Concluding Remarks

Our conclusion is rather simple. There are two ways of considering the Walrasian conception of welfare economics and of the welfare state.

The first derives from the interpretation Pareto and Schumpeter gave of Walras’s contribution to economics in their days: pure economics has to be entirely disconnected from social and applied economics; it is the only field in Walras’s works that deserves to be considered as a major source of future advances, in spite of Walras’s errors and hesitations.

A second way, arguably more faithful to Walras, was opened up by William Jaffe and consists in trying to understand the consistency and unity of Walras’s global economic and social message. In this context, pure economics cannot be disconnected from social and applied economics; this necessary connection is the only way to really understand the methodo­logical, philosophical and analytical foundations of pure economics. If we adopt this route, then there is little to be found in Walras concerning welfarist welfare economics. Paradoxically, however, it leads us to find in Walras some of the first characteristics of the welfare state in a period, in a country and in a kind of political economy that were entirely dominated by the French Liberal School of the time (Breton and Lutfalla, 1991). This conception of the welfare state is present in Walras’s Economie appliquee and concerns many issues compatible with the French notion of “Etat- Providence” born in France in the 1860s and developed after World War II. For example, when discussing competition and markets Walras argues that it is necessary to distinguish private goods that concern individual agents within markets, and public goods that concern individuals as members of the community or the state itself. This distinction also generates the difference between “economic” and “moral monopolies” (translation from the French expression “monopoles moraux” used by Walras in L’Etat et les Chemins de Fer in 1875).

A systematic and unified investigation of all these themes would enable us to understand better Walras’s conception of the state and view of economic policy, but such an investigation is beyond the scope of this chapter because much of the necessary work has still to be done. However, what we have done in this chapter is enough to make a strong case that the main preoccupation of Walras in this field is more closely related to the twentieth-century concept of the welfare state than it is to the so-called welfare theorems. It concerns people not just as rational individual agents but as members of communities (note the parallel with Richard Musgrave’s focus on communities, discussed in this volume, Chapter 10). Hence Walras should not be seen as welfarist, not least because he took seriously the practical conditions for the realization of the “Social Ideal.”