Walras, (Marie Esprit) Léon

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French economist and co-discoverer, with English economist William Jevons and Austrian economist Karl Menger, of marginal utility economics. Jevons's Theory of Political Economy (1871) was not well received when it appeared but it was read. Menger's Principles of Economics (1871) was both read and well received, at least in his own country. But Walras's Elements of Pure Economics (1874–77) was neglected everywhere despite his tireless efforts to get the book noticed. That was in part because Walras set himself a task that went beyond Jevons and Menger, his co-discoverers of marginal utility economics; namely, to write down and solve the first multi-equational model of general equilibrium.

Walras's comprehensive analysis of general equilibrium is built up step-by-step in a process of ever-decreasing abstractions, starting from the case of two-party, two-commodity barter to multi-party, multi-commodity exchange of given stocks of goods, to production and the markets for productive services, to saving and capital formation, and, lastly, the use of money and credit. His procedure in all cases was to write down the abstract demand and supply equations on the assumption of perfect competition, perfect mobility of the factors of production, and perfect price flexibility, and then attempt to prove the existence of a general equilibrium solution for this set of simultaneous equations by counting the number of equations and unknowns; if they were equal, he concluded that a general equilibrium solution was at least possible. This strictly static picture of the determination of equilibrium was then followed up by a quasi-realistic explanation of how the competitive mechanism might actually establish such an equilibrium.

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