Introduction
Leon Walras is often assumed, at least implicitly, to be a welfarist on the grounds that his work is generally considered to be the origin of the first social welfare theorems and therefore a forerunner of Pareto optimality (Sections 5.1 and 5.2).
This chapter argues that such a view contradicts the basic foundations of Walras’s economic and social philosophy and especially his conceptions of society (Section 5.3) and of individuals (Section 5.4). If we take seriously Walras’s distinction between “general social conditions” (“conditions sociales generales”) and “specific personal positions” (“positions personnelles particulieres”), we can develop an alternative interpretation of his views on welfare (Section 5.5), which leads in turn to a different, non-welfarist, conception of the Walrasian view of the state (Sections 5.6 and 5.7). But first, it is helpful to consider the standard view in a little more detail.The modern Theory of General Economic Equilibrium (GEE) has always considered the contribution of Leon Walras as one of its main sources of inspiration. This view is expressed, for instance, by Kenneth Arrow and Frank Hahn at the very beginning of their book, General Competitive Analysis. Characterizing their own kind of approach, they wrote that their contribution belonged to
a long and fairly imposing line of economists from Adam Smith to the present who have sought to show that a decentralized economy motivated by selfinterest and guided by price signals would be compatible with a coherent disposition of economic resources that could be regarded, in a well-defined sense, as superior to a large class of possible alternative dispositions. (Arrow and Hahn, 1971: vi)
They also added that their book and therefore this “line of economists” was “concerned with the analysis of an idealized, decentralized economy. In particular, it is supposed, in the main, that there is perfect competition and that the choices of economic agents can be deduced from certain axioms of rationality” (Arrow and Hahn, 1971: v).
In 1995, Roger Guesnerie also noted:
It is useful to come back to what I consider an exemplary effort and a success story of contemporary mathematization, namely the studies of competitive equilibrium in the tradition - already formalized - of the Lausanne School.
The exacting rigour applied to examining the logical validity and scope of the propositions has transformed the Walrasian model into the Arrow-Debreu model, thus making it what is in a certain way a construction without equivalent in the social sciences.... In my opinion, the results of this study belong to the heritage of the discipline.... And even more essentially, by purifying and clarifying the message of the Lausanne School models, contemporary formalization has even more clearly brought out its central position in the economist’s “software.” (Guesnerie, 1995/1997: 97-98/90)General equilibrium theorists such as Arrow, Hahn and Guesnerie did not praise Leon Walras only for his use of rational choice, his mathematical formalization and for his representation of decentralized market economies. He was also credited with having developed a theory of the maximization of social satisfaction that today is widely interpreted as one of the first formulations of the first theorem of welfare economics, once it is assumed that a competitive GEE was also a Pareto-optimal or efficient state (see, for instance, Rebeyrol, 1999: 74). However, although it is widely held, this interpretation of Walras is far from being obvious and was criticized a long time ago by Jaffe (1977/1983). It needs to be revisited in order to draw out its consequences in the light of recent works that have contributed to the reconsideration of Walras’s broader contribution to economics and social science. In particular, it has important implications for the way we view Walras’s conception of welfare.
5.2