Œconomia (Dec 2018)
The Concept of Labor Market in Léon Walras’ Pure, Social, and Applied Economics
Abstract
This article aims at clarifying how Léon Walras (1834-1910) tackled the labor problem (or “la question sociale”, i.e., the social issue), by focusing on his concept of labor market in his pure, applied and social economics. According to theoretical interpretations, Walras, who founded the general equilibrium theory, laid the groundwork for the neoclassical wage theory. Indeed, Walras was opposed to workers’ strikes for higher pay and to the minimum wage system. However, this does not mean he was optimistic about workers’ conditions in his day or believed only market mechanisms might improve them. In fact, he remained strongly determined to solve worker poverty based on his concept of pure economics (general equilibrium theory) all his life. In this paper, emphasis is placed on his idea of the entrepreneur not only in his Pure, Social, and Applied Economics but also in his other writings. It offers a key to clarify Walras’ special understanding of the capital-labor relationship, which is completely different from that of Karl Marx. In conclusion, this paper evaluates the validity of the economic system that Walras imagined based on his thinking about the labor market, where he believed fairness and efficiency might coexist.
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