Mises Institute

What Do Austrians Think of Equilibrium?


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What do Austrians think of equilibrium? Jonathan Newman's answer is "always and never." Rather than treating equilibrium as an unreachable ideal against which real markets are judged failures — the trap Mises warned against — he walks through a realistic market process asking at each step what has been settled and what remains open. That yields several distinct equilibrium constructs: the plane state of rest that occurs after every single exchange (where markets always clear), the Wicksellian state of rest where competitors' prices converge, and the final state of rest that the economy forever tends toward but never reaches. The payload is a quiet demolition of "sticky price" and "sticky wage" reasoning — and with it, the Keynesian account of depressions.
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