Marcel Boiteux, who died on September 6, was both an exception and exceptional. An exception, because he was successively an eminent economist and the director of a very large public company, EDF, an almost unique case. Exceptional for his immense talent, endowed with great conceptual abilities and, at the same time, revealing himself to be a great man of action, successfully managing EDF for twenty years.
The general public might remember that he presided over the destiny of EDF throughout the period when the company built, in record time, the nuclear power plant which still supplies the majority of our country’s electricity. This is enough to establish its notoriety as well as the constancy of its commitment to this energy source. In our opinion, other more timeless lessons can be learned from his thought and action.
First, while it is fashionable to make fun of economic theory and its use of mathematics, his work and the reception within his company demonstrate that economic theory can be useful. The mathematization of a problem can provide a solution that has empirical and functional validity. This solution could not be found without the use of mathematics and without an adequate theoretical framework. This does not mean that it is always this way. Not all economic problems are soluble. And not all mathematical economics is useful.
Maximize the collective surplus
Disciple of Maurice Allais (1911-2010), Nobel Prize winner in economics in 1988, Marcel Boiteux knew that the notion of marginal cost, the cost of the last unit produced, is a central notion for the management of a public company and for establish your prices. According to his very telling formula, “Clocks are made to tell the time, and prices are made to tell the costs”.
But an engineer is not satisfied with an idea, unlike the researcher, he tries to operationalize it, and the application to the supply of electricity presents a certain number of difficulties: electricity cannot be stored in large quantity, demand has a random side – think of the sudden variations in temperature from one day to the next – and it experiences peaks and troughs.
During the twenty years that he spent in the economic studies department of EDF, Marcel Boiteux successfully pursued the objective of operationalizing the concept of marginal development cost (long-term marginal cost) and deduce the optimal price, not to maximize the company’s profits, but to maximize the collective surplus.
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