Léon Walras facts for kids
Quick facts for kids
Léon Walras
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| Born | 16 December 1834 Évreux, Upper Normandy, France
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| Died | 5 January 1910 (aged 75) Clarens, now part of Montreux, Switzerland
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| Field | Economics Microeconomics |
| School or tradition |
Lausanne School Marginalism |
| Alma mater | École des Mines de Paris |
| Influences |
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| Contributions | Marginal utility General equilibrium Walras's law Walrasian auction |
Léon Walras (born December 16, 1834 – died January 5, 1910) was a French economist. He used mathematics to study how economies work. Walras helped create the idea of "marginal theory of value." This idea explains how much people value an extra unit of something.
He also started the "general equilibrium theory." This theory looks at how all markets in an economy can balance out at the same time. Walras is famous for his book Éléments d'économie politique pure. This book used a lot of math to explain economic ideas.
Walras believed that buying and selling only happen after a "trial and error" process. This process, called tâtonnement, helps markets find the right prices. A famous economist, Joseph Schumpeter, called Walras "the greatest of all economists." This was because Walras showed how a whole economy could reach a balance.
About Léon Walras
Walras's father, Auguste Walras, was a school administrator. Even though he wasn't a professional economist, his ideas influenced his son. He thought that the value of goods came from how rare they were compared to what people wanted.
Léon Walras went to a mining school, the École des Mines de Paris. But he didn't like engineering very much. Before becoming an economist, he worked in many different jobs. He was a bank manager, a journalist, and even wrote romantic novels. Later, he became a professor of economics at the University of Lausanne.
Walras also cared about making society better. Like a group called the Fabians, he thought the government should own land. He believed that land would always become more valuable. The money from renting this land could support the country without needing other taxes. He also thought other taxes could hurt the economy.
Another person who influenced Walras was Augustin Cournot. Cournot was a friend of Walras's father. Through Cournot, Walras learned about using logic and math in economics.
Walras is known for starting the Lausanne school of economics. He did this while teaching at the University of Lausanne. His student, Vilfredo Pareto, continued his work there.
For a long time, many economists didn't know about Walras's work. This was because most of his books were only in French. Also, his ideas were very mathematical and complex for people back then. But in 1954, his main book was translated into English. This helped more people understand his important ideas.
Walras was one of the three main thinkers of the "marginalist revolution." This was a big change in how economists thought about value. He developed his ideas on his own. He didn't know the other two main figures, William Stanley Jevons and Carl Menger.
Walras's Main Ideas
Walras's Law Explained
Walras's law is a simple but powerful idea. It says that if you add up all the extra demand or supply in every market, the total will always be zero. Imagine you have many different markets, like for shoes, food, and toys. If there's too much demand for shoes, there must be too much supply (or not enough demand) in some other market.
This means if all markets except one are perfectly balanced, then that last market must also be balanced. It's like a seesaw: if one side goes up, another side must go down to keep the total balance.
General Equilibrium Theory
In the 1870s, Walras published his most famous work. It was called Éléments d'économie politique pure. This book made him known as the "father of general equilibrium theory."
His main goal was to answer a big question: Can all markets in an economy be in balance at the same time? People already knew that prices could balance supply and demand in one market. But it wasn't clear if this could happen for all markets together.
Walras created a math model to show this. He imagined a perfect market where prices and products adjust automatically. He started by looking at how people trade goods. He showed that the value of what is sold must equal the value of what is bought.
He also explained how to find absolute prices. You pick one good, called a numeraire, to measure all other prices against. For example, if bread is the numeraire, you measure the price of milk in units of bread.
Walras then added production to his theory. He showed how the prices of things needed to make goods also adjust. He used four sets of equations to describe:
- How much of each good people want.
- How the price of goods relates to how much they cost to make.
- How much of each input (like labor or materials) is available.
- How much of each input businesses need.
He also had four sets of things to figure out:
- The price of each good.
- How much of each good is sold.
- The price of each production input.
- How much of each input businesses buy.
Walras added one more important idea: Walras's law. This law says that all money received must be spent. This helped him show that a general balance could exist for the whole economy.
