Takashi Negishi (born 1933) is a distinguished Japanese economic theorist and a historian of economic theory.
In 1963 he received a PhD in economics from the University of Tokyo in Japan, and he was professor of economics at the University of Tokyo from 1976 to 1994. After retiring from the University of Tokyo, he taught economics at Aoyama Gakuin University in Tokyo and some other universities.
He became the president of the Econometric Society in 1993. He published numerous papers in English; his main contributions were republished in Negishi (1994a, 1994b).He started his career in economic research as a general equilibrium theorist. In the late 1950s and the early 1960s he published a series of pioneering mathematical papers on stability analysis, welfare analysis and on the theory of imperfect competition in the context of general equilibrium theory. In particular, the following three papers are important: (1) “A note on the stability of an economy where all goods are gross substitutes” (1958), (2) “Welfare economics and existence of an equilibrium for a competitive economy” (1960) and (3) “Monopolistic competition and general equilibrium” (1961).
Paper 1 is a seminal paper that provided a mathematical proof of the dynamic stability of the Walrasian price adjustment by means of tatonnement (trial and error). Walrasian price adjustment process implies that the prices of the goods with excess demand increase and the prices of the goods with excess supply decrease. However, the dynamic stability of the equilibrium point is not ensured, unless some restrictive assumptions on the excess demand functions are imposed. Hicks (1939) proposed some mathematical “stability condition”, but Samuelson (1944) pointed out that Hicks’s condition is not equivalent to the “true” condition for the dynamic stability of the equilibrium point of a system of differential equations. Metzler (1945) found that Hicks’s condition becomes equivalent to Samuelson’s “true” condition of dynamic stability if it is assumed that all goods are “gross substitutes”.
Negishi’s paper 1 provided a mathematical proof that the “true” condition of dynamic stability is automatically satisfied if all goods are “gross substitutes”. Negishi’s contribution in paper 1 was written independently of the contributions of Hahn (1958) and Arrow and Hurwicz (1958), all of which were published in Econometrica in 1958.Paper 2 is also a seminal paper that provided a new method of the proof of the existence of a general equilibrium of a competitive economy. Gale (1955) and Nikaido (1956) utilized the excess demand correspondence and the fixed-point theorem to prove the existence of the general equilibrium solution. On the other hand, Negishi’s paper 2 utilized the Pareto optimality condition that is expressed by the maximization of the weighted average of the utilities of the consumers subject to the production possibility constraint to prove the existence of the general equilibrium solution. His method of proof, which is called “Negishi’s method”, turned out to be more efficient than the alternative method for the numerical computation of the general equilibrium solution.
Paper 3 is a seminal paper that constructed a model of general equilibrium with monopolistic competition. Before this paper was published, general equilibrium theory tended to concentrate on the analysis of a perfectly competitive economy, and the theory of imperfect competition was concentrating on partial equilibrium analysis. Negishi’s paper filled this gap. In fact, Nikaido’s (1975) book on the general equilibrium approach to monopolistic competition owes much to the idea that is expressed in Negishi’s paper.
He also made some important theoretical contributions to international economics and public economics (see Negishi 1994a).
In the 1970s, Negishi utilized the mathematical method of general equilibrium analysis to consider the microeconomic foundation of Keynesian macroeconomics, which turned out to be an important predecessor of the “new Keynesian” theory that flourished in the 1980s and the 1990s (Negishi 1979). In Negishi (1979), he suggested the concept of the “kinky perceived demand curves” to prove the existence of “Keynesian” equilibria with involuntary unemployment, which are called “Keynes-Negishi equilibria” (see Dreze and Hering 2008).
In the 1980s, his attention shifted to the study of the history of economic theory against the background of modern economic analysis (Negishi 1985, 1989, 1994b). In this area of research, he applied modern mathematical methods to the theories of great economists of the past, such as Adam Smith, Ricardo, Malthus, Marx, Mill, Walras, Jevons, Menger, Marshall, Bohm-Bawerk, von Thunen and Keynes. His approach to the history of economic theory resembles that of Michio Morishima, another major Japanese economist, who examined the theories of Marx, Walras and Ricardo from the viewpoint of modern analytical economics (see Kurz 2011).
TθICHIRO ASADA
See also:
Competition (III); Formalization and mathematical modelling (III); General equilibrium theory (III); John Maynard Keynes (I); Keynesianism (II); Karl Heinrich Marx (I); Michio Morishima (I); New Keynesianism (II); David Ricardo (I); Marie-Esprit-Leon Walras (I).
References and further reading
Arrow, K.J. and L. Hurwicz (1958), ‘On the stability of the competitive equilibrium’, Econometrica, 26 (October), 522-52.
Dreze, J. and P.J.J. Hering (2008), ‘Kinky perceived demand curves and Keynes-Negishi equilibria’, International Journal of Economic Theory, 4 (June), 207-46.
Gale, D. (1955), ‘The law of supply and demand’, Mathematica Scandinavica, 3, 155-69.
Hahn, F.H. (1958), ‘Gross substitutes and the dynamic stability of general equilibrium’, Econometrica, 26 (January), 169-70.
Hicks, J.R. (1939), Value and Capital, Oxford: Clarendon Press.
Kurz, H.D. (2011), ‘The contributions of two eminent Japanese scholars to the development of economic theory: Michio Morishima and Takashi Negishi’, in H.D. Kurz, T. Nishizawa and K. Tribe (eds), The Dissemination of Economic Ideas, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 337-64.
Metzler, L. (1945), ‘Stability of multiple market: the Hicksian condition’, Econometrica, 13 (October), 277-92.
Negishi, T. (1958), ‘A note on the stability of an economy where all goods are gross substitutes’, Econometrica, 30 (July), 445-7.
Negishi, T. (1960), ‘Welfare economics and existence of an equilibrium for a competitive economy’, Metroeconomica, 12 (June), 92-7.
Negishi, T. (1961), ‘Monopolistic competition and general equilibrium’, Review of Economic Studies, 28 (June), 196-201.
Negishi, T. (1979), Microeconomic Foundations of Keynesian Macroeconomics, Amsterdam: North-Holland. Negishi, T. (1985), Economic Theories in a Non- Walrasian Tradition, Cambridge: Cambridge University Press. Negishi, T. (1989), History of Economic Theory, Amsterdam: North-Holland.
Negishi, T. (1994a), The Collected Writings of Takashi Negishi, vol. 1 General Equilibrium Theory, Aldershot, UK and Brookfield, VT, USA: Edward Elgar.
Negishi, T. (1994b), The Collected Writings of Takashi Negishi, vol. 2 The History of Economics, Aldershot, UK and Brookfield, VT, USA: Edward Elgar.
Nikaido, H. (1956), ‘On the classical multilateral exchange problem’, Metroeconomica, 8 (June), 135-45.
Nikaido, H. (1975), Monopolistic Competition and Effective Demand, Princeton, NJ: Princeton University Press.
Samuelson, P.A. (1944), ‘The relation between Hicksian stability and true dynamic stability’, Econometrica, 10 (July-October), 1-25.