The Economist

INTRODUCTION TO MAURICE ALLAIS’S WORK
AS AN ECONOMIST GLOBAL VISION AND SEEDS OF RENEWAL

By Bertrand Munier

Ursula Hicks used to enjoy telling the story of how, just after the 1945 Liberation, amid the countless heated public meetings then held to debate proposals for the economic and political reconstruction of France which the War had left in a sorry plight, she once found herself led with her husband to a Paris meeting-room. There she saw labourers, clerks, curious bystanders, officers and other ranks back from the front, gathered to listen to a young lecturer who was explaining, enthusiastically and volubly, that the French economy must henceforth be run in accordance with the lessons to be learned from the general economic equilibrium, beginning with the issue of how the rate of interest is determined.

The speaker was Maurice Allais.[1]. The anecdote is not only amusing but revealing, for it highlights the author’s real plan, viz. to undertake a scientific analysis of the observable phenomena with a view to concrete action. Indeed this was what had initially aroused the young Polytechnic graduate’s interest in economic analysis: the sad spectacle of the queues waiting outside the Salvation Army’s soup kitchens in the US in 1933. To ensure the success of what he had in mind, Maurice Allais decided from the start to respect a specific method: basing his reasoning exclusively on models that were in turn based on observation, calling on the intermediate stage of introspection if needed (hence his acceptance of experimentation as a source of information even beyond mere statistical data). This method echoes a scientific practice found across the whole range from experimental psychology to physics, both experimental and theoretical – two disciplines which Maurice Allais as an economist considered to be of the highest importance in his research work. His deep-seated conviction was always that “the analysis of societies manifestly calls for a synthesis of all the social sciences: economics, law, sociology, history, geography and politics.”[2].

With regard to what he followed Léon Walras in calling Pure Economics, it involves methods which may be common to various sciences, those just mentioned and others. As in Physics, therefore, it is desirable to pinpoint the most universal economic constants that can be found. Hence in the mind of Maurice Allais, while the theory of risk in economics is undoubtedly linked to psychology, it is also connected with the conception of the physical world; and thus the theory of general equilibrium is linked with risk theory, but also with the life-cycle of the human generations, etc. “No solution can be found to economic problems by drawing exclusively on economic theory and on the quantitative aspects of life in society.” (Ibid.)

So I shall be making use of this multidisciplinary global vision in setting out the main lines of Maurice Allais’s analyses of risk theory, general economic equilibrium, the theory of capital, monetary analysis, indexation, fluctuations and growth, regional economic integration, among so many others included in his total output. The questions these theories raise in our own day will be examined as we proceed.

By virtue of the undeniable authority as a mathematical economist won by his published writings, Maurice Allais found himself in a position from which to undertake a severe and telling critique of the abuse of mathematical tools in contemporary economic analysis. In his Nobel Lecture he emphasized that “(t)he use of even the most sophisticated forms of mathematics can never be considered as a guarantee of quality. Mathematics is, and can only be, a means of expression and reasoning. The real substance on which the economist works remains economic and social. Indeed, one must avoid the development of a complex mathematical apparatus whenever it is not strictly indispensable. Genuine progress never consists in a purely formal exposition, but always in the discovery of the guiding ideas which underlie any proof. It is these basic ideas which must be explicitly stated and discussed.”.

No doubt contemporary readers will be wondering whether it is still worthwhile in our day to read Maurice Allais’s writings – a task which is not always an easy one. However outstanding his pioneering work may have been, it may be asked, have not more recent authors integrated Allais’s input into their own analyses? And if so, why should one trouble to read his original work, no matter how great he was?

But if matters had been so simple, this incorporation of Maurice Allais’s models by a great many other authors would no doubt have been accomplished by the beginning of the fifties. Whereas, as we shall be seeing, this is not what happened, or at least has only happened in respect of certain issues, very gradually and very belatedly. In reality, even today, many of the ideas expressed by Allais in the half-century following his extraordinary ground-breaking work have yet to be extracted from the books and articles in which this hugely talented author gave them expression, instead of which we are offered platitudes and prejudices about him which do scant credit to their authors.

As Paul Samuelson (1984) has written, “Maurice Allais is a fountain of original and independent discoveries. Had Allais’s earliest writings been in English, a generation of economic theory would have taken a different course.” Rising generations will find even today, and indeed no doubt for many years to come, in the perusal of this multiform corpus of writings, deriving as it does from the great enlightenment tradition, matter wherewith once more to renew our economic and social analysis. Let us hope that among their number some new author of comparable stature and character to Maurice Allais is waiting in the wings, and that the years to come will bear witness to the fact.