"Economics and Ideology: Aspects of the Post-Ricardian Literature"

Hollander, Samuel
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First Pub. Date
July-September 1979
Literature of Liberty. vol. ii, no. 3, pp. 5-35. Arlington, VA: Institute for Humane Studies
Pub. Date

1. [1] J.A. Schumpeter, History of Economic Analysis. Schumpeter's position is much the same, in its essentials, as that of F.H. Knight, On the History and Method of Economics, pp. 37-88.

2. [2] Knight, History and Method of Economics, p. 41. Cf. Schumpeter, History of Economic Analysis, p. 568: while "Professor Knight went perhaps too far if he accused Ricardo of not having seen the problem of distribution as a problem of valuation at all... it is true that Ricardo failed to see the explanatory principle offered by the valuation aspect." Cf. p. 543n.: "The full implications of the fact that capitalist distribution is a value phenomenon are not clearly seen even by Ricardo."

3. [3] Schumpeter, History of Economic Analysis, p. 569.

4. [4] Schumpeter, History, p. 680n., pp. 589-90, p. 568. See also Schumpeter, Economic Doctrine and Method, pp. 196-7; and Knight, p. 40.

5. [5] Schumpeter, History of Economic Analysis, pp. 600-1. See also p. 592.

6. [6] Schumpeter, History, p. 474; cf. p. 568, p. 673n. See also p. 560: the rejection of the labor-quantity theory by the non-Ricardians and anti-Ricardians of the 1830s, Schumpeter contends, "shows again that the Ricardian teaching was really in the nature of a detour." Keynes too implied that Ricardianism constituted a "detour" (although his position is limited to the issue of aggregative demand and falls therefore into an entirely separate category): "One cannot rise from a perusal of [the Malthus-Ricardo] correspondence without a feeling that the almost total obliteration of Malthus' line of approach and the complete domination of Ricardo's for a period of a hundred years has been a disaster to the progress of economics." Essays in Biography, pp. 140-1.

7. [7] Schumpeter, History of Economic Analysis, p. 465.

8. [8] Schumpeter, History, p. 918.

9. [9] Maurice Dobb, Theories of Value and Distribution Since Adam Smith, 44f., p. 112f. Cf., R.L. Meek, "Value in the History of Economic Thought," History of Political Economy 6 (Fall 1974): pp. 250-1.

10. [10] Dobb, Theories of Value, p. 115; cf. Meek, "Value in the History of Economic Thought," p. 250.

11. [11] Dobb, Theories, pp. 115-6.

12. [12] Cf. Dobb, Theories, p. 35: "income-distribution (e.g. the profit-wage rate) was a pre-condition of the formation of relative prices." See also p. 169, p. 261, p. 266.

13. [13] Luigi L. Pasinetti, Growth and Income Distribution: Essays in Economic Theory, pp. 43-4. See also Alessandro Roncaglia, Sraffa and the Theory of Prices, p. 119f; Dobb, Theories of Value, p. 261.

14. [14] Editor's Introduction, Works and Correspondence of David Ricardo, ed. Piero Sraffa (Cambridge, 1951-1973), I, xxxi. Recall that "corn" refers to what we today call "grain."

15. [15] Luigi L. Pasinetti, Growth and Income Distribution, p. 2.

16. [16] The profit rate (r)= f' (&Ncirc;I) – 1; where &xbar; is the given corn wage and f' (&Ncirc;I) the marginal product of labor in corn production. Obviously, as the marginal product of labor rises or falls, the profit rate (r) rises or falls because the corn wage is assumed to be fixed.

17. [17] See the Biographical Note by D.M. Nuti in V.K. Dinitriev, Economic Essays on Value, Competition and Utility, pp. 29-32.

18. [18] Cf. Léon Walras, Elements of Pure Economics, pp. 424-51: "It is clear... that the English economists are completely baffled by the problem of price determination; for it is impossible for [interest charges] to determine [price] at the same time that [price] determines [interest charges]. In the language of mathematics one equation cannot be used to determine two unknowns."

19. [19] Alfredo Medio, "Profits and Surplus-Value: Appearance and Reality in Capitalist Production," in E.K. Hunt and J.G. Schwartz, A Critique of Economic Theory, pp. 330-1.

20. [20] Medio, pp. 340-1.

21. [21] Dobb, Theories of Value, p. 148. There is some ambiguity attached to this kind of conception for it is not always clear whether temporal priority or causal priority or both are intended by the "prior" solution to distribution. But in at least one important formulation temporal as well as causal priority is explicity attributed both to Ricardo and Marx. Cf. R. V. Eagly, The Structure of Classical Economic Theory.

22. [22] Roncaglia, Sraffa and the Theory of Prices, p. xvii, p. 117, p. 98.

