The neoclassical economics owes its development to Alfred Marshall and Leon Walras in the late 19th century. Marshall is also attributed with the partial equilibrium theory. Walras is known for his ...general equilibrium theory. Both Marshall and Walras are also attributed with the introduction of mathematics in their explanations of economic phenomenon. Since their time mathematical economics has reached new heights. Marshall, a British economist relied on the Ceteris paribus assumption principle. Walras, a French mathematician used laissez-faire as his assumption principle. Neoclassical economics saw major changes post the Great Depression. The 1929 Great Depression changed the economic views of John Maynard Keynes who was the ardent fan and star pupil of Marshall. Over time, the rational behaviour of agents and value proposition helped change the various proposed models in mainstream economics. The 2008 global financial crisis jolted the sensibilities of the entire world. Since the last decade trillions of dollars have been pumped into the global financial systems to ensure that the mega-financial institutions do not fail. Several Nobel Laureates in Economics including other prominent economists have questioned the mainstream academia's ethical position and their inability to predict the 2008 financial crisis. Her Majesty the Queen of England called the crisis 'Awful '. Her Majesty is known for her remarkable ability to clad public display of emotions. This paper aims to examine the failings of the mainstream economics in light of the existing scholarly literature on the topic. The authors believe that the mainstream economic is in dire need of overhaul.
Walras as an ordoliberal? Baranzini, Roberto; Fèvre, Raphaël
The European journal of the history of economic thought,
03/2019, Volume:
26, Issue:
2
Journal Article
Peer reviewed
Léon Walras and the ordoliberals share the opinion that State intervention in favour of a competitive order is a central element of economic policy. Hence, can Walras be regarded as a forerunner of ...ordoliberalism? This study performs a methodological and ontological analysis of Walras' and Eucken's thoughts and sheds light on another common ground: philosophical idealism. By taking different inclinations - Walras' Teleological Realism vs Eucken's Historicist Conceptualism - these authors reveal different relations with reality and methodological stances, which result in opposing philosophies of History. Paradoxically, by revealing tenuous epistemological bonds, we set a new distance between Walras and the ordoliberals.
Knut Wicksell discussed in his 1893
, as part of a critical comment on Launhardt and Jevons, conditions for consistent aggregation. He argued that Jevons's “trading body” concept was only valid if ...identical linear marginal utility functions (with ensuing parallel Engel lines for all individuals) could be assumed, which he regarded as unrealistic. Wicksell preferred Léon Walras's notion of market excess aggregate demand functions, which are functions of prices only. Such functions would not be affected by aggregation problems, if only disequilibrium transactions were assumed away. The article also addresses Wicksell's position concerning the so-called Cournot problem (that the general equilibrium system may not be able to provide precise numerical solutions), and his use of the notion of the representative agent in the formulation of the saving function.
This paper is an account of the history of Léon Walras's attempt to be awarded the Nobel Peace Prize for 1906. It describes Walras's moves to get three of his Lausanne colleagues to nominate him for ...the prize, the arguments advanced in the proposal, and the reception that it received by the Norwegian Peace Prize Committee in Kristiania (Oslo). It discusses whether Walras had realistic reasons to believe that he stood a chance of winning the prize, and it evaluates the validity of the arguments on which the proposal was based.
5 January 2010 marks the 100th anniversary of the death of one of the most important economists of the 19th and 20th centuries, Marie-Ésprit Léon Walras. The authors of the article wanted, in ...connection with this anniversary, to present Léon Walras as a person and as an economist. The main objective is to put forth a possibly new interpretation of the Walrasian General Equilibrium Theory and to demonstrate that seemingly complex equations can be identified by a standard optimization of decisions made by economic agents.
This paper shows that modern monetary theory can be better understood through the differences between Menger and Walras. Since the 1980s, attempts to establish coherent microfoundations for monetary ...exchange have brought Menger's theory of the origin of money to the forefront and sent walrasian methods to the backstage. However, during the first decade of the twenty-first century, models inspired on mengerian monetary theory, mainly represented by the search monetary approach, are trying to reintroduce neo-walrasian elements. This paper aims at clarifying the main theoretical implications of this movement, through an analysis of the Menger-Walras divide on money. This divide allows us to show new proof of the deep theoretical differences among the so-called marginalist authors and of the richness of this historical period as a source for modern economics.
