Sunday, 5 May 2013

Friedman on Walras

From Milton Friedman, "Leon Walras and His Economic System", American Economic Review, December 1955.
I am tempted, in concluding this rather discursive commentary, to paraphrase Mill's comment that "A person is not likely to be a good economist who is nothing else." A person is not likely to be a good economist who does not have a firm command of Walrasian economics; equally, he is not likely to be a good economist if he knows nothing else.
Seems a reasonable point.


Matt Nolan said...

That is a really good quote, hadn't heard it before!

Paul Walker said...


I would argue that Friedman saw value in Walras's work but also saw limitations. The two paragraphs before the one I quoted read:

"Walras has done more than perhaps any other economist to give us a framework for organizing our ideas, a way of looking at the economic system and describing it that facilitates the avoidance of mistakes in logic. It is no derogation of this contribution to emphasize that it is not by itself enough for a fruitful and meaningful economic theory; division of labor is appropriate in economic theory too. Economics not only requires a framework for organizing our ideas, it requires also ideas to be organized. We need the right kind of language; we also need something to say. Substantive hypotheses about economic phenomena of the kind that were the goal of Cournot are an essential ingredient of a fruitful and meaningful economic theory. Walras has little to contribute in this direction; for this we must turn to other economists, notably, of course, to Alfred Marshall.

The large and substantial immediate rewards from Walras' concentration on form; the prestige and intellectual appeal of mathematics; the difficulty of making experiments in economics and the consequent laboriousness and seeming unproductiveness of substantive work devoted to filling in our analytical filing boxes-all these have combined to favor the Walrasian emphasis on form, to make it seem not only an essential part of a full-blown economic theory, but that economic theory itself. This conception-or misconception-of economic theory has helped to produce an economics that is far better equipped in respect of form than of substance. In consequence, the major work that needs now to be done is Marshallian rather than Walrasian in character itself a tribute to Walras' impact."

Matt Nolan said...

I'll have to hunt down the paper, seems like a must read!