The firm fits into general equilibrium theory as a balloon fits into an envelope: flattened out! Try with a blown-up balloon: the envelope may tear, or fly away: at best, it will be hard to seal and impossible to mail…. Instead, burst the balloon flat, and everything becomes easy. Similarly with the firm and general equilibrium – though the analogy requires a word of explanation.

General equilibrium theory – GET for short – has two attributes. First, it defines clearly the boundary between economic analysis and the exogenous primitive data or assumptions from which it proceeds; that is, it defines a precise, self-contained ‘model’. Second, it verifies the overall consistency of the economic analysis. A natural step in verifying overall consistency is to exhibit sufficient conditions for the existence of the proposed solutions, or ‘equilibria’. This step is usually amenable to mathematical reasoning.

Still, I do not mean to identify general equilibrium theory with that potent cocktail of economics and mathematics known as mathematical economics. (To some, mathematical economics is merely a pleonasm; to others, it is a branch of mathematical pornography; the word cocktail, with its element of pornographic pleonasm, is purposely neutral.) Work in mathematical economics lacking the GET–attributes is abundant.