Maurice Allais

Maurice Félix Charles Allais (31 May 1911 – 9 October 2010) was a French physicist and economist, the 1988 winner of the Nobel Memorial Prize in Economic Sciences "for his pioneering contributions to the theory of markets and efficient utilization of resources", along with John Hicks (Value and Capital, 1939) and Paul Samuelson (The Foundations of Economic Analysis, 1947), to neoclassical synthesis.

They formalize the self-regulation of markets, which Keynes refuted but reiterated some of Allais's ideas.

Born in Paris, France, Allais attended the Lycée Lakanal, graduated from the École Polytechnique in Paris and studied at the École nationale supérieure des mines de Paris.

It's after a trip in 1933 to the United States during the Great Depression, that he decides to make the economy.

Allais died at his home in Saint-Cloud, near Paris, at the age of 99.

Allais considered Léon Walras, Wilfredo Pareto, and Irving Fisher to be his primary influences.

He was reluctant to write in or translate his work into English, and many of his major contributions became known to the dominant community only when they were independently rediscovered or popularized by English-speaking economists.

At the same time, he claimed Keynes's liberalism and declared himself in favor of an important public sector.

Allais attended the inaugural meeting of the Mont Pelerin Society, but he was alone among the attendees to refuse to sign the statement of aims because of a disagreement over the extent of property rights.

He exerted an important influence, at the end of the war, on French economists such as Gérard Debreu, Jacques Lesourne, Edmond Malinvaud and Marcel Boiteux.

Paul Samuelson said "Had Allais earliest writings been in English, a generation of economic theory would have taken a different course", and felt the Nobel Prize should have been awarded to him much earlier.

Assar Lindbeck, the chairman of the selection committee, considered Allais as "a giant within the world of economic analysis".

Author of several theoretical and applied economics studies, his work has focused on the development of mathematical economics, especially in the fields of general equilibrium theory, capital theory, decision theory, and monetary policy.

A pioneer in macroeconomic monetary analyses, the economist has been authoritative for his theoretical studies of risk, illustrated by his famous paradox: "the less the risk is, the more speculators flee."

He has also been a pioneer in various fields such as the role of central banks and the pricing of public services.

His first book develops the microeconomic aspect.

In the 1940s, Allais worked on "decision theory" (or "theory of choice") under uncertainty and developed a theory of cardinal utility.

Due to war conditions and his commitment to publish in French, his work was undertaken independently of Theory of games and economic behavior developed by John von Neumann and Oskar Morgenstern.

With Traité d'économie pure, which he wrote between January 1941 and July 1943, based on his contributions, along with Hicks and Samuelson, to the concept of neoclassical synthesis.

He anticipates several of the propositions and theorems put forward by Hicks, Samuelson and others, sometimes giving them a more general and rigorous formulation.

His academic and other posts have included being Professor of Economics at the École Nationale Supérieure des Mines de Paris (since 1944) and Director of its Economic Analysis Centre (since 1946).

In 1947, in the second part of his work Économie et Intérêt, Allais introduced time and currency and thus tackled the dynamics and growth of capitalist economies.

Again, he made several proposals, that would be later attributed to other, better-known economists.

In 1949, he received the title of doctor-engineer from the University of Paris, Faculty of Science.

He also held teaching positions at various institutions, including at the University of Paris X–Nanterre.

His first works oriented him towards the sciences of the concrete and the experiments of fundamental physics, on which he will also publish numerous works, notably on pendular oscillations and the laws of gravitation.

He formulated the Allais paradox in 1953, which questions the traditional model of rationality of choices and contradicts the expected utility hypothesis.

It shows that when confronted with a lottery, an individual does not maximize his hoped-for gains, but rather aims at certainty.

Although he participated in the Mont Pelerin Society, Allais was convinced of an affinity between liberalism and socialism, stating: "‘For the true liberal, as for the true socialist, it matters little whether the means of production are privately or collectively owned, so long as the essential goals they pursue, namely efficiency and justice, are achieved."

He advocated "competitive planning" as a "possible synthesis of liberalism and socialism."

In particular, he demonstrates the equivalence theorems that Kenneth Arrow and Gerard Debreu will find in 1954: "Every equilibrium situation in a market economy is a situation of maximum efficiency, and reciprocally, every situation of maximum efficiency Is a equilibrium situation in a market economy."

The market thus ensures economic efficiency and optimal distribution of income in the nation.

At the same time, Samuelson exposed the process of trial and error which leads to the equilibrium of markets.

He introduced the first overlapping generations model(OLG model) (later popularized and attributed to Paul Samuelson in 1958), introduced the golden rule of optimal growth before Trevor Swan and Edmund Phelps, show that an interest rate equal to the growth rate maximizes consumption.

He also described the transaction demand for money rule before William Baumol and James Tobin

He was also responsible for early work in Behavioral economics, which in the US is generally attributed to Daniel Kahneman and Amos Tversky.

In 1959, he and other French members of Mont Pelerin such as Jacques Rueff established an organization, Mouvement pour une société libre, which spoke readily of a social liberalism that would go "beyond laissez-faire and socialism."

Finally he criticizes the drifts of a discipline that privileges mathematical virtuosity at the expense of realism.

With this "new scholastic totalitarianism" he moved away, in the 60s, from the analysis of the general equilibrium developed by Walras and replace it with a study focusing on real markets rather than a utopian market, favoring the study of imbalance and based on the idea of surplus.

The economic dynamics are thus characterized by the research, the realization and the distribution of a surplus and there is a general equilibrium when there is no longer any realizable surplus.