The Economist Dupuit on Theory, Institutions, and Policy: First of the Moderns?

Public utility is the principle, the basis, the foundation, not only for property, but for taxation, for law, because society makes stipulations that are in the public interest. The debate between justice and utility is of immense scientific importance.

--Jules Dupuit, "Du principe de propriété"

Whoever will take the trouble to look at the whole of the studies or even at the rapid sketches left by Mr. Dupuit will readily recognize that his total work reveals an intelligence whose scope surpasses many men whose names are more well known to the public than his own. . . . Mr. Dupuit's reputation, far from having to fear something from time, will probably owe it much.

--E. Lamé Fleury, "Economistes contemporains"

Almost half a century ago the great ideational historian Joseph J. Spengler proclaimed, with good evidence (1954), Richard Cantillon (1680?-1734) the "first of the moderns." Cantillon was, for all intents and purposes, the forerunner of classical economics in spite of the fact that he lived firmly in the "mercantile" time line. In this article I advance the case that the engineer Jules Dupuit (1804-1866) was a neoclassical-contemporary economic thinker ensconced in the classical age. ¹ Dupuit has long been characterized, correctly and along with the American A. T. Hadley, as one of the two most important transport economists of the nineteenth century. And beginning with F. Y. Edgeworth, he has, over the present century, been recognized for the discovery of seminal areas of pure economic analysis. These contributions, contained mainly in three essays ([1844] 1952, [1849] 1962, and 1849), include no less than the following: the discovery of marginal utility theory as the fundamental behavioral postulate of economics, demand theory, the concept of full price, welfare economics, monopoly theory, the theory of price discrimination, quality differentiation (and distortion), spatial pricing, the focal role of entrepreneurship, and a theory of the competitive adjustment mechanism. Such purely theoretical inventions, constituting nothing less than the essentials of microeconomic theory, have been and are being explored elsewhere. ²

A more inclusive and contemporary side of Dupuit has been entirely neglected. Dupuit as the holistic scientist and integrator of theory, legal institutions, and policy has never come to light, owing to the total neglect of a brilliant series of essays and communications. These contributions on institutions and economic policy were published mainly in the Journal des économistes between 1850 and 1865, the year prior to his death. ³ In these papers and in his 1861 book La liberté commerciale, Dupuit focused solely on economic questions and became the "complete economist," portraying utility as not only the core of the economic universe but the unifying force behind policy and institutions as well as theory. ⁴ In short, he believed that pure economics was both a theoretical and an empirical science that should be accepted by all (1863a, 1863b, 1863c, 1863d), that economic institutions and policy questions are matters of economics as a "positive science" (1861c, 113), and that utility and its rationale in empirical investigation were the foundations of that science. Far more than simply a railway practitioner or a dabbler at the periphery of economics, Dupuit was one of the soundest scholars of the premodern period. These achievements have been obscured by the fact that Dupuit's writings, including those of his later years, were not then and have never been collected in book form.

Dupuit accomplished the integration of economic theory with institutions and policy in a context of empiricism, with several related innovations: (1) the creation of property rights assignments as the center of incentive-based economic outcomes; (2) the invention of central principles of public choice and interest group analysis as the source of all government interventions (e.g., regulations, taxes, tariffs); and (3) the placement of a utility maximand, demand revelation, and empirical study at the center of a theory of economic...