Aftalion, Albert

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Aftalion, Albert



Albert Aftalion (1874–1956) was a French economist born in Bulgaria. He was a professor at the University of Lille and then at the University of Paris. His entire life was devoted to his work, and he left his mark on the entire generation of French academic economists who began their careers between the two world wars.

Aftalion’s theoretical work was in the tradition of the first Viennese school. Like Eugen von BöhmBawerk, he attached great importance to the duration of the process of production, which for him provided an explanation of cycles. From Friedrich von Wieser he derived his theory of imputation, which he used as an argument against socialism (Aftalion 1923); his theory of the marginal utility of money; and the income theory (1927–1950, vol. 1), which marked a stage in his monetary thinking. Aftalion was also a statistician (1928) and fond of numerical data, which he interpreted practically in their raw state. He calculated correlation coefficients, standard deviations, and average lags but was suspicious of overly audacious techniques. He refused to take sides in the Methodenstreit and believed in using both theory and statistics to interpret contemporary events.

Aftalion is best known for his theory of crises (1913), which is in effect a theory of cycles. His explanation of cycles is a “real” one. Cycles occur because the process of production takes time. Production of capital goods responds to changes in the demand for consumption goods only after a certain delay. Just as a fire that is alternately stirred up and damped down takes time to become hotter and cooler—and thus also alternately makes a room too hot or too chill—so, because of the rigidity of manufacturing plant, do phases of upswing and depression succeed one another in the life of the economy (1921). The response of the producer goods sector to changes in the demand for consumption goods is not only late but is also magnified. “A small expansion of the consumption goods industries requires a much larger expansion in the fixed capital producing industries” (1913, vol. 2, p. 372). If Aftalion did not coin the phrase “acceleration principle,” he clearly developed the concept.

In his theoretical criticism of socialism Aftalion asserted that the equal distribution of wealth would weaken the incentive to work and that the suppression of private property would dry up savings and kill capital formation.

His interpretation of the French inflation of 1919–1924 is noteworthy both for the method he used and the conclusions he drew. Monnaie, prix et change (1927–1948, vol. 1) is a typical instance of his characteristic intellectual procedure. Although eager to know, measure, and understand the facts, Aftalion was anything but an empiricist, a historicist, or a pure statistician. At the outset he made sure that he had a solid and precise theoretical point of reference: the quantity theory of money, in its Ricardian form, which states that general price changes are never more than reflections of changes in currency circulation. Aftalion compared this doctrine with the actual monetary experiences of his country and his era. Drawing a curve for the general price index and for the quantity of money in circulation in France after World War i, he found that (1) the variations in price were not proportional to the variations in banknote circulation but much broader; (2) the two phenomena often varied in opposite directions over considerable periods of time; and (3) the price movements preceded, and by several months, the changes in the quantity of money. Therefore, circulation was not the determining variable. Rather, it was the rate of exchange (itself controlled by psychological factors) that carried internal prices along with it, and it was only later that the rise in internal prices brought about the inflation of fiduciary issues. Aftalion inverted the “traditional order of the procession.”

Thus, the classic theory was found to be deficient. Aftalion did not say that it was false; he showed that it was not a good explanation of all the cases of currency depreciation or of all the phases of that depreciation and that it needed to be refined. The Austrian value theory shows the way to this necessary reworking. From the point of view of the economic actor, the value of the monetary unit reflects the marginal utility of the currency. Now, marginal utility does not depend directly on the total amount of money, that is, on the sum total of currency, but on the income at the disposal of individuals. Aftalion therefore first substituted a Wieserian income theory for the quantity theory of money. But he went beyond that. The marginal utility of money does not depend only on the amount of money income; it reflects a subjective evaluation of the monetary unit, into which there enter memories (the past history of a currency has endowed it with more or less prestige) and forecasts (relating to the monetary and budget policy of the government). Aftalion stressed psychological factors: confidence as well as mistrust in the future value of money. This is by no means an abandonment of theory on his part. He still attributed importance to quantitative phenomena, even if he did not believe that they explain everything. Also, he asserted that social psychology has laws, being based on scientific knowledge. The psychological explanation that Aftalion superimposed on the classical theory was intended to be no less theoretical than the classical theory itself.

