Abstract
Abstract:
This study critically examines Léon Walras’s thoughts on labour in terms of pure, applied
and social economics. In his theory of pure economics, Walras incorporated labour exchange
into his general equilibrium system. He disregarded worker subjectivity towards labour performance
and the resulting variability in the substance of labour. This neoclassicist bias
emasculating the human traits of labour caused him to negate the distinctiveness of labour
exchange and argue for its market determination. Thus, Walras assumed labour exchange to
be ‘moral-free.’ In addition, Walras denied the influence of ‘moral’ factors in the scope of applied
economics treating industries and contended that production activities, including the labour-
management relationship, generally should be subject to free competition. However,
Walras recognised a need for the state regulation of labour time. Nevertheless, he opposed the
minimum wage system and denounced strikes for wage increases. Consequently, Walras adhered
to his theory of labour exchange, incurring serious inconsistencies in his own arguments.
Walras stressed that social economics dealing with distributional issues in light of justice
represents ‘moral’ study. Under the profound influence of his father, Auguste Walras,
Walras defended labour-based property rights and proposed land nationalisation. However, he
justified the acquisition of capital profit as well as wages determined in a competitive market
economy and denied a conflict between labour and capital. Hence, he substantially excluded
labour exchange and the labour-capital relationship from the topics of social economics. In
this manner, Walras advocated the market determination of labour exchange embracing its
subsumption of production and distribution, and labour-management and labour-capital harmony.
Therefore, Walras’s arguments in his trilogy allowed a moulding of the neoclassical
principle of labour exchange. However, like his contemporary economists who advanced the
same line of ideas, Walras enforced this step by playing down his own fair observations of
the realities of industrial relations that were at variance with his theory. Thus, Walras’s trilogy
reveals features of the formation of neoclassical thought on labour exchange.
JEL classification numbers: B 13, J 01.