23. [23] Roncaglia, pp. 16-7, p. 98, p. 32.

24. [24] Schumpeter, History of Economic Analysis, p. 478.

25. [25] See also F.W. Fetter, "The Rise and Decline of Ricardian Economics," History of Political Economy 1 (Spring 1969). As explained above, Schumpeter considers this procedure to be in conflict with "general equilibrium" analysis; I do not.

26. [26] D.P. O'Brien, J.R. McCulloch: A Study in Classical Economics, pp. 402-3. The treatment of the invariable measure of value, which is said to be "central to Ricardo's system," we are told "never interested McCulloch at all." (O'Brien, p. 146).

27. [27] P.W. Groenewegen, Economic Journal 83 (March 1973): 193.

28. [28] Schumpeter, History of Economic Analysis, p. 529.

29. [29] Grundrisse: Foundations of the Critique of Political Economy (1857), p. 883.

30. [30] Dobb, Theories of Value, p. 122. But see the position of Pedro Schwartz, The New Political Economy of John Stuart Mill, pp. 16-7 which places Mill more firmly in the Ricardian tradition at least as far as concerns analysis.

31. [31] Marx, Theories of Surplus Value, III, p. 238.

32. [32] Marx, Theories, p. 260.

33. [33] Marx, Theories, p. 266. That the roots of British socialism are to be traced to Ricardo's economics was later urged in Anton Menger's The Right to the Whole Produce of Labour and by H.S. Foxwell in his Introduction to that work: "Whatever qualifications Ricardo may have made in his own mind, ninety-nine readers out of a hundred took him literally, and the main impression left by his book was that while wealth was almost exclusively due to labour, it was mainly absorbed by rent and other payments to the unproductive classes." (H.S. Foxwell, "Introduction" to Anton Menger, The Right to the Whole Produce of Labour, pp. xl-xlii).

34. [34] There is an extensive literature adopting this perspective. Élie Halévy, Thomas Hodgskin, pp. 180-1 emphasizes the opposition of the socialists to the Ricardians but at the same time insists upon their dependency on Ricardo's value theory: "the democratic opponents of James Mill and McCulloch, the first working-class theorists, instead of attacking the Ricardian theory of value seized upon its principles to draw from it new conclusions and to refute, by a form of reductio ad absurdam, Ricardo's political economy." See also Halévy, The Growth of Philosophic Radicalism, pp. 223-4: William Thompson (and Hodgskin) "draw inspiration" from Ricardo.

Similarly, G.D.H. Cole refers to Hodgskin's work as the "working-class answer" to Malthus and Ricardo, and to his "critique of the orthodox economics of Ricardo and his school." (See Cole's Introduction to Thomas Hodgskin, Labour Defended Against the Claims of Capital, pp. 10-11.) But he also writes, regarding both Hodgskin and Thompson, of their "deductions from Ricardian assumptions" and their "inversion of the Ricardian economic system... [in] essence, their deductions from Ricardian assumptions are the same." As Hodgskin argues in his book, "if it is admitted—and Ricardo admits it—that labour is the source of all value, then clearly all value belongs to the labourer, who should receive the whole product of his work." (Cole, p. 12). See also Cole, A History of Socialist Thought, I, p. 106.

Max Beer, A History of British Socialism, I, p. 154, draws the relationship in these terms: "But at the same time the socialists appeared and began to make use of the Ricardian theory of value as a weapon against the middle classes and to teach Labour that not the Tory landowner but the Liberal capitalist was their real enemy. Ricardo made labour the corner-stone of his system and yet he permitted the capitalist to appropriate accumulated labour and to decide the fate of the working classes."

35. [35] Marx, Theories of Surplus Value, III, p. 501.

36. [36] Afterword to the second German edition (1873) of Marx's Capital, vol. I, p. 15.

37. [37] Meek considers Ricardian theory narrowly defined in terms of the labor theory of value and the related conception that profits depend upon "the proportion of the annual labour of the country... devoted to the support of the labourers," or upon the quantity of labor allocated to the wage-goods sector relative to the labor force as a whole; and also other supposed standard doctrines involving future prospects and class relationships. Cf. R.L. Meek, Economics and Ideology, pp. 62, 67, 72-3.

38. [38] Meek, Economics and Ideology, pp. 68-9, 70, 72. For much the same general approach see also Meek, "Marginalism and Marxism," History of Political Economy 4 (Fall 1972):500-1, and Meek, Studies in the Labour Theory of Value, pp. 124-5 where "the persistent rejection or dilution of the labor theory by so many economists during the late 1820s and the 1830s," is attributed to the "use (or misuse) of classical value theory by the British radical writers."

39. [39] S. Hollander, The Economics of David Ricardo.