Aftalion studied international gold movements between the two wars (1932b; 1938) and constructed a precise and novel theory of the “stimulants” that produced a new equilibrium in the balance of accounts (1937). Here Aftalion used a terminology of his own. He called the sum total of everything that gives rise to settlements between the nation and countries abroad the balance of payments (balance des paiements). (This includes movements of gold and capital.) As thus defined, the balance of payments is always in equilibrium but a formal equilibrium. On the other hand, the balance of accounts (balance des comptes)—which is the balance of payments minus movements of gold and capital—is usually in imbalance. But Aftalion questioned whether it is true that its imbalances tend to be self-correcting, as is affirmed by Ricardo’s classical theorem, according to which any imbalance in accounts brings about transfers of gold, which produce changes in relative prices that restore equilibrium. Aftalion analyzed current facts and observed that (1) by virtue of international credits, monetary instability, etc., migrations of gold depend today on many factors other than the balance of accounts; (2) the practices of sterilizing gold and credit inflation have made price movements largely independent of changes in national gold stocks; and (3) the ratios of prices (and interest rates) current in different nations are no longer anything more than a secondary factor in international accounts. Hence, the automatic Ricardian mechanism no longer operates. This does not mean that there is no longer any natural tendency toward spontaneous restoration of equilibrium. The movements of incomes play an ever more effective corrective role than do price movements. Any deficit in the balance of accounts brings about, in the country showing the deficit, an excess of total monetary income over the monetary value of the national production; this (all other things being equal and even without any rise in internal prices) favors importation of merchandise and exportation of capital. While this represents a “stimulant” to restoration of equilibrium, there are countervailing “obstacles” of a political and psychological nature (commercial and monetary protectionism, general and budgetary economic policies, future diplomatic and military perspectives, etc.). Which, then, will prevail: these forces producing disequilibrium or the natural stimulant to the restoration of equilibrium? The answer will depend entirely on the circumstances, and Aftalion erected a theory of the various constellations of circumstances that can arise.

Aftalion’s thought was always subtle, his approach scientifically rigorous and meticulous. His work exemplifies the revisions imposed by the events of the interwar period on several traditional aspects of classical economic theory: J. B. Say’s law of markets, the quantity theory of money, and the Ricardian theory that describes how gold shipments ensure an automatic equilibrium in international accounts.

Daniel Villey

[For the historical context of Aftalion’s work, seeEconomic thought, article onthe austrian school; and the biographies ofBÖhm-bawerk; Ricardo; andWieser. For discussion of the subsequent development of Aftalion’s ideas, seeBusiness cycles; International monetary economics, article onbalance of payments; Money, article onquantity theory.]


1899 L’oeuvre économique de Simonde de Sismondi. Paris: Pedone.

1904 La crise de l’industrie linière et la concurrence victorieuse de l’industrie cotonnière. Paris: Larose.

1911 Les trois notions de la productivité et les revenus. Revue d’économie politique 25:145–184, 345–369.

1913 Les crises périodiques de surproduction. 2 vols. Paris: Rivière. → Volume 1: Les variations périodiques des prix et des revenus: Les théories dominantes. Volume 2: Les movements périodiques de la production: Essai d’une théorie.

1921 Le rythme de la vie économique. Revue de meta-physique et de morale 28:247–278.

1923 Les fondements du socialisme: Étude critique. Paris: Rivière.

1925 Existe-t-il un niveau normal du change? Revue économique Internationale [1925], no. 4:423–450.

1927–1948 La valeur da la monnaie dans I’économie contemporaine. 2 vols. Paris: Sirey. → Volume 1: Monnaie, prix et change, 1927. Volume 2: Monnaie et économic dirigée, 1948. A 3d edition of Volume 1 was published in 1950.

(1928) 1931 Cours de statistique. Compiled and edited by Jean Lhomme and Jean Priou. 3d ed. Paris: Presses Universitaires de France.

1929 Monnaie et Industrie: Les grands problèmes de I’heure présente. Paris: Sirey.

1932a Die Einkommenstheorie des Geldes und ihre Bestätigung durch die gegenwärtigen Phänomene. Volume 2, pages 376–390 in Die Wirtschaftstheorie der Gegenwart. Edited by Hans Mayer. Vienna: Springer.

1932b L’or et sa distribution mondiale. Paris: Dalloz.

1937 L’équilibre dans les relations économiques internationales. Paris: Domat-Montchrestien.

1938 L’or et la monnaie, leur valeur: Les movements de I’or. Paris: Domat-Montchrestien.


Bouniatian, Maurice 1966 Mes théories économiques et Albert Aftalion. Paris: Librairie Général de Droit et de Jurisprudence.

Dieterlen, Pierre 1960 Albert Aftalion et la pensée économique. L’année sociologique 3d series [1959]: 127–181.

Hornbostel, Henry 1957 Í la recherche d’Albert Aftalion: 1874–1956. Revue d’économie politique 67: 789–802.

Lecaillon, Jacques; and Hosmalin, Guy 1957 Liste des travaux d’Albert Aftalion. Revue économique [1957]: 363–366.

Lhomme, Jean 1957 L’influence intellectuelle d’Albert Aftalion. Revue économique [1957]: 353–362.

L’oeuvre scientifique d’Albert Aftalion. Preface by Gaetan Pirou. Articles by F. Perroux et al. 1945 Paris: Domat-Montchrestien.

Robertson, D. H. 1914 Les crises périodiques de sur-production, by Albert Aftalion (Book review). Economic Journal 24:84–89.