Money, Banks and Finance in Economic Thought

Numéraire, Workers, and the Tax system: Was Isnard a precursor of Walras?

Misaki Kayoko, Shiga University

This paper aims to reconsider the well-known similarities between the economic theories of A.N. Isnard (1748-1803) and Léon Walras (1834-1910) and to clarify how they reached completely opposing conclusions on economic policies. Isnard’s main work, Traité des Richesse (1781) was almost ignored by his contemporaries. However, after 100 years, it attracted attention from Walras and Jevons due to its mathematical analysis of the exchange values of commodities. In the 20th century, Isnard came to be regarded as a pioneer of mathematical economics. Jaffé emphasized his influence on Walras and insisted that Isnard was a precursor of general equilibrium theory. In his History of Economic Analysis, Schumpeter referred to the French tradition as the theoretical origin of general equilibrium model and connected Quesnay, Isnard, and Walras. However, there is no evidence that Isnard influenced Walras in the formation process of his general equilibrium theory. I checked the copies of Traité des Richesse at the Walras Library preserved at the University of Lausanne and found no evidence, either. In his comprehensive study of Isnard, At the origins of Mathematical Economics: The Economics of A.N. Isnard (1748-1803) published in 2006, Van den Berg provided the first detailed biography of Isnard and examined the influence of physiocrats to illustrate the real intentions of his work. According to Van den Berg, Traite’s exchange equations should be understood as a critique of physiocrats. Simultaneously, there is little originality in Isnard’s equations, contrary to the 20th century interpretations. The original intention of Isnard’s book was to analyse the fiscal and monetary system under the Ancien Régime and to propose new policies that deny Quesnay’s economic theory and policy. Inspired by Van den Berg’s research, this paper focuses on the totally different attitudes of Isnard and Walras towards physiocrats. Walras holds Quesnay in high esteem as the founder of pure economics and advocate of a single tax, insisting on the increasing surplus created by land and the exemption of wages from tax. Comparing their ideas on surplus, labour, and the tax system will help shed new light on the origin of the general equilibrium theory in the French tradition of the history of economic thought.

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Keywords: Walras, Isnard, Physiocrats, general equilibrium, single tax

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