Iteration in Walras's theory of tatonnement

Summary It has been argued that Léon Walras did not have a theory of economic tatonnement but was instead concerned with a technique of mathematical iteration for the purpose of finding the solutions to the equations of a model of general equilibrium, that his work lacks an account of a means whereby prices are changed, and that he was uninterested in real economic adjustment processes. It is concluded that those judgments are incorrect. It is shown that Walras wanted to develop a realistic theory of time-consuming economic tatonnement in a freely competitive economy, and that he based it on his theories of how prices are changed, of iterative pricing, of entrepreneurial iterative behavior, and of a presumed convergence of the variables to equilibrium.I am grateful to Indiana University of Pennsylvania for a grant that made possible the preparation of this article.