Dupuit Unique View Of Economics

Dupuit's Unique View of Economics

Dupuit's special insights into economic analysis were the combined result, on the one hand, of his technical and scientific training in calculus and functions and, on the other, of his keen observation and utilization of the mountain of statistics on public-works revenues and costs gathered by himself and his fellow engineers. Dupuit had read Smith, Ricardo, and J. B. Say, the French expositor of classical eco­nomics. However, Dupuit's economics marks a clear departure from the old school. French economists of the day, Pelagrino Rossi and Joseph Gamier in particular, in­fluenced Dupuit's opinions on classical, macro issues. But the one writer who could have helped him most in the area of micro analysis—Cournot—was apparently un­known to him. And, at one point, both lived and worked in Paris simultaneously!

Dupuit's contributions relate primarily to his engineering interests. In the words of one of his biographers, "Political economy, which attracts at every turn the engi­neer's interest, had also been the object of his constant study, and he was no less learned in that science than in that of public works." But it was the combination of these interests that produced Dupuit's special genius for theory and concept forma­tion. Specifically, Dupuit combined three elements to produce analytical tools: (1) subjects of economic interest and importance; (2) relevant, observed facts and sta­tistics abstracted from these subjects; and (3) mathematical analysis—deductive logic and graphical depiction—to organize and reorganize relations suggested by these facts and statistics. Theories, so derived, could be confronted with new facts and data for confirmation or alteration.

So conceived, Dupuit's method treated political economy as a combined science of reason and observation. Cournot also combined the two, but with far less emphasis on empirical grounding and its correspondence to theory. Unorganized statistics are, of course, meaningless. As Dupuit noted, "To better see the facts, to better observe them, one must clarify them by light of reason." But "empty theories," i.e., those hav­ing no empirical referent in the real world, are far more ludicrous. So Dupuit's whole effort was directed toward a real-world problem—measuring public utility, the so­cial welfare produced by public goods and services. In keeping with this aim, he made seminal discoveries in the theoretical areas of marginal utility, demand, consumers' surplus, simple and discriminating monopoly, and marginal-cost pricing. These ideas, which are all related to the optimum price and output policies of public goods, will be considered in turn.