implications of economists Alfred Marshall and Leon Walras's adjustment schemes. In the Keynesian macrosystem, the Marshallian ranking of price and quantity-adjustment speeds is reversed. Thus, in the shortest period, flow quantities are freely variable. However, only one or more prices are given and the admissible range of variation for the rest of prices is thereby limited. Researcher James Tobin has argued that one way to appreciate the importance of this change of dynamic structure is to analyze the stability implications of Marshallian and Walrasian adjustment processes. Tobin argues persuasively that Keynes' achievement was to show that, in a capitalist economy, market forces may be too weak to generate a lull-employment equilibrium. Tobin develops two simple macro models, one reflecting the Walras-Keynes-Phillips (W-K-P) adjustment relation and the other reflecting the Marshallian (M) adjustment relation. It is clear from Tobin's analysis that the speed of adjustment of price and quantity is not the only characteristic distinguishing the Marshallian and Walrasian approaches.