Concluding Remarks

Since the early 1990s, most monographs about Leon Walras contain a section on his phi­losophy, and several articles have been published on this topic. More recently, alongside epistemological issues, Walrasian ontology has also been investigated and these aspects have been used to interpret his work, making it possible to elucidate two fundamental points.

The first point is the question of the referent of pure economics, that is, of the entity that general equilibrium refers to. Walras was greatly influenced by Etienne Vacherot, whose La metaphysique et la science ou principes de metaphysique positive (1858) used to be his “favorite bedside book”. Walras considers pure economics as a rational science, not an experimental science. From economic facts, the subject gets immediate percep­tions organized in real types. Freed by the abstraction process from their contingencies, real types become ideal types. Pure economics is the set of mathematical propositions obtained by deduction from ideal types (exchange value, for example) that determine the equilibrium price vector, under a hypothetical system of absolute free competition. The only “empiricist” aspect of his method is that it is grounded in facts, but the construction of ideal types is not achieved through an inductive process. “Collecting facts has nothing to do with a scientist’s work... it is a ragman’s job” (OEC XIII: 552).

Empirical analysis is also a posteriori dismissed, since a theory does not need verifica­tion (OEC VIII: s. 30). Moreover, regardless of the method used to confront theory with reality, the former cannot possibly be validated, because the “perfection, or the absolute, is the principal constituent of theory and science [but] imperfection, or that which is rela­tive, is the principal constituent of practice and art” (Walras, OEX IX: 15 [8]). In other words, reality is necessarily inadequate compared to science.

Ideal types are perfect, and capture the essence of things, or things per se. The resulting theory has strong foundations and can claim to stand as the true nature of the objects of knowledge. Walras asserts that essences exist, as do ideal types, and their knowledge is possible. He is a realist - in the philosophical sense of the word - both ontologically and epistemologically. However, the conceptual existence of ideal types precedes that of singular things, as essences are not yet completed in historical time, “the world is a reality that starts empirically and that afterwards returns and acts upon itself to organize itself according to a rationally generated ideal” (OEC XIII: 552). Thus, the referent of pure economics, of Walras’s general economic equilibrium, is an ideal cognitive product that has not yet achieved full correspondence in reality, but that will gradually materialize. This is Walras’s teleological realism, a realism that does not involve realisticness (Maki 1998).

The second point, which has to do with the relations between pure and applied eco­nomics, is closely linked to the first, because it is precisely through the materialization of the ideal that applied sciences play a crucial role. Applied economics points out provident reforms to implement sound practices, which are essential to the realization of the ideal economy, and to the materialization of essences. Applied economics provides the - institutional, not formal - conditions for the existence of the ideal as grasped by pure economics. Implicitly, applied sciences account for the gap between the historical appearance of phenomena and their essence. From this perspective, pure economics and applied economics are consubstantial in knowledge and Walras dodges the idealistic bias.

Finally, if, as suggested by Jaffe, we take into account the final purpose of Walras’s political and social economy - that is, the solution of the social question in its three facets - as well as the underlying ontology and epistemology, as called for by De Caro and Dockes, some controversial features in his thought can be explained. The ^tem­poral structure of Elements and the expulsion of disturbing (dynamic) factors from the general economic equilibrium are no longer understood as related to an inconsistency owing to Walras’s (declining) intellectual health, and some key concepts such as tatonne- ment become more intelligible. This approach makes it possible to remove a number of contradictions, such as that between neutral money as found in Elements and the money responsible for crises in applied economics, or between absolutely free competition and the unique entrepreneur. More generally, this interpretative line explains why Walras suggests reforms that seemed useless if the theory was accurate. In fact, these reforms are necessary for the pure theory to be true and so the state intervention is not conceived by Walras as limited to correct market failures.

Leon Walras’s political and social economy, as it emerges from recent studies, is rather distant from the Ecole de Lausanne general economic equilibrium, and this dis­tance can help us to understand the evolution of economic theory during the following 150 years.

Roberto Baranzini

See also:

Ladislaus von Bortkiewicz (I); Capital theory (III); Antoine-Augustin Cournot (I); Francis Ysidro Edgeworth (I); Formalization and mathematical modelling (III); Hermann Heinrich Gossen (I); General equi­librium theory (III); William Stanley Jevons (I); Carl Menger (I); Non-Marxian socialist ideas in France (II); Vilfredo Pareto (I).