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Nobel Memorial Lecture, April 27, 1973
Introduction by Professor Ragnar Bentzel of the Royal Academy of Sciences
Professor Bentzel began his introduction as follows:
In a couple of years, we shall be able to celebrate the centenary of a remarkable event in the history of economic science. In 1874, the French economist Leon Walras made an extremely important contribution to economic thought by constructing a theory to explain the basic features in the economic mechanism which determine what quantities of different commodities will be produced in a country, what prices will prevail and how the incomes will be distributed between different groups in the community.
This theory was presented in the form of a large system of equations, which was intended to illustrate the extensive network of relationships linking together different parts of the economy and creating a mutual interdependence between all the different prices, quantities of commodities and incomes.
This theory laid the foundations of one of the most important structures in economic science - the general equilibrium theory. Its purpose is precisely to elucidate the mutual relations between different phenomena in an economy, in order thereby to create a basis for conclusions concerning prices, production structure, income distribution, etc. (Le Prix Nobel, 1972, p. 202).
Outside of Schumpeter, I never read such an objective and enlightening characterization of Walras' contribution in the economic science. Joseph A. Schumpeter, another economist who, like Lord Keynes, did not live long enough to receive a Nobel prize, considered Walras to be the greatest of all economists. Here is the voice of Schumpeter:
As has been emphasized before, economics is a big omnibus which contains many passengers of incommensurable interests and abilities. However, as far as pure theory is concerned, Walras is in my opinion the greatest of all. His system of economic equilibrium, uniting, as it does, the quality of "revolutionary" creativeness with the quality of classic synthesis, is the only work by an economist that will stand comparison with the achievements of theoretical physics (Schumpeter, 1954, p. 827).
Professor Bentzel in turn had added a different evaluation:
Walras' theory was later developed by many economists, including the Swede Gustav Cassel. However, up to the 1930s, the equations of the systems were formulated in such general terms...