Stationary Stale

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Stationary Stale

The method of economic statics is generally associated with the concept of a stationary such where everything repeats itself from year to year. The economy d u 1. steadily like a gramophone repeating itself candle . However, the concept of a stationary state is a n ere methodological fiction devoid of any reality, . curd economies of India and China at one time showed symptoms of solitariness,
Further. this concept docs not mean a method of analysis but an object of analysis, viz., an economic process which goes on at an even rate or which merely reproduce self, The values of all variables such as tastes, resources and technology arc not supposed to change over lime. The factors which control production. consumption. distribution and exchange are assumed to be constant, yet there is movement, though at a uniform rate. People continue to be bum and die, but births equal deaths so that there is no change in numbers, though the composition of population is changing. Thus, it does not mean a frozen fixity. To use Spigot’s words. “Individual drops composing the waterfall are continually in movement, though the waterfall itself remains. Tale economic system itself may remain static, though individual constituents may undergo change. The three fundamental sets of data viz., tastes, resources and techniques.remain the same.

the same time. l3ut we shut out eyes to other changes and focus our attention only on demand. supply and price to simplify mailers. Simplifying Process. Marshall has very dearly described the simplifying process thus: The forces to be dealt with are so numerous. that it is best to take a few at a time; and to work out a number of partial solutions as auxiliaries to out main study. Thus we begin by isolating the primary relations of supply. demand and price in regard to a particular commodity. We reduce to inaction all other forces by the phrase ‘other things being equal’. We do not suppose that they are inert. but for the time we ignore their activity .In the second stage. more forces are released from the hypothetical slumber that had been imposed on them. Gradually. the area of the dynamical problem becomes larger; the area covered by provisional statistical assumptions becomes smaller.”Step to reality. This method is known as the method of “decreasing abstraction,” “successive approximation” or the “isolating. one-at-a-time procedure”, Recently. it has been called the “optimistic” approach. In the words of Joan Robinson. “An optimist appears to be analytical economist who is prepared to work stage-by-stage towards the still far distant ideals of constructing an analysis which will be capable of solving the problems of the rcal world.”  Allocative Problems, Again, it is only through the-method of economic statics that the various types of allocative problems of the economy are studied. We study how an individual allocates his income on the purchase of various.

Applicability, Further. as Harrod states. the central core of the doctrine and the principles related to Robbins’s definition of economic fall within the purview of economic statics. The thenry or comparative costs, case for free trade and marginal analysis, etc .. are all exercises in static analysis. Prof. Harrod alsc holds that Knight’s theory “I’ profits ralls within the amhit or static analysis. He argues that “Since change and round about production involve uncertainty-and once-over chan generates more uncertainty than continuing ch.ange-l conceive the thcorv of profit to lie within the field of statics. I do not SCl’ anything specifically dynamic for instance in the theory of profit elaborated  by Prof. F.. H. Knight”. Herrod again maintains that Keynes’s Geller.!1  Theory is also essentially static in character. Except i, I unable is the source of most of our fallacies in Political Economy.” Static analysis assumes away time. Wc cannot. therefore. Phillip in much meaning into our siatellll:nh regarding ecnnumic changes since they take’ place over lime. l lcncc. static unalysi« has only a limited scope to deal with the real economic problems.

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Stationary Stale