Walras

Léon Walras (1834–1910) was a French economist who helped establish general equilibrium theory. A professor in Lausanne, he developed a mathematical framework to analyze how supply, demand, and prices interact across all markets in an economy. His major work, Elements of Pure Economics, published in the 1870s, laid the formal groundwork for modern microeconomics and price theory.

Walras introduced the concept of a general equilibrium: a set of prices at which every market clears, meaning that quantity supplied equals quantity demanded. He formalized systems of simultaneous equations to represent the interdependencies among goods and factors of production. The central idea is that the entire economy moves toward an equilibrium price vector that balances all markets.

The estimated price adjustments in Walras’s model, often described as tâtonnement or “groping,” are hypothetical. Prices adjust without actual trades until markets clear, distinguishing Walrasian theory from processes with immediate exchange. His framework influenced later neoclassical economists and thinkers such as Vilfredo Pareto and Kenneth Arrow and Gérard Debreu, who extended and formalized general equilibrium analysis.

Walras's work shaped modern microeconomics by providing a rigorous, general equilibrium foundation for value theory and resource allocation. Although later developments incorporated dynamics and uncertainty, the Walrasian model remains a core reference for understanding how prices coordinate multiple markets and how quantities adjust in an interconnected economy.