The Economic Point of View: An Essay in the History of Economic Thought

Kirzner, Israel M.
(1930- )
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Editor/Trans.
Laurence S. Moss, ed.
First Pub. Date
1960
Publisher/Edition
Kansas City: Sheed and Ward, Inc.
Pub. Date
1976
Comments
2nd edition. Foreword by Ludwig von Mises.

1. [1] Memorials of Alfred Marshall, ed. A. C. Pigou (London: Macmillan & Co., 1925), p. 499.

2. [2] R. Robinson, Definition (Oxford, 1950), p. 15.

3. [3] B. Croce, Historical Materialism and the Economics of Karl Marx (English ed.; London: Macmillan & Co., 1915), p. 29.

4. [4] These considerations will account for the absence of references in this essay to the achievements in recent years in mathematical programming, input-output analysis, and game theory. Rivett has suggested, in "The Definition of Economics," Economic Record, November, 1955, pp. 229-230, that progress in linear programming might one day require review of the borderlines of economics. Apart from its special relevance to Rivett's own definition of economics, this suggestion can refer only to the scope of the subject, not at all to the delineation of the economic point of view. On this point see especially W. J. Baumol, "Activity Analysis in One Lesson," American Economic Review, December, 1958, p. 837.

5. [5] E. Cannan, Wealth (3rd ed.; London, 1945), p. 4.

6. [6] For examples of the specific restriction of definitions of economics to "economic theory," or even more narrowly to "price theory," see J. A. Schumpeter, History of Economic Analysis (New York, 1954), pp. 535-536; F. H. Knight, "The Nature of Economic Science in Some Recent Discussion," American Economic Review, Vol. XXIV, No. 2 (June, 1934), p. 226.

7. [7] On the distinction between real and nominal definitions, see, e.g., J. S. Mill, A System of Logic (10th ed.; London, 1879), I, 162 f.; L. S. Stebbing, A Modern Introduction to Logic (6th ed.; London, 1948), p. 426; C. K. Ogden and I. A. Richards, The Meaning of Meaning (3rd ed. revised; London, 1930), p. 109 n.

8. [8] For examples of writers who saw in the multiplicity of definitions a proof of their fundamental weakness, see L. Walras, Eléments d'économie politique pure, ou Théorie de la richesse sociale (Lausanne, 1874), p. 3; A. P. Usher, "The Content of the Value Concept," Quarterly Journal of Economics, August, 1917, p. 712; F. Kaufmann, "On the Subject Matter and Method of Economic Science," Economica, November, 1933, pp. 381-382.

9. [9] For Pareto's views on the usefulness of defining economic affairs, see the translation of his paper "On the Economic Phenomenon" (first published in Giornale degli economisti, 1900, II, 139-162) in International Economic Papers, No. 3, p. 194. See also V. Pareto, "L'économie et la sociologie au point de vue scientifique," Rivista di scienza, 1907, p. 294. Myrdal's views are expressed in his The Political Element in the Development of Economic Theory (Harvard, 1954), pp. 154-155; for those of Hutchison see his The Significance and Basic Postulates of Economic Theory (London: Macmillan & Co., 1938), p. 53.

10. [10] G. Tagliacozzo, "Croce and the Nature of Economic Science," Quarterly Journal of Economics, Vol. LIX, No. 3 (May, 1945), p. 308.

11. [11] For examples of earlier views recognizing the importance of an adequate definition of economic affairs, see E. de Laveleye, "Les lois naturelles et l'objet de l'économie politique," Journal des économistes, April, 1883, p. 92; S. Patten, "The Scope of Political Economy," The Yale Review, November, 1893, reprinted in S. Patten, Essays in Economic Theory (New York, 1924), p. 178.

12. [12] L. Robbins, An Essay on the Nature and Significance of Economic Science (2nd ed.; London: Macmillan & Co., 1935), p. 3. Robbins put forward the same view, as well as the suggestion for a history of the stream of thought leading up to modern definitions, in his Introduction to Wicksteed's The Common Sense of Political Economy (London, 1933), I, xxii. See also L. Robbins, "Live and Dead Issues in the Methodology of Economics," Economica, August, 1938, p. 344, for an acknowledgment of the minor importance of the precise wording in the expression of the (correct) definition.

