Discontinuity in Economic Theory and Economic Discontinuities

Abstract

Viewing the world as fundamentally continuous contrasts sharply with viewing it as fundamentally discontinuous. A smooth world represents the Newtonian-Laplacian dream of a gradual and steady upward movement of reality through a gentle Darwinian, evolutionary process. In economics this view was epitomized by Alfred Marshall. The discontinuous world defines itself in sharp contrasts and sudden changes as in the modern, punctuated evolutionary theory of Niles Eldredge and Steven Jay Gould (1972). In economics this view was most eloquently asserted by Karl Marx and Joseph Schumpeter.

Well it’s a matter of continuity. Most people’s lives have ups and downs that are gradual, a sinuous curve with first derivatives at every point. They’re the ones who never get struck by lightning. No real idea of cataclysm at all. But the ones who do get hit experience a singular point, a discontinuity in the curve of life---do you know what the time rate of change is at a cusp? Infinity that’s what! A-and right across the point, it’s minus infinity! How’s that for sudden change, eh?”

Thomas Pynchon, 1973

Gravity’s Rainbow, p. 664.

“In fact, all our theories of science are formulated on the assumption that space-time is smooth and nearly flat, so they break down at the big bang singularity, where the curvature of space-time is infinite.”

Stephen W. Hawking, 1988

A Brief History of Time, p. 46.