Léon Walras and The Wealth of Nations: what did he really learn from Adam Smith?

Abstract

This paper clarifies what Walras learned from Smith by examining his quotations of Smith and his handwritten notes in the Wealth of Nations belonging to the Walras Library. Although Walras’s general equilibrium theory has often been compared to Smith’s “invisible hand,” Walras himself had no intention of developing it in his pure economics. In his applied economics, Walras was influenced by Smith’s analysis of the division of labour in terms of efficiency. However, Walras did not share the explanation of its origin in his social economics, which suggests the reason why Walras never quoted Smith’s Theory of Moral Sentiments.