to which one Jack Harllee replied...Food For Thought commented....Before concluding that economic theory does not include analysis of unstable equilibria check out the vast published findings on unstable equilibria in the field of International Economics. Once again we have someone touching on one tiny part of economic theory and drawing overreaching conclusions.
This response fairly well captures my own position. I argue in the book that the economics profession has been fixated far too strongly on equilibrium models, and much of the time simply assumes the stability of such equilibria without any justification. I certainly don't claim that economists have never considered unstable equilibria (or examined models with multiple equilibria). But any examination of the stability of an equilibrium demands some analysis of dynamics of the system away from equilibrium, and this has not (to say the least) been a strong focus of economic theory.