The founder: Leon Walras

Upon his installation, Walras asked for his position’s brief to be amended so as to make it consistent with the scientific project he had developed in the early 1860s and pursued all his life: “discovering the natural laws of value and of wealth, together with the moral laws governing the fairest distribution within the most abundant production” (Walras 1863: 159).

Upon his arrival in Lausanne, besides preparing his teachings (whose trace is to be found in his Cours, Walras worked hard on the first volume of his triptych, the Elements d’economie politique pure (Elements of Pure Economics), whose first issue consisted of three sections released in 1874. The second instalment of the Elements was released in 1877 and contributed two extra chapters to the construction of the general economic equilibrium: next to the exchange of several commodities for one another and the circu­lation of money, Walras added the equations of production and those of capitalization. However, Walras was not satisfied with the resulting architecture and unconvinced by his own theory of money. Indeed, issues related to circulation and credit figure promi­nently in his subsequent research in pure economics, and beyond. Since the Elements were completed, Walras focused his work on applied economics (where the problems of money and credit remain central) and social economics, with his studies on the “Realisation de l’ideal social” (Realization of the Social Ideal) via land repurchase by the state and the abolition of taxation.

In 1889, the second edition of Elements was released, where the general economic equilibrium was presented in a logic of increasing complexity (an exchange economy with two goods and later several ones, an economy with production, an economy with capitalization and credit, and an economy with money) and whose last volume presents a section related to “considerations on the consequences of economic progress”. This structure, whose justification regarding the general economic equilibrium was educa­tional, was never modified. Not surprisingly, in terms of content, the most important contribution of this second edition is the theory of money, revised and expanded through the addition of two chapters on bimetallism.

In 1890, the Academy eventually became the University of Lausanne. Two years later, Walras requested early retirement for health reasons and his succession was therefore open. He first proposed the chair to Ladislaus von Bortkiewicz, who turned it down as he hoped to succeed Professor Yuly Edwardovich Yanson in Saint Petersburg. Following this refusal, Walras turned to Vilfredo Pareto, whom he had met the year before through Maffeo Pantaleoni.