The Evolutionist Economics of Leon Walras

Albert Jolink

• Publisher: Routledge
• Year: 2005
• Print ISBN: 9780415098243
• eBook ISBN: 9781134961696
• Topic: Business
• Subtopic: Business General
• Index: Business

This study offers a new perspective of Walras' pure, applied and social economics. Through archival research at the University of Lausanne, Jolink considers Walras' ideas on philosophy and philosophy of science based on a newly constructed taxonomy. Walras' work is placed in a broader context by stressing the nineteenth century cultural and historical background in which he lived. This further gives an insight into the relationship between the romanticism of the early nineteenth century and logical positivism of the twentieth century.

1

EVOLUTION AND PROGRESS

EVOLUTION DEFINED

The idea of evolution in modern economics is generally regarded as a derivative of the biological analogy. To some extent this is too specific. Although the entry ‘evolution’ in The New Palgrave is connected to ‘natural selection’, this is only to indicate the adaptive traits of the idea of evolution. In this respect, ‘evolution’ may set a framework for conceptualization of ‘adaptations’ and need not be confined to the specific objective of biology.

The idea of evolution as a general concept, rather than as its biological specification, is widely used in economic, social, philosophical and historical literature. In most cases, however, ‘evolution’ is used in a mixed composition of different elements. The elements which can frequently be observed, and which can be placed in a hierarchy (Lewontin 1968) are: change, order, direction, progress and perfectibility.

The hierarchy, here, can be seen as one of an increasing degree of moral intention. In the elementary stage, the concept of evolution merely implies ‘change’. The differentiation that is made in this case is between a static world view and an evolutionary world view. In European social history prior to the eighteenth century the world view was considered to be mainly static. Society and the relations within it were characterized by fixity and, to some extent, stability. As the influence of industrial or bourgeois revolutions amended the conditions in society, ‘change’ became the rule. Evolution, then, implied the idea of continual change possibly following fixed laws.

A second element to be included is the idea of ‘order’. While the concept of evolution above embraces continual change, change itself does not necessarily imply the concept of evolution. Following this line of thought, the idea of evolution is further specified by including the premiss that change leads to a transformation of what existed before. In the case of a social organization, the evolutionary process leads to the transformation of the existing society into a new social organization. Whether this new social organization be a rearrangement, or a redistribution, of existing social components or something completely new remains undefined. In any case, the assumed outcome of the evolutionary process is order rather than chaos.

Once the transformation premiss is accepted, the question about the direction in which the transformation takes place follows naturally. By stressing the direction, the evolution of, say, a social organization describes the history of that society. As such, one could think of evolution as passing through successive stages, or a ‘changeful sequence’ (Lotka 1956). Each consecutive stage is related to earlier stages from which it has evolved. When and how one stage transforms into a next stage is thereby subordinate to the question of direction. As will be explained in the next section, the evolution of society in terms of a change from a stage of hunting and gathering to a stage of agriculture, and from a stage of agriculture to a stage of industry, stresses the direction of the evolution rather than the actual process of transformation.

A derivative from the matter of direction is whether the direction is reversible or irreversible. In the reversible case, it would be possible to imagine evolution as a process of continual change in which the transformation could give rise to an earlier variety. At this point of defining evolution one could speak of a reversal rather than regression or degeneration, as we shall see below. It therefore seems quite a dramatic step to define evolution as an irreversible process of continual change. In this irreversible case the transformation is a unidirectional one in which, say, the new social organization cannot be transformed into an earlier or older social organization.

Only in the presence of the idea of evolution as an irreversible change it seems possible to speak of progress. With the introduction of the element of progress, however, a moralistic undertone is brought in. This moralistic undertone is manifested in the question whether the change in the evolutionary process has led to an improved state. The improvement could apply both to the indivi dual or to the collectivity. In an eighteenth-century society, in which a man from modest descent could improve his social status, change may even be conflated with progress. Evolution in this context is regarded as a process of improvement and, to some degree, natural selection.

A final element in the process towards defining evolution is the element of ‘perfectibility’. The element of perfectibility adds the end terms towards which the evolution is likely to proceed. The continual change, therefore, is not only an improvement but could ultimately lead to an Utopian state. In my definition of perfectibility, I will add an element of ‘intention’: perfectibility implies a deliberate intention, through human intervention, to change the object to be perfected. In the case of a society, ‘perfectibility’ refers to deliberate human actions intended to improve their surroundings. As we will elaborate in the following sections and in Chapters 2 and 3, the element of perfectibility will play a dominant role in the understanding of the context of Walras’s work. In its connection to Walras’s work we will therefore define evolution as a process of continual, progressive change leading to predetermined, though often Utopian, end terms. In this definition of evolution, several stages in the development of society can be described. These stages in the history of civilization are neither fact nor theory, but merely organize the concept of evolution in terms of progressive change. We will refer to an ‘evolutionist’ theory rather than evolutionary theory when history is regarded ‘as development, as progress, as a succession of stages of increasing complexity or perfection’ (van Parijs 1981, p. 51). We will therefore leave references to evolutionary theories aside.