The standard view about the relationship between the Marshallian and the Walrasian approaches is that they are complementary to each other. My aim in this paper is to show that, on the contrary, they ...constitute alternative sub-research programmes within the wider neoclassical paradigm. I make my point by contrasting the two approaches against the following benchmarks: the purpose of economic theory according to Marshall and Walras; their views as to the role of mathematics; their specific ways of tackling complexity; the conception of equilibrium underpinning their theories; and, finally, their trade organisation assumptions.
In this article, I analyze and compare the contributions of Dupuit and Walras on the natural monopoly of railroads. Both theorists argued that railroads—as opposed to inland waterways—could not be ...vertically unbundled, a point that previous authors who compared their views failed to point out. Moreover, until now, Dupuit’s analysis of the railroad monopolies before the Société d’économie politique had been overlooked. This article fills this gap in the literature by showing that Dupuit and Walras both concluded that railroads were better managed under the monopoly regime; however, they drew upon different perspectives. I argue that Dupuit was more pragmatic, using the concept of a “de facto monopoly,” while Walras was more ideological, arguing that the railroad industry was a public utility. In so doing, I underline that Dupuit did not oppose government intervention, counter to a few misrepresentations and fallacies in the literature.
This contribution aims at exploring what is today the new "normal" in economic policy, namely, austerity. It must be read as a homage to Karl Polanyi, the first who understood the tragedy, and to ...Kari Polanyi-Levitt, who expanded on her father's thought. Austerity has nothing to do with old anticyclical or stabilizing policies. It is a permanent regime devoid of any sound foundations. It is a pure quasi-religious policy that is self-reinforcing. The author emphasizes the fundamental conflict between its promoter, Friedrich Hayek, and its adversary, John Maynard Keynes, and points to the sole towering intellectual, Karl Polanyi, who understood that their conflict embodied two radically different visions of the world. Polanyi discovered that the core of the conflict was the merciless fight between the supreme rule of God-given market laws, the Hayekian order, and democracy enshrined in a peaceful society that is oriented toward the future. The Hayekian order abolishes the modern democratic state, sacrifices the future, and extols poverty for the sake of order. Polanyi was the first to have discovered the true message of Keynes, who had destroyed the logical foundations of Hayek's philosophy and economics. In conclusion, the author strives to explain why, early in the twenty-first century, the Hayekian legacy is the true road to serfdom because it ignores Polanyi and encourages belief in market laws. Early American "Keynesians," who knew nothing about Hayek, transformed Keynes into a new Léon Walras. These early Keynesians were doomed from the start and vanished when they endorsed the Philips curve as expressing the absolute truth.
Recent developments in microeconomic theory have shown that the self-interested behavior underlying neoclassical theory is artificially truncated: it depicts a charmingly Victorian but Utopian world ...in which conflicts abound but a handshake is a handshake. But a handshake is not always a handshake. Studies of principal-agent analysis, the economics of information, radical political economy, mechanism design, and transactions cost economics have all focused on the difficulties involved in policing and enforcing the actual process of market exchange. Abandoning the Victorian world of neoclassical theory will redirect economists to an older conception of their profession: what once was called political economy. By taking optimizing more seriously, post-Walrasian economics has inspired a revolution in economic thought fostering both new theoretical departures and alternative conceptions of the capitalist economy. We will offer our own interpretation of this literature, focusing on the widely recognized fact that the terms arising from exchange are not generally enforceable at zero cost to the exchanging parties. Where some aspect of the good or service supplied is both valuable to the buyer and costly to provide, the absence of third-party enforcement of claims gives rise to endogenous enforcement strategies. We refer to this relationship as a “contested exchange” because, unlike the transactions of Walrasian economics, the benefit the parties derive from the transaction depends on their own capacities to enforce competing claims.
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