Subjectivism and Economic Analysis: Essays in memory of Ludwig ...

MAURIZIO CASERTAdichotomy. Similarly this dichotomy would not be disturbed bymodels that differ because they are based on different fullycomprehensive theories: shifting from one model to another would bethe result of a structural break. On the contrary, the collection ofmodels based on different non-fully comprehensive theories willdisturb the novelty-versus-explanation dichotomy. Shifting from onemodel to another will not be the result of a structural break, but theresult of the evolution of one regime into another within the sameongoing process of learning. What would be preserved in this case isthe unity of the process of learning: the various models would appearas different closures of the same general system. Provisionalequilibrium, therefore, turns out to be a quite appropriate notion ofequilibrium to associate with this kind of approach.It is not neglected here that the approach sketched above is just atentative answer to the question of the relevance of the notion ofprovisional equilibrium. There is at least one other route that wouldbe interesting to take. It concerns the possibility of modelling aprocess of learning that is neither deterministic, which would killnovelty, nor evolving through exogenous changes, which would killexplanation. This line is not pursued here.The reason why emphasis is placed on an approach based on amultiplicity of models lies in the fact that there is already anexample in the literature, in particular, in the theory of economicgrowth. By playing with endogenous and exogenous variables anumber of growth regimes is established. Each of these regimes ishere reinterpreted as being associated with a non-fullycomprehensive theory. The whole approach is thus reinterpreted asan application of the notion of provisional equilibrium. It is to thediscussion of this approach that the rest of this chapter is devoted.An open-system approachAn analytical approach that admits of a multiplicity of solutionswas the subject matter of an article Sen published in 1963. Thisarticle has become the source of inspiration for a number of growththeorists. What Sen argues in this article, which focuses ondistributional problems rather than on growth, is that it is notpossible to satisfy simultaneously an investment functionindependent from saving, full employment of capital and labour,and the marginal productivity theory of distribution.Sen uses the following equations:114