Edgeworth’s Figure 1 and the ‘Complicated Double Adjustment’: Labour Exchange, Production and Remuneration

Edgeworth’s famous Figure 1 from Mathematical Psychics is known for its linkage to the Edgeworth box diagram and its contributions to the determinism and indeterminism of economic equilibrium. In this study we present the textual evidence which establishes that Figure 1 was also used by Edgeworth as an illustration of what William Stanley Jevons termed the ‘complicated double adjustment’ between consumption and production for the case of labour exchange. We develop a complete one period formalisation of the economic interdependence between labour exchange and production for Edgeworth’s Figure 1; and extend that formalisation to a two period model that accommodates advances from one period to the next.