Schinkel, M. (2006). Disequilibrium Dynamics and Aggregate Excess Demand: On a Homunculus Fallacy in Economic Theory History of political economy, 38(suppl. 1):189--212.

Modern economic theory is predominantly a theory of equilibrium. The question of how such positions of rest, in which all individual plans and expectations match, come about in larger economies is rarely addressed. The discipline has little more to offer on it than the metaphor of the 'invisible hand,' the imposed 'law of supply and demand,' which says that the prices of goods and services rise when their demand exceeds their supply and fall otherwise until they are equal, or at best formalizations of such price adjustments, carried out by an auctioneer-like central institution with information on aggregate excess demand. The auctioneer model is hardly convincing as an explanation of the majority of market processes in which no such central coordinator is present. By appealing to an outside entity, an 'auctioneer,' with no objectives of its own, existing disequilibrium theory is furthermore at odds with the microfoundations of economics. It presupposes a level of coordination, whereas economics{\textquoteright} original research question is whether and how order arises in an unorchestrate society of people making their own individual plans. Moreover, despite this considerable amount of structure, the approach was able to History of Political Economy 38 (annual suppl.) This essay is in part based on my PhD thesis (Schinkel 2001). I am indebted to Manuel Luis Costa, Franklin Fisher, Hans Maks, Jan Tuinstra, Michel De Vroey, and Roy Weintraub for many stimulating discussions over the years. I also thank them, as well as Iwan Bos, Wade Hands, Phil Mirowski, and participants at the 2005 HOPE conference, for comments on an earlier version of this essay. Sander Nieuwenhuis has kindly advised me on homunculi in the cognitive sciences. Errors and opinions are mine.