------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (December 2006)
Donald A. Walker, _Walrasian Economics_. New York: Cambridge
University Press, 2006. x + 357 pp. $80 (cloth), ISBN: 0-521-85855-0.
Reviewed for EH.NET by Roger E. Backhouse, Department of Economics,
University of Birmingham.
This aim of this volume is to complement Walker's earlier book,
_Walras's Market Models_ (1996), by placing that work in a broader
context. That book offered a detailed analysis of the general
equilibrium models found in the four editions of Walras's _Elements
of Pure Economics_. One of the main arguments of that book concerned
the phases in Walras's thinking, among which the most significant was
the deterioration that Walker identified in the quality of Walras's
theorizing after the second "greatest" edition of the book. The heart
of this book is a one-chapter summary of what Walker chooses to call
the "mature comprehensive model." This offers concise summaries of
the model's main components, of which the most important is the
analysis of market equilibrium and stability. Here we find a contrast
between the model that Walras was analysing and his equation system.
The former offered an account of processes outside equilibrium in
which the outcome was path-dependent. This contradicted the
equations. It was in response to the contradictions between his model
and his equations that Walras introduced the "written pledges
sketch." This was a model where the tatonnement was virtual. It was
the product of the last phase of his work.
To explain Walras's motivation in his mature comprehensive model,
Walker offers four substantial chapters on what may broadly be termed
his methodology. The underlying theme is that Walras was thoroughly
integrated into nineteenth-century thinking on scientific method, and
that he sought to apply those methods in his economic work. Here, the
main target is those who claim that Walras was an "arch-rationalist."
He was, Walker claims, a realist and an empiricist as well as a
rationalist and an idealist. His philosophy was based on a synthesis
of idealism and realism, being based not on ideal types but on real
types established by observation and experiment. Conclusions were
developed and compared with the results of observations. This was not
the hypothetico-deductive method, because it was based on an initial
process of induction. Thus the assumption of free competition was
made because he believed it was the best account of reality and as a
result his equations were derived "scrupulously" from reality. Thus
Walras's work on applied economics is important to understanding his
pure economics.
The book's other main theme is what happened to Walras's economics
after Walras. This is done in two chapters. The first, on his
contemporaries and immediate successors, discusses Vilfredo Pareto,
Knut Wicksell, Joseph Schumpeter, Henry Moore and Henry Schultz. The
treatment ranges from a detailed, and very informative, account of
Pareto, to a single-paragraph summary of Schultz. Schultz is perhaps
a surprising inclusion here, but Walker makes the point that he
showed great interest in the mature comprehensive model, and he had
nothing to do with the virtual equilibrium model. The other chapter
is on the story, better known to contemporary economic theorists, of
how the written pledges sketch was taken up, first by Gustav Cassel,
and then by Karl Schlesinger, John von Neumann and John Hicks (in the
latter case through reading Pareto rather than Cassel). Though
influenced by Walras, this tradition focused on the search for
logical consistency and failed to take account of the mature
comprehensive model.
This book is to be welcomed. Not only does it present, much more
clearly, the significance of Walker's meticulous examination of
Walrasian theory but it also points to some of the major areas of
disagreement. Opposing points of view are not analysed in detail, but
in pointing out where he believes others have gone wrong Walker
provides readers with the necessary references. The discussion of
Walras's influence is arguably much too brief. However, it makes
sense if we see it not as trying to tell a story that has been
discussed extensively elsewhere, but as trying to make a single,
fundamental point: that the influence of the mature comprehensive
model and that of the written pledges sketch need to be considered
separately. The legacy of the former lies not in the Arrow-Debreu
model but in non-tatonnement and computable general equilibrium
models.
A key part of Walker's argument is the conflict between Walras's
model and his equations, which did not fully capture that model, for
this was the source of the misinterpretation by subsequent
generations of economists for whom Walrasian economics was economics
with an auctioneer. The same could be said of the two other
economists who dominated twentieth century economics: Alfred Marshall
and Maynard Keynes. The Walras that Walker portrays would make an
interesting comparison with Marshall (for example their views on
human nature), which makes it disappointing that attention was not
paid to critics of Walras such as Milton Friedman (surely important
in understanding why his work was perceived as it was).
The remaining section of the book contains a valuable comprehensive
bibliography of Walras's writings and a chapter of bibliographical
remarks. However, perhaps the most significant aspect of the
literature on Walras is the absence of a biography comparable to
those we have on Keynes. It would have been impossible to reach the
understanding of Keynes that we have today without good biographies,
and perhaps the same is true of Walras. Walker discusses William
Jaffe's failure to write his once-planned biography. However, that
does not answer the question of why no one else has taken up the
challenge. Perhaps that is the next stage in coming to understand
Walras.
Roger E. Backhouse is Professor of the History and Philosophy of
Economics at the University of Birmingham and is currently Lachmann
Fellow in the Department of Philosophy at the London School of
Economics. He is the author of _The Ordinary Business of Life_
(Princeton University Press, 2002), alias _The Penguin History of
Economics_ (Penguin Books, 2002).
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Published by EH.Net (December 2006). All EH.Net reviews are archived
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