Interdependence of Several Markets: The Hicks–Morishima Approach Reconsidered

This chapter aims to shed some new light on the Hicks–Morishima approach to the interdependence of several markets. In spite of its rather simple and ambitious framework for the interdependence of several markets, it is quite unfortunate that this approach has been rather neglected in the academic circle. We suppose that there are several reasons for this. First, the traditional general equilibrium approach developed by Lionel W. McKenjie, Gerald Debreu, and Kenneth W. Arrow exclusively works with the good space rather than the price space. In contrast, the Hicks–Morishima approach based on Hicks’ classical book Value and Capital exclusively operates on the price space, thus against the current mainstream of economic theory. Next, the majority of economics readers are usually familiar with the straightforward notion of demand and supply curves, but not with the twisted concept of excess demand curves. It is one of my main purposes to mend such unfortunate tendency, presumably proceeding toward the establishment of a new grand system of social science. We can learn new lessons from old teachings.