Walrasian Auction
A Walrasian auction is a special type of auction. In this auction, everyone tells the auctioneer how much they want to buy at every possible price. The auctioneer then finds the price where the total amount people want to buy exactly matches the total amount available.
Walras believed that markets reach this balance through a process of "trial and error." He called this tâtonnement. It's like slowly adjusting prices until supply and demand meet perfectly.
What is Economic Value?
Léon Walras had a specific way of defining economic value. He said that something is useful if it can serve any purpose or meet any need. He didn't think about whether the need was good or bad.
For example, he said a substance is useful if a doctor uses it to heal someone. It's also useful if a criminal uses it to harm someone. From an economic point of view, both uses show that the substance has value because it can fulfill a purpose. The morality of the use doesn't change its economic usefulness.
In economics, "value" is different from how we use the word in everyday life. It's not about what's morally good or bad. It's about how useful something is to meet a need.
Walras's Legacy
For many years, Walras's work wasn't well-known in English-speaking countries. This was partly because he wrote in French. Also, his use of complex math made his ideas hard for many people to understand.
But later, his work became very important. Many German-speaking scientists helped spread his ideas.
The famous economist Joseph Schumpeter had high praise for Walras. He said that Walras was "the greatest of all economists." Schumpeter believed Walras's ideas about economic balance were as important as major discoveries in physics.
Major Works
Éléments d'Économie Politique Pure
This book, published in parts in 1874 and 1877, is Walras's most famous work. Its full title means "Elements of Pure Political Economy, or Theory of Social Wealth."
Walras planned for this book to be the first of three parts of a larger study. The other parts would cover applied economics and social economics.
The book had several editions over the years. Each new edition made some changes and additions. The third edition (1896) is often seen as the best one.
The book was translated into English in 1954 by William Jaffé. This translation, called Elements of Pure Economics, helped many more people learn about Walras's ideas. Another translation was made in 2014.
Other Works
- Francis Saveur, 1858.
- "De la propriété intellectuelle" (On Intellectual Property), 1859.
- "Paradoxes économiques I" (Economic Paradoxes I), 1860.
- "Théorie critique de l'impôt" (Critical Theory of Taxation), 1861.
- De l'impôt dans le Canton de Vaud (On Taxation in the Canton of Vaud), 1861.
- "La bourse et le crédit" (The Stock Exchange and Credit), 1867.
- "Correspondance entre M. Jevons, professeur a Manchester, et M. Walras, professeur a Lausanne" (Correspondence between Mr. Jevons, Professor in Manchester, and Mr. Walras, Professor in Lausanne), 1874.
- "Un nuovo ramo della matematica. Dell' applicazione delle matematiche all' economia politica" (A New Branch of Mathematics. On the Application of Mathematics to Political Economy), 1876.
- Théorie mathématique de la richesse sociale (Mathematical Theory of Social Wealth), 1883.
- "Notice autobiographique de Léon Walras" (Autobiographical Note by Léon Walras), 1893.
- Études d'économie sociale; Théorie de la répartition de la richesse sociale (Studies in Social Economics; Theory of the Distribution of Social Wealth), 1896.
- Études d'économie politique appliquée; Théorie de la production de la richesse sociale (Studies in Applied Political Economy; Theory of the Production of Social Wealth), 1898.
- "Théorie du crédit" (Theory of Credit), 1898.
- "Sur les équations de la circulation" (On the Equations of Circulation), 1899.
- "Cournot et l'Économique Mathématique" (Cournot and Mathematical Economics), 1905.
- "La Paix par la Justice Sociale et le Libre Échange" (Peace Through Social Justice and Free Trade), 1907.
- L'état et le chemin de fer (The State and the Railway), 1875.
- "Leone Walras, Autobiografia" (Léon Walras, Autobiography), 1908.
- "Un initiateur en économie politique, A.A. Walras" (A Pioneer in Political Economy, A.A. Walras), 1908.
- "Économique et méchanique" (Economics and Mechanics), 1909.
- Correspondence of Léon Walras and related papers (edited by William Jaffé, 3 vols.), 1965.
See also
In Spanish: Léon Walras para niños
- Léon Walras at Wikipedia France
- Walras's law
- Walrasian auction
- General equilibrium
- Cost the limit of price
- Progressive theory of capital
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