Since Arrow-Debreu is a general equilibrium model, if only 1% of the economy doesn't fit the model, the model doesn't work. If you're asking about what percentage of markets approach textbook perfection, that's a more reasonable question.
I came back to lbo-talk because pen-l has been very dry of late. It turns out that lbo-talk is engaged in exactly the same kind of discussion that pen-l has, often with exactly the same people involved. So I think it's reasonable to think that lbo-talk is sucking the life out of pen-l, contrary to Doug's intention.
What is needed is a clear division of labor between the two. (Let's see: pen-l gets the politics and lbo-talk gets the economics? no, that doesn't work...)
in pen-l solidarity,
Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html "A society is rich when material goods, including capital, are cheap, and human beings dear." -- R.H. Tawney.