Microfoundations of Evolutionary Economics (Evolutionary Economics and Social Complexity Science, 15), 2019/7/10

Yoshinori Shiozawa, Masashi Morioka, Kazuhisa Taniguchi
Microfoundations of Evolutionary Economics
Springer; 1st ed. (2019/7/10)
364 pages
ISBN-10 : 4431552669

※　Below is an essay I submitted to Amazon Reviews.

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"a great breakthrough--an achievement of paramount importance"

The following is a quote from the following book.
Marc Lavoie, Post Keyensian Economics 2nd Edition (2022), p. 191,Edward Elgar Pub, 2022/5/31

 The message being conveyed by their book should by now be clear: the results achieved by Shiozawa et al. (2019) constitute a great breakthrough--an achievement of paramount importance as the authors say--for the analysis of the modern industrial economy (the financial sector requires a completely different story). The authors claim that their results are comparable to those of Arrow-Debreu, but obtained within the completely realistic framework of a production economy where agents dispose only of local information and frugal capabilities. Prices are not scarcity indices: changes in prices are not signalling changes in demand relative to supply. They are a tool to assess the best production method, as improvements or new combinations will be reflected by a decrease in unit costs. The information conveying changes in demand is transmitted and assessed through quantity signals--sales and changes in inventories--but not through prices. A key achievement of the authors is the demonstration that a multi-sectoral economy, where production takes time and with produced inputs, can adjust to changes in demand through the realistic decisions of managers to change quantities without any change in prices--something that previously was not thought to be possible.

 This book is also good news for:
(1)Business people who struggle daily with the real "market" with "indigenous theories" in their respective industries.
(2)Something is not right? Undergraduate students of social sciences who are struggling to get the "right answers" to exercises in neoclassical micro/macro economics textbooks in order to earn credits in "Introduction to Economics," even though they feel uncomfortable.

 This book is also a challenge to neoclassical economists. That is, the Adam Smith problem posed by Kenneth J. Arrow and Frank H. Hahn in 'General Competitive Analysis'1971, Preface vii, namely, "What will an economy motivated by individual greed and controlled by a very large number of different agents look like?" In other words, what Yoshinori Shiozawa and his group have presented is a theoretical proof that the market economy functions according to an working principle that is completely different from general equilibrium theory. Such a major theoretical shift had not occurred for 60 years since 1954 (Arrow & Debreu, Existence of equilibrium for a competitive economy, Econometrica, 22, 265-290).

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