An Historical Investigation
Chapter 9: The Dreamland of Léon Walras
9. The Dreamland of Léon Walras INTRODUCTION The man responsible for the vision that the economy can be seen as a vast system of interrelated markets that must be studied in terms of a system of mathematical equations was Léon Walras. Walras tried many professions (novelist, journalist, bank employee) before he followed in the footsteps of his father Auguste Walras and became an economist. His scientific career started when in 1870 he was finally named to a professorship in the faculty of law of what was later to become the university of Lausanne in Switzerland. The main ingredients of Walras’s vision on economic science are fourfold: • Economics is a mathematical science; • Marginal utility explains the determination of market prices; • In a system of free competition all markets simultaneously tend to a situation of economic equilibrium (supply equals demand), and • General economic equilibrium is a relative welfare maximum. These were the main points of his Elements of Pure Economics (EPE) which was first published in two parts in 1874 and 1877. A month before the publication of the first part of the book Walras discovered that Jevons in 1871 had published a mathematical analysis of exchange which was also based on the notion of marginal utility. He readily conceded Jevons’s priority concerning this point in the preface of the EPE but also retained his right to claim originality for ‘certain important deductions’ of his own (Walras 1954, 36). This modest phrase hides that there are important differences between the...
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