The story of the body of economic analysis that were initiated by Léon Walras can be divided into developments before and after 1930. During the period before 1930 there were two phases to the story. The first was the seminal achievement of Walras. The second was the refinements and extensions made by the generation of Walrasian theorists that followed him. During the period after 1930 the story is also divided into two phases. One is the work that has been done on the type of Walrasian model in which there are no disequilibrium transactions. The other is the beginning of work on the behavior of general equilibrium systems in which disequilibrium transactions and production occur. These phases will be sketched very briefly with the objective of giving a beginner's introduction to some major aspects of the history of general equilibrium theory.

In April 1909 Léon Walras (1834–1910) presented his last lecture before the Société Vaudoise des Sciences Naturelles at Lausanne. The subject dealt with in this lecture was the analogy between the mathematics used in economics and that employed in mechanics; it is reformulated in what turned out to be one of Walras's last publications, entitled ‘Economique et Mécanique.’

“The stimulation given by the General Theory to the construction and testing of aggregative models may well prove to be Keynes's chief contribution to economics in the longer perspective of historical judgement.”

On October 1, 1936 the Stockholm economists hosted a very distinguished guest, John Maynard Keynes. Homeward bound from a visit to the Soviet Union, Keynes appeared at the Political Economy Club. The minutes, as recorded by Ingvar Svennilson, relate:

1. 1. At the invitation of the club, Mr. J.M. Keynes lectured at the Institute of Social Science on the subject “My grounds for departure from orthodox economic traditions.” The lecture was arranged with support from J.H. Palme's fund for economic education and economic research. Some 100 persons attended the lecture.

2. 2. Following the lecture, the club arranged a dinner at the student union building. In addition to Mr. and Mrs. Keynes, the dinner was attended by: the chairman Professor Ohlin, Miss Kock, Messrs. Björ, Böök, Cederwall, Dahlgren, Hammarskjöld, Helger, Johansson, Lagercrantz (guest), Lundberg, Myrdal, Rothlieb, Rooth, Suoviranta (Finland, guest) and Wigforss, as well as the undersigned. After dinner there was a discussion that continued until midnight.

As with most papers written for occasions of this kind, this one has elements of self-indulgence. In this Society, at least, one has a captive audience, some (or most?) of whom may have come for another purpose. At the same time, one has no prescribed theme: if one had one, one organised last year's meeting around it. True, there are constraints: it is after all the History of Economics Society, which constrains the subject somewhat–but only a little; it is an after dinner speech at the end of two long days of meetings, which limits the heaviness of the contents; and it will appear in the Bulletin, which prevents complete absurdities. Yet these constraints are fairly minimal.

A recent comparative study of the economists' participation in government, draws negative conclusions with respect to this profession in Italy. The Italian case was shown to have been weak both in the teaching of economics at University level and lacking in the provision of a clearly defined and a highly specialized academic training. The complaint that Italian economists were generally devoted to teaching microeconomics, rather than macroeconomics, which is more strongly linked to political and productive demands, has often been heard.

Matters are not very much improved when we come to the historian who qualifies all this [oversimplification of Luther] by some such phrase as that “Luther, however, was of an essentially medieval cast of mind;” for this parenthetical homage to research is precisely the vice and the delusion of the whig historian.

Herbert Butterfield, The Whig Interpretation of History

Two new schools of thought have recently emerged in public finance: fiscal constitutionalism, founded on the theory of Leviathan government, and supplyside economics, popularly perceived in terms of the Laffer curve. Comments by several writers have raised the possibility of conflicts betweens the tax principles of the two schools. In particular, both Brunner (1982) and Reynolds (1982) criticized supply-siders for emphasizing tax cuts to increase public revenues and ignoring the importance of placing limits on governmental growth. In addition, McKenzie's description of “constitutional economics” as an intellectual movement that “promises far more radical reforms of government than those ever attempted by Keynesian and supply-side economics” (1984, p. 1) indicates that “constitutional” and supply-side economics are different. Yet, his discussion of the Laffer curve and supply-side tax cuts from a constitutional economist's perspective leaves the distinct impression that the two schools are in agreement on tax policy positions.

The relationship of the Virginia School of public finance to several important topics in the history of economic thought has attracted much recent attention. Barry Baysinger and Robert Tollison (1980), for instance, view William Ewart Gladstone's fiscal policies as an attempt to create a tax constitution to restrain a revenue-maximizing government. This position is in keeping with the evolving normative taxation principles of the Virginia School (see especially Brennan and Buchanan 1980). Charles Leathers (1986), on the other hand, argues that Gladstonian finance emphasized expenditure constraints, not constitutional tax constraints. Elias Khalil (1987) meanwhile, contrasts James Buchanan's methodological individualism with the “nonseparable” approach of Sir James Steuart (1767), which led Steuart to approve of a large degree of state intervention in the economy. While these essays either find past policies that conform to Virginia School principles or else find past economic theorists with sharply different approaches, they have not noted a striking anticipation of Buchanan's view of public debts by Antonine Louis Claude Destutt de Tracy (1754–1836).

A substantial collection of Malthus manuscripts has recently been discovered at Ryde (Isle of Wight), in the home of Robert Malthus (1881–1972), the great-grandson of Malthus' brother. Discoveries of other Malthus documents, notably his travel diaries, had been made at Ryde in the early 1960s in response to the enquiries of G.F. McCleary and Patricia James, but this new material was apparently overlooked by Robert Malthus at that time.

In several reviews of my Classical Economics (1987; henceforth CE) a criticism recurs relating to my proposition that distribution in Ricardian economics is dependent upon the pattern of final demand. Anthony Brewer, who is convinced by the demonstration in the book of ‘a fundamentally important core of general equilibrium economics accounting for resource allocation in terms of the rationing function of relative prices,’ has stated the objection fairly and his formulation invites and deserves a response:

I argue for an aesthetic criterion of truth through the explication of the epistemologies of Adam Smith and Albert Einstein–the progenitors of modern economics and physics [cf. Skinner, 1979:ch. 2; Holton, 1968, 1979]. The aesthetic criterion supersedes objectivist and relativist epistemologies.

The Winternitz Solution, which is generally regarded as a receding landmark in the long and still expanding literature on the transformation problem, deserves a closer scrutiny than it has received so far. While the mainstream professional viewpoint regards the Winternitz solution merely as a special case of the general conditions stated in Seton's seminal 1957 article, many students of the history of economic thought in the English speaking world receive their first and often only introduction to the transformation problem from the pages of Mark Blaug's Economic Theory in Retrospect (hereafter ETR-i where i = 1, 2,3,4 denotes the four successive editions of this book). Although Winternitz does not lay out the full economic implications of his solution–presumably because he felt these were of limited mathematical interest, the treatment in Blaug is seriously misleading. Our purpose here is to provide a complete presentation of the Winternitz Solution (Part I) and subsequently to give a critique of Blaug's treatment (Part II).

In 1954 the American Economic Association held its first session on “The International Flow of Economic Ideas.” As a discussant, the great scholar of Walras, William Jafft said, “The Iron and Bamboo Curtains of today were preceded three-quarters of a century ago by nationalistic, linguistic, and other curtains–all impending the free flow of ideas in the learned world,” (1955, 38–9). A.W. Coats later added some other obstacles, “…the unavailability of modern information retrieval methods, or perhaps a plain ornery human unwillingness to cooperate or personal dislike, all have at times been impediments to the progress of knowledge,” (1987, 66).