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History of Political Economy 35.4 (2003) 655-678



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Ethics, Engineering, and Natural Monopoly:
The "Modern Debate" between Léon Walras and Jules Dupuit

Robert B. Ekelund Jr. and Robert F. Hébert


In political economy, as in all sciences whose principles
lend themselves to moral or physical demonstrations,
some questions are debatable and some are not.
—Jules Dupuit, 1863

In the 1986 Royer Lectures delivered at the University of California at Berkeley, Amartya Sen (1987) argued that economics sprang from two different origins, both related to politics, but in different ways. The first origin, which Sen calls the ethical approach, goes back at least to Aristotle. It relates economics to human ends and social achievement. The second, which he calls the engineering approach, is concerned primarily with logistical issues. It derives in part from technique-oriented analyses of statecraft, and in part from analyses of technical problems connected with the functioning of markets. Sen claims that Adam Smith was a major protagonist of the first approach, and Léon Walras was a major protagonist of the second.

This historical representation reflects a popular misconception about Walras, who is linked to the engineering approach to economics by virtue of his technical contributions to equilibrium theory. This popular view is flawed on two accounts. One, it underestimates the complexity of Walras's views on economics and thereby obscures his dominant interest [End Page 655] in what he called social economy. Two, it neglects genuine contributions to the engineering approach made by actual engineers, such as Jules Dupuit.1 A comparison between Dupuit and Walras suggests that Dupuit, not Walras, represents the engineering approach to economics, and that Walras represents the ethical, not the engineering, approach to economics.

Léon Walras is known to economists especially for his discovery of the laws of general equilibrium and for his role as precursor in the application of mathematics to economic theory. These were technical achievements of the highest order. But his forays into pure economics emanated from, and were directed by, his goal to define the ideal economy. His was mainly a philosophical inquiry, albeit a complex one, in which questions of pure theory were dominated by a social conception of mankind that focused on the interrelations between truth, justice, and interest (the last being identified with utility). In order to appreciate Walras's "global system" (see Dockès 1996), it is necessary to understand his distinction between pure economics on the one hand and applied economics and social economics on the other. The former describes what is, whereas the latter describe what ought to be, according to material well-being and justice, respectively. For Walras, the core issue of pure economics is the "natural law" of value in exchange; the core issue of applied economics is the theory and organization of production; and the core issue of social economics is the distribution of wealth.

Walras treated économie appliquée as both a theoretical inquiry and a practical exercise. He departed from his contemporaries in that they tended to equate the distinction between science and art with the distinction between theory and practice. Walras disagreed. He believed that the "art" of political economy had a theoretical dimension as well as a practical dimension.2 Insisting that applied science is art, Walras adopted [End Page 656] Adolphe Blanqui's view that the art of economics consists of establishing a program of what ought to be. But what ought to be from the point of view of material well-being (i.e., the object of applied political economy) is not necessarily what ought to be from the standpoint of justice. And that makes room for a third branch of economics, namely, social economics. The difference between pure economics and applied economics is that the former is a passive inquiry into the nature of idealized "facts," studied in their own right (Walras [1875] 1992, 408), whereas the latter is an active inquiry into the rules that govern the operation of an economy in conjunction...

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Additional Information

ISSN
1527-1919
Print ISSN
0018-2702
Pages
pp. 655-678
Launched on MUSE
2004-01-06
Open Access
No
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