Albert Aftalion was born on 21 October 1874 in Ruse (Ruschuk) in a Sephardic Jewish family After Bulgarian Liberation, when he was aged just four, his family emigrated to France, setting up home in Nancy. Nancy hosted a large Bulgarian colony, with numerous students, many of them of dentistry. The city was also a temporary home to famous Bulgarian poet Peyo Yavorov.
Aftalion graduated from the Sorbonne, authoring two doctoral theses: in law (1898) and economics (1899), the latter on Sismondi.
He settled in Lille, teaching there between 1900 and 1922. While there, his interests evolved from an analysis of northern French economics (mining and cloth) and German harbors (Aftalion used sociological surveys) to applying statistics to economic study (he set up a hall of statistics) and political economy in which the stress fell on cyclic theory. In 1922 and 1923 Aftalion left Lille and moved to Paris to lecture in statistics at the Sorbonne. He did so for 11 years until inheriting Charles Rist’s post in 1934 and taking over lecturing in political economy.
After the Vichy government adopted its Jewish Statute,in late 1940 Aftalion was removed from lecturing and left in isolation in Toulouse, spending four years there. In late 1944, he was restored to the Sorbonne, teaching there until retirement in 1950. Albert Aftalion died aged 82 on 6 December 1956 at Chambesy and was buried at Auteuil near Geneva. His contemporaries remember him as an exceptionally modest and reserved person; as Lhomme put it, ‘an eternal researcher and an eternal student’.
The accelerator idea is set out in his paper, ‘La realité des surproductions générales: essai d’une théorie des crises générales et périodiques,’ published in the Revue d’économie politique in 1909. This formed the basis of his 1913 two-volume work on economic cycles, Les crises periodiques de surproduction: arguably his best known work. In brief, accelerator theory claims that investment is a function of demand and income as opposed to multiplier, where the causality is exactly the opposite: from investment to income. Ideas on the accelerator, as well as on its cumulative movement with the multiplier went on to form the basis of a number of theories on the economic cyclical behavior, such as Paul Samuelson’s oscillator. The theory of economic cycles and overproduction crises (Aftalion preferred the term cycle theory to crisis theory, considering the latter a special case within the former) was strongly influenced by Austrian methodology on the pyramidal spatial and time structure of economic goods (Menger’s goods of various orders), most of all investment and consumer goods. As distinct from Hayek and the Austrians, however, who considered cycles as fundamentally based on money, and credit dynamics in particular, Aftalion’s theory relied overall on ‘real’ factors rather than monetary ones, seeing impulses as resulting from entrepreneurs’ errors. Hence erroneous pricing (while Hayek has it the other way around: wrong pricing leading to wrong expectations) which is determined by the economy’s intrinsic trend to overcapitalization (with Hayek, it is not a question of overcapitalization, but of bad capitalization and malinvestment). Aftalion felt that though credit was not the major cause of cycles and crises, it played an important auxiliary and attenuating role. It also acted through increasing incomes which could also be due to other factors. In both cases, we have endogenous cycle theories and theories for divergence between expectations and reality, determined by the time structure of the economic process.Theory of money and exchange rates: he proposes new analytical avenues to overcome the limitations of the quantitative theory which still dominated at the time, as well as its logical extension into the area of exchange rates and purchasing power. It is this set of ideas that forms the core of the present study.