STAGES IN THE HISTORY OF ECONOMICS

With evolution defined as a succession of stages of increasing perfection the fundamental thought is that of ‘history in stages’. If we deal with the history of societies or of civilization, as in the remainder of the book, societies are assumed to go through different stages with different characteristics. It is inadequate to describe this evolution of societies, however, when the process has no scale of reference. Thus, it seems meaningless to describe the successive stages of the history of civilization without indicating which common element varies. In this section we will elaborate on a scale of reference that will characterize the conception of stages in the history of economics.

In his history of economics Meek (1976) has given an elaborate framework of the conception of history of eighteenth-century economists which had, as he claims, remained unnoticed by modern historians of economics. This framework, which Meek labelled ‘the four stages’ theory, seems to voice a longstanding tradition in looking for laws in history which originates in the thinking of the Enlightenment.

The basic idea underlying the four stages theory is that the successive stages are founded on different economic modes of subsistence. On the basis of these modes of subsistence, such as hunting or agriculture, several stages in the history of civilization can be formed. The important point here is the economic scale of reference, which, as we shall see, has a tradition in economic science which lasts until far into the nineteenth century. Although several examples can be found in the literature on the evolution of societies which cite either more refined or less detailed categories, the general idea of successive stages on an economic basis remains the same.

The search for laws in history was inspired by the preoccupation of Cartesian science with laws and uniformities in an apparently chaotic world. This search was partly based on inferences drawn from cultural differences among the different continents. In particular the Indians of ‘the Americas’ and the conditions they lived in aroused the fantasy of historians and philosophers stressing the cultural similarities between the modern ‘savages’ and the primitive ancestors of the civilized world.

Meek (1976) distinguishes three ‘streams of thought’ giving rise to the four stages theory entering economics, one through Smith and the other two through Turgot. The first stream is the GrotiusPufendorf-Locke stream, which mainly goes into the historical origins of property. The idea here is that changes in the mode of subsistence are the chief cause of changes in property rights and are therefore also the chief cause of changes in society. Meek argues that Adam Smith can be placed in this tradition. The second ‘stream of thought’ is represented by those works that emphasize the role of God in the making of history. Its major representative is J.B. Bossuet who wrote his Discours sur l’histoire universelle in 1681. In the Discours Bossuet distinguished twelve successive cultural or religious epochs. The third stream distin guished by Meek focused on the progressiveness of philosophy, literature, and arts and sciences since the classical times. One could mention Fontenelle’s The Origin of Fables in this respect. According to Meek, Turgot was mainly influenced by the second and third ‘streams of thought’. As set out by Pesciarelli (1978) the four stages theory was not at all confined to Britain and France. Representatives of the four stages theory in Italy, such as Giambattista Vico, already published their ideas in the early eighteenth century. My concern in this book, however, is not so much the prehistory of the four stages theory but the framework of stadial types the four stages could provide and what the consequences of this framework could be, in particular for the economics of Walras. It therefore seems worthwhile to go into Turgot’s and Smith’s framework of the four stages theory in some more detail.

According to Du Pont de Nemours, Turgot paid Bossuet the honour that seemed appropriate to the quality of the work, although Turgot regretted that the Discours sur l’histoire universelle lacked original views, reason and true knowledge. Bossuet’s historical importance is therefore suggested to lay in his role as whipping-boy for Turgot and other philosophes. There are major differences between Bossuet’s and Turgot’s stadial theories which made the latter’s version more acceptable from a scientific point of view. In the first place, Turgot preferred to give a secular account of the historical developments as opposed to the biblical version in Bossuet. In the second place, and of greater concern for this book, Turgot emphasized progress rather than simply temporal sequence. Both elements entered into Turgot’s Plan de deux discours sur l’histoire universelle.