40. [40] On this matter see John Hicks and S. Hollander, "Mr. Ricardo and the Moderns," Quarterly Journal of Economics 91 (August 1977):351-69.

41. [41] Ricardo, Works and Correspondence, I, p.118 (Sraffa ed.).

42. [42] Ricardo, Works, II, p. 179 (Sraffa ed.). See also I, p. 388, p. 392, and Ricardo's letter to Malthus of 11 October 1816 (Sraffa ed.) VII, 78: "... it is probable"—not certain—"that with facility of production, or cheap food and necessaries, profits would rise."

43. [43] Ricardo, Works, I, p. 343. (Sraffa ed.) See also pp. 305-6: "the money wages of labour sometimes do not rise at all, and never rise in proportion to the rise in the money price of corn, which though an important part, is only a part of the consumption of the labourer."

44. [44] See Section I and note 18 above.

45. [45] A. Marshall, Principles of Economics, pp. 818-9. According to Jevons, "Cost determines supply; Supply determines final degree of utility; Final degree of utility determines value." Theory of Political Economy, p. 165.

46. [46] Marshall, Principles, p. 821n. See also Marshall, p. xxxiii regarding Ricardo's doctrine which ("though obscurely expressed") "anticipated more of the modern doctrine of the relations between cost, utility and value, than has been recognized by Jevons and some other critics." See too Marshall, p. 101n. regarding Walras: "His success was aided even by his faults. For under the honest belief that Ricardo and his followers had rendered their account of the causes that determine value hopelessly wrong by omitting to lay stress on the law of satiable wants, he led many to think he was correcting great errors; whereas he was really only adding very important explanations."

47. [47] But see H.M. Robertson, "The Ricardo Problem," South African Journal of Economics 25 (September 1957): esp. pp. 179f.

48. [48] Cf. also a similar conclusion by Mark Blaug, "Kuhn Versus Lakatos, or Paradigms versus Research Programmes in the History of Economics," History of Political Economy 7 (Winter 1975):416-7.

49. [49] Marx, Capital, III, p. 797.

50. [50] A felicitous term by Thomas Sowell, "Marx's Capital After One Hundred Years" Canadian Journal of Economics and Political Science 33 (February 1967):71.

51. [51] Marx, Capital, III, p. 178. Cf. also Capital, p. 191: "... it requires an insight into the over-all structure of the capitalist production process for an understanding of the supply and demand created among themselves by producers as such."

52. [52] Marx, Capital, pp. 184-5.

53. [53] Sraffa, Production of Commodities, p. 33.

54. [54] Ricardo, Works and Correspondence, I, p. 226 [Sraffa's ed., (my emphasis)].

55. [55] See my article, S. Hollander, "The Reception of Ricardian Economics," Oxford Economic Papers 20 (July 1977):221-57.

56. [56] See, for this terminological usage, George J. Stigler, "The Successes and Failures of Professor Smith," Journal of Political Economy 84 (November 1976):1199-1213. It should be emphasized that we have been concerned with "success" insofar as concerns "professionals" in economics rather than simply "educated gentlemen." For evidence that M.P.s frequently rejected the idea of a necessary opposition between wages and profits see Barry Gordon, Political Economy in Parliament, 1819-1823. There is a further problem here that the inverse wage-profit relationship as interpreted by Ricardo does not represent a necessary opposition between labor and capital; allowance must be made for misinterpretation.

57. [57] Malthus, Principles of Political Economy, 1st ed. (1820), 2nd ed. (1836); on Longfield, see his Lectures on Political Economy (1834) in The Economic Writings of Mountifort Longfield (New York, 1971).

58. [58] S. Bailey, A Critical Dissertation on the Nature, Measure and Causes of Value (London, 1825).

59. [59] Nassau W. Senior, "Report on the State of Agriculture," Quarterly Review 25, no. 50 (July 1821); T. Perronet Thompson, The True Theory of Rent in Opposition to Mr. Ricardo and Others (London, 1826), 9th edition (1832).

60. [60] W.F. Lloyd, A Lecture on the Notion of Value (London, 1834).

61. [61] M. Bowley, "The Predecessors of Jevons: The Revolution that Wasn't," The Manchester School 40 (March 1972):27.

62. [62] M. Longfield, Lectures on Political Economy, p. 247.

63. [63] M. Longfield, Lecture on the Notion of Value, p. 28.

64. [64] G. Poulett Scrope, "The Political Economists," Quarterly Review 44, No. 87 (Jan. 1831); and Principles of Political Economy derived from the Natural Laws of Social Welfare (London, 1833). Samuel Read, Political Economy: An Inquiry into the Natural Grounds of a Right to Vendible Property or Wealth (Edinburgh, 1829); Nassau Senior, An Outline of the Science of Political Economy (London, 1836).

65. [65] Marx, Capital, I, p. 596n.

66. [66] Cf. the evidence presented by Professor P.H. Douglas which demonstrates that the impetus to early nineteenth-century British socialism deriving from the conception of profits and rent as "deductions from the whole produce of labour" came from the writings of Adam Smith rather than those of Ricardo. "Smith's Theory of Value and Distribution," in J.M. Clark, Adam Smith, 1776-1926, p. 95f.

A similar account is given by Mark Blaug, Ricardian Economics, p. 148; but see Blaug, p. 143. "Unlike Gray and Thompson, who show no signs of having read Ricardo, Hodgskin derived his exploitation theory of profit directly from Ricardo's version of the profit labour theory of value."

In her well-known monograph on the subject Esther Lowenthal questioned the legitimacy of the designation "Ricardian" socialism: "although... the socialist use of the labour theory followed hard on the publication of Ricardo's Principles, there is no evidence that the socialists were particularly impressed by his teachings. They, all of them, quote Adam Smith as their authority for the labor theory of value... and only Hodgskin betrays an intimate knowledge of [Ricardo's] work." (The Ricardian Socialists, p. 103). But Ms. Lowenthal also asserts that Hodgskin attacks the claims of capital on the basis of the labor theory of value and "bases very explicitly on Ricardo's system of economics" his position that "since labour produces all value, labour should obtain all value." (Lowenthal, pp. 73, 74-5).

See also Schumpeter, History of Economic Analysis, p. 479, regarding the notion that labor is the only factor of production: "Though this proposition harks back to Locke and Smith and not to Ricardo, it is likely that the Ricardian theory of value did encourage these socialist writers and also offered suggestions to them."

67. [67] For a position close to my own see T.W. Hutchison, On Revolution and Progress in Economic Knowledge, p. 240f. While Professor E.K. Hunt has recently demonstrated Hodgskin's reaction against Ricardian value theory, he nonetheless accepts Meek's general position regarding the motive for the bourgeois reaction on the grounds that "most of Hodgskin's contemporaries... were quick to recognize that Ricardo's labour theory of value led quite naturally to Hodgskin's theory of capital. And this undoubtedly contributed to the conservative reaction of the 1820's against Ricardo's value theory." See E.K. Hunt, "Value Theory in the Writings of the Classical Economists, Thomas Hodgskin, and Karl Marx," History of Political Ecoiomy 9 (Fall 1977):345.

68. [68] Thomas De Quincey, The Logic of Political Economy (1844) in David Masson ed. Political Economy and Politics, pp. 250-1. J.S. Mill, in his review (Collected Works of J.S. Mill, IV, pp. 403-4) complained of De Quincey's "ultra-Tory prejudices which deformed his work, and which were particularly regretable since he was so sound on economic theory." Mill had in mind largely De Quincey's support for the corn laws.

69. [69] By contrast "the practical outcome of Hodgskin's inquiry seems tame, and, as often happens with anarchist essays hardly in keeping with the pretensions of the critical part of the work." Foxwell, in his "Introduction" to Anton Menger, The Right to the Whole Produce of Labour, p. lxiv. On the nature of Hodgskin's own reform program—more precisely its absence—see also Halévy, Thomas Hodgskin, pp. 125-6.

70. [70] Meek, Economics and Ideology, p. 71. See also Mark Blaug, Ricardian Economics, p. 149; L.S. Moss, "Isaac Butt and The Early Development of the Marginal Utility Theory of Imputation," History of Political Economy 5 (Fall 1973):325; and M. Dobb, Theories of Value and Distribution Since Adam Smith, p. 110.

71. [71] The economists sometimes had to prove their moral and religious bona fides and reconcile economics with Christianity to gain entry into the universities. See L.S. Moss, Mountifort Longfield: Ireland's First Professor of Political Economy, pp. 14-5. Also see S.G. Checkland, "The Advent of Academic Economics in England," The Manchester School of Economic and Social Studies (January 1951):52. But, it should be noted that the labor writers expressed themselves in much the same language. Rejecting the Malthusian principle, Hodgskin proclaimed that "moral feelings and scientific truth must always be in harmony with each other," Popular Political Economy, (London, 1827), pp. xxi-xxii. Hodgskin's book ends on the same theme: "... the science of Political Economy" will be found when perfectly known to "Justify the ways of God to man."

72. [72] James Mill's Letter of 25 October, 1831 cited by Graham Wallas, The Life of Francis Place, p. 274n.

73. [73] James Mill's Letter of September 3, 1832, also in Wallas.

74. [74] William Thompson, Distribution of Wealth, pp. 71-3.

75. [75] Thompson, p. 45

76. [76] Thompson, p. 15.

77. [77] Hodgskin, The Economist 12 (18 November 1854):1270.

End of Notes.

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