French economist Marie-Esprit-Léon Walras (16 December 1834–5 January 1910) is best known for revolutionizing economics with his mathematical formulation of the mechanics of the price system. He presented equations that tied together theories of production, exchange, money and capital. His general equilibrium theory has come to be called "Walrasian general equilibrium" -- and is still very much a part of modern economic theory.
The history of economic thought credits Walras, Carl Menger and William Stanley Jevons with having established independently the subjective theory of value at roughly the same time.
Influence on economics
According to Rothbard: "since World War II, mainstream neoclassical economics has followed the general equilibrium paradigm of Leon Walras. Economic analysis consisted of the elaboration of the Walrasian concept of general equilibrium, in which the economy pursues an endless and unchanging round of activity—what the Walrasian Joseph Schumpeter aptly referred to as "the circular flow." Since the equilibrium economy is by definition a changeless and unending round of robotic behavior, everyone on the market has perfect knowledge of the present and the future, and the pervasive uncertainty of the real world drops totally out of the picture. Since there is no more uncertainty, profits and losses disappear, and every business firm finds that its selling price exactly equals its cost of production. It is surely no accident that the rise to dominance of Walrasian economics has coincided with the virtual mathematization of the social sciences.
- ↑ Mises.org ."Mistaken Identity", Mises Daily, January 11, 1999. Referenced 2011-05-26.
- ↑ Thomas C. Taylor. "An Introduction to Austrian Economics", Cato Institute, 1980. Referenced 2011-05-26.
- ↑ Murray N. Rothbard. Breaking Out of the Walrasian Box: The Cases of Schumpeter and Hansen (pdf), The Review of Austrian Economics, referenced 2011-05-26.