Introduction

It cannot be pretended that the theory of stability developed historically with an eye to the considerations discussed in the previous chapter. Nevertheless, that discussion provides a useful vantage point from which to view the development of the subject. In turn, such a review allows us naturally to build an understanding of the steps which lead to ever more satisfactory stability models.

In my view, there have been four major developments in the history of modern stability analysis. These are (1) the realization that the subject was one which had to be studied in a context with a formal dynamic structure; (2) the realization that global, rather than simply local, results could be obtained; (3) the introduction of non-tâtonnement processes; and (4) closely related to this, the insight that attention paid to specifying the disequilibrium processes involved could lead to far more satisfactory results than could be obtained by restricting the excess demand functions. In some ways, the analyses resulting from each of these steps made increasing use of the economic underpinnings of the stability problem (largely, but not exclusively, Walras' Law) and led to correspondingly more and more satisfactory results.