Léon Walras
Marie-Esprit-Léon Walras (
December 16,
1834 in
Évreux,
France -
January 5,
1910 in Clarens, near
Montreux,
Switzerland) was a French
economist, considered by
Joseph Schumpeter as "the greatest of all economists". He was a
mathematical economist associated with the creation of the
general equilibrium theory.
Son of French economist
Auguste Walras. Auguste was a school administrator and not a professional economist yet his economic thinking had a profound effect on his son. He found the value of goods by setting their scarcity relative to human wants.
Walras also inherited the role of social reformer from his father. Much like the
Fabians, Walras called for the nationalization of land believing that land's value would always increase and that rents from that land would be sufficient to support the nation without taxes.
Augustin Cournot, a schoolmate of Auguste was another of Walras' influences. It was from Cournot that Walras inherited the tradition of
French Rationalism as well as the use of mathematics in economics. Cournot created functional relationships where "quantities are related to demand prices and costs." He also created the downward sloping demand curve.
One of the three leaders of the marginalist revolution, Walras was not familiar with the marginalist ideas of
William Stanley Jevons or
Carl Menger and developed his theories independently.
In 1874 and 1877 Walras published
Elements of Pure Economics, a work that led him to be considered the father of the general equilibrium theory. The problem that Walras set out to solve was one presented by Cournot, that even though it could be demonstrated how individual markets behaved, it was still unknown how goods interacted with each other to effect supplies and demands.
Walras created a system of simultaneous equations in an attempt to solve Cournot's problem. He recognized that while his system may be correct, the number of unknowns combined with the lack of information made it unsolvable.
To find equilibrium Walras set up a series of experiments called
tâtonnement, or groping. Walras simulated groping by calling out prices and people responding how much they would supply or demand at that price, the price was adjusted until equilibrium was reached.
Professor at the
University of Lausanne,
Switzerland, Walras is credited for having founded what subsequently became known, under direction of his Italian disciple, the economist and
sociologist Vilfredo Pareto, as the
Lausanne school of economics.
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Walras'_law*
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