In his Plan, Turgot unfolds a four stages theory. Starting from the beginning, ‘without provision, in the middle of the forest’, man can do little more than to try to survive. Since the wild fruits will prove to be insufficient man will have to hunt animals to survive. Hence, small groups of people, dispersed over the earth will each have their own territory to hunt. This is what Turgot calls the hunting stage. After a lapse of time man will find it much more convenient to group certain animals in herds and domesticate them rather to run after wild animals. This will be the pastoral stage. The shepherds and their families will find themselves assured in their subsistence and their number will grow. The shepherds living on fertile lands and aided by draught-animals will start to cultivate the land. This is what Turgot calls the stage of (agricultural) labourers. The hunters who are deprived of either fertile land or animals will remain hunters.

According to Turgot the labour in agriculture will create a surplus value. Because of this surplus value only a few agrarians will be able to supply the food to a larger group. Others will therefore be able to specialize in other trades and live in villages and towns. In this manner commerce can arise and the first signs of inequality among men will become apparent.

In Turgot’s Plan small nations will grow into larger nations and the first discord between groups will arise leading them into wars and conquering. Through their activities the land-labourers are richer than other people and will therefore have to defend themselves against violence. Turgot believes governments have an important function here.

Turgot’s formulation of the four stages theory in his Plan serves above all to explain the formation of nations and governments. The modes of subsistence described in Turgot’s four stages theory explain why certain political constitutions reign at one stage and why this political constitution is adjusted in a different stage. The discussion, therefore, mainly takes place on a national, or macroeconomic, level.

In Smith’s version of the four stages theory the discussion centres around the origin of property rights. From the beginning, with ‘10 or 12 persons of different sexes settled in an uninhabited island’, man will pick wild fruits and hunt animals for his support. This is Smith’s age of hunters. However, when the number of people has increased, hunting may exhaust the available animals, so man will try to tame some of the animals in order to secure a living. Smith calls this the age of shepherds. As society evolves the amount of people will grow; in the end, however, their herds will be insufficient to support the population. Man will therefore turn to agriculture and society will gradually advance into the age of agriculture. In this process of evolution a specialization of arts will take place giving rise to a surplus. Because of this specialization people will produce more than necessary for their own support and will exchange the surplus for other commodities they needed but did not produce themselves. ‘Thus’, Smith concludes, ‘at last the Age of Commerce arises.’

In Smith’s four stages theory the framework serves to explain the changes in the laws and regulations with regard to property. In this account the role of the government is an important one, but, as it seems, only to secure the individual’s property rights and thus enable further progress.

Laws and government may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and preserve to themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence.

(A. Smith 1762, quoted by Meek 1976, p. 123)

As set out by Meek (1976), the four stages theory in economics gradually changed its character as time went by. As economic science gradually retreated from the sociological and historical areas, the four stages theory was recast into a backward projection of the capital accumulation process. In the late eighteenth century and early nineteenth century, the four stages were classified according to the use of, and access to, capital. The resulting historical outlook arose out of a Whiggish attitude, in which the commercial stage arose out of a gradual increase over time in the division of labour, exchange and capital accumulation. The economic activities of the commercial stage were thus confirmed by the developments of the pre-commercial stages.

In the mid-nineteenth century, the four stages theory usually took the form of a theory of development, although by then the stadial descriptions were only subordinate parts of the theoretical works. Partly, this was due to a concentration on the workings of the commercial society; for the other part, the differentiation of the various stages was often inapplicable in reality. Simultaneously, the concentration on the modes of subsistence gave way to an array of criticisms on the question of property and property rights. The criticism opened the way for any suggestion of political, economic, or social reform which would remedy the detected imperfections of society.

The four stages theory, as developed in the works of Turgot and Smith, thus, displayed similarities but also differences as time went by. In terms of the definition of evolution given above, both versions of the four stages theory embraced the elements of ‘change’, ‘order’ and ‘direction’. The difference in emphasis, already between Turgot and Smith appears to be manifested in the elements of ‘progress’ and ‘perfectibility’. The question whether the four stages theory may or may not include an element of improvement will be discussed in the next section.

FROM NATURAL ORDER TO SOCIAL CONSTRUCT

It may be argued that the four stages theory is completely compatible with ‘progress’, or even ‘perfectibility’. This statement, however, requires substantial refinement. At the risk of pretending to give an exhaustive overview of Western eighteenth-century social orderings, w...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Dedication
• Contents
• List of figures
• Preface
• List of abbreviations
• Introduction
• 1 Evolution and Progress
• 2 The World According to Walras
• 3 Indications of Philosophy
• 4 Indications of History
• 5 Indications of Science
• 6 The Elements
• 7 The Applied
• 8 Economics of Transition
• 9 From Romanticism to Logical Positivism
• Notes
• Bibliography
• Index