Leon Walras was descended from a Dutch journeyman tailor
who migrated to the south of The young Walras learned
from Cournot the meaning of functional relations between variables. However,
concerns about the limits of Cournot's demand curve for a single good led
Walras to seek a wider framework within which to express the demand for a
good as a function not only of its own price, but of a host of prices of
related goods. This was the point of departure for his general equilibrium
model of an economy. Most economic writers before
Walras followed the lead of Alfred Marshall and
employed a convention in dealing with particular markets called partial equilibrium
analysis. This convention calls for ignoring some determinants of demand and
supply in order to concentrate on the more direct causes of equilibrium price
and quantity. Walras departed from this practice by recognizing the
interdependencies that exist between markets because the process of price
determination occurs in all markets simultaneously. To isolate one market for
study without regard to the others was no more appropriate, in Walras's view,
than studying the position of the earth in the solar system without regard to
other planets. His architectonics, consequently, was an elaborate but highly
abstract system of mathematical equations that painstakingly detailed the
economic conditions for simultaneous equilibrium in every economic market. Walras's general equilibrium approach to economics did not win favor with the reigning academic hierarchy in France, forcing him to take a teaching position in Switzerland at the University of Lausanne, where he remained until he was replaced in 1893 by Vilfredo Pareto. Both he and Pareto realized that their equations could not be solved due to the lack of data and the large number of variables involved. Nevertheless, theirs was a great achievement from the standpoint of logical clarity, and the impact of their thoughts on modern economic theory ranks both Leon Walras and Vilfredo Pareto among the dozen most influential economists of all time. |
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Author:
Ralph Byrns |
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Economics
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