13. [13] F. H. Knight, review of L. Mises, Nationalökonomie, in Economica, 1941, p. 410 n.

14. [14] A. L. Macfie, An Essay on Economy and Value (London, 1936), pp. 2-3.

15. [15] For examples of economists convinced of the insuperable difficulty of achieving a determinate definition of economic affairs, see P. T. Homan, "Issues in Economic Theory, an Attempt to Clarify," Quarterly Journal of Economics, May, 1928, pp. 349, 364; F. St. Leger Daly, "The Scope and Method of Economics," The Canadian Journal of Economics and Political Science, May, 1945, p. 169.

16. [16] G. Tagliacozzo, "Croce and the Nature of Economic Science," Quarterly Journal of Economics, May, 1945, p. 307.

17. [17] See, e.g., R. Robinson, Definition, pp. 162-172.

18. [18] B. Croce, "On the Economic Principle II," translated in International Economic Papers, No. 3, 1953, pp. 197-198, from Giornale degli economisti, I (1901). See also International Economic Papers, No. 3, p. 203, for an interpretation by Pareto of the differences between Croce and himself in terms of the philosophical clash between the medieval nominalists and realists.

19. [19] F. A. Hayek, "The Trend of Economic Thinking," Economica, May, 1933, p. 131.

20. [20] On these points see, e.g., L. Robbins, The Theory of Economic Policy in English Classical Political Economy (London, 1952), p. 3; M. Bowley, Nassau Senior and Classical Political Economy (London, 1937), pp. 27 f.

21. [21] See, e.g., A. Amonn, Objekt und Grundbegriffe der theoretische Nationalökonomie (2nd ed.), pp. 23 f.

22. [22] J. S. Mill, "On the Definition of Political Economy: and on the Method of Investigation Proper to It," (in Essays on Some Unsettled Questions of Political Economy) London reprint, pp. 120 f.

23. [23] See the Centenary Volume of the Political Economy Club, London, 1921, p. 44.

24. [24] It was in this period too that one of the earliest denials of a specifically economic side of affairs was put forward by Comte. Any such separation was "irrational" and evidenced the "metaphysical" character of economics. For an account of Comte's criticism of economics and of J. S. Mill's reaction to it, see Ashley's Introduction to his 1909 edition of Mill's Principles, pp. xi f. See also R. Mauduit, A. Comte et la science économique (Paris, 1929); F. A. Hayek, The Counter-Revolution of Science (Glencoe, 1952), pp. 181-182. An early discussion of Comte's views on economics is J. E. Cairnes' "M. Comte and Political Economy," in Essays in Political Economy (London, 1873).

25. [25] Knies required of a definition of economics that it comprise a) "das Gebiet der Untersuchungen," b) its "Aufgabe," and c) its "Methode." (K. Knies, Die politische Oekonomie vom geschichtliche Standpuncte [Braunschweig, 1883], p. 157.) Menger required a similar scope for a definition. (C. Menger, Untersuchungen über die Methode der Sozialwissenschaften und der politischen Oekonomie insbesondere [Leipzig, 1883], p. 238.)

26. [26] The distinction between the "individual" (or concrete) and the "general" (or abstract) in economic phenomena was made famous by Menger in his Untersuchungen, pp. 3 f.

27. [27] Prominent United States writers who applied themselves to the careful definition of the economic point of view during this period include in their ranks Ely, Patten, Davenport; Taussig, Hadley, Giddings, Hadley, and Ward.

28. [28] Among French writers of the period who concentrated most directly on definition may be mentioned: R. Worms (La science et l'art en économie politique, Paris, 1896); E. Levasseur (De la methode dans les sciences économiques, Paris, 1898); A. Jourdan (Des rapports entre le droit et l'économie politique, Paris, 1884); G. Schmidt ("Rapports de l'économie politique avec la morale et le droit," Revue d'économie politique, 1900); G. Tarde (Psychologie économique, Paris, 1902).

29. [29] Cammillo Supino, La definizione dell'economia politica (Milan, 1883).

30. [30] L. M. Fraser, Economic Thought and Language (2nd printing, 1947), ch. 2.

31. [31] The following references support the conclusion that writers who have sought to define the scope of economics have done so with regard to the discipline as it has actually developed, not to any projected subject: A. Marshall, The Present Position of Economics (London, 1885); L. Robbins, Nature and Significance of Economic Science (2nd ed.; London, 1935), p. 22; R. T. Bye, "The Scope and Definition of Economics," Journal of Political Economy, October, 1939; A. Amonn, Objekt und Grundbegriffe der theoretischen Nationalökonomie (1911), p. 12.

Chapter 2

32. [32] L. M. Fraser, Economic Thought and Language (London, 1947), pp. 21 ff.

33. [33] Contrast, however, Cunningham's appraisal of Adam Smith's achievement as consisting "in isolating the conception of national wealth, while previous writers had treated it in conscious subordination to national power" (quoted in A. Marshall, Principles of Economics, [8th ed.; Macmillan & Co.], p. 758 n.).

34. [34] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, ed. Cannan (Modern Library, 1937), p. 643.

35. [35] See, e.g., op. cit., p. 403.

36. [36] Op. cit., p. 397. John Neville Keynes has remarked (The Scope and Method of Political Economy [4th ed.; London, 1930], p. 39 n.) that although Smith's work has the form of a science, he himself conceived his subject primarily as an art. In this connection, however, a note of Jeremy Bentham is of considerable interest. He wrote (Economic Writings, ed. Stark, Vol. III [George Allen and Unwin, 1954], p. 318 n.): "To Adam Smith, the science alone has been the direct and constant object in view: the art the collateral and occasional one."

37. [37] L. Robbins, The Theory of Economic Policy in English Classical Political Economy (London, 1952), pp. 170-171.

38. [38] James Steuart, An Inquiry into the Principles of Political Economy (1767), cited in L. Haney, History of Economic Thought (4th ed.), p. 138.

39. [39] On the attitudes of some of the earliest economic writers towards the right of private property, see, e.g., E. Halévy, The Growth of Philosophic Radicalism (Boston, 1955), p. 45; L. Robbins, The Theory of Economic Policy, pp. 50 f.; J. Bonar, Philosophy and Political Economy (3rd ed.; London, 1922), pp. 142 f. Perhaps the most clear example of an economist who was stimulated by concern with private property rights was Samuel Read. Read, one of the economists "rediscovered" by Seligman ("Some Neglected British Economists," Economic Journal, 1903), called his book Political Economy. An Inquiry into the Natural Grounds of Right to Vendible Property or Wealth (Edinburgh, 1829). He treated economics, not as concerning wealth, but as concerning the "right to wealth." It is of interest to note that the alternative name which Read suggested (p. xvii) for political economy, "Political Justice," is the title of Godwin's book of 1793 fiercely attacking the institution of private property.

40. [40] Gunnar Myrdal, The Political Element in the Development of Economic Theory (English ed.; Harvard, 1954), pp. 69 f. Contrast Schumpeter's remark in this regard (History of Economic Analysis, New York, 1954), p. 120.

41. [41] The intellectual ancestry of classical political economy has been traced variously to the moral tradition represented by the Mandeville-Shaftesbury-Hutcheson realm of thought and to the political tradition of the Grotius-Pufendorf-Hobbes-Locke filiation. See, e.g., J. T. Merz, History of European Thought in the Nineteenth Century (Edinburgh, 1914), IV, 127-128; J. Bonar, Philosophy and Political Economy, pp. 6, 85, 151; W. Hasbach, Untersuchungen über Adam Smith (Leipzig, 1891), pp. 23 f., 140 f. See also F. A. Hayek, "Individualism: True and False" (reprinted in Individualism and Economic Order, Chicago, 1948).

42. [42] B. Mandeville, Fable of the Bees (ed. of 1723), pp. 427-428.

43. [43] W. Röpke, The Social Crisis of Our Time (English edition; Chicago, 1950), p. 68.

44. [44] F. A. Hayek, The Counter-Revolution of Science (Glencoe, 1952), p. 107.

45. [45] See, e.g., W. H. Hutt, Economists and the Public (Jonathan Cape: London