What Went Wrong with Walras? The Econometric Transformation Process of Walrasian Economics during the 1920s and 1930s

Abstract

This paper will address the issue of the reception and transformation of Lé on Walras’s work among some econometricians during the 1920s and 1930s. As set out in the paper, the reception of Walras’s work is related to the importance of the role of statistics, the dynamic representations of a changing reality and the consistency of simultaneous equations modelling.

The main contribution of this article lies perhaps in detecting these (different) reasons ‘what went wrong with Walras’ but should also be seen in the light of an extrapolated discussion of the current relevance of Léon Walras work and his legacy for modern political economy.

The conclusion is that the reception of Walras’s work by the early econometricians (statisticians and mathematicians together) was lukewarm, partly because it represented the wrong ideas and partly because of ignorance. When and where Walras’s work was discussed it was mainly as a starting point to illustrate the relevance of the changes suggested by the newly founded econometric discipline. At the end of the day, this may illustrate the development of the economic discipline, but perhaps even more importantly it may reveal the need for weaving Walras’s applied and social economics into our present-day Walrasian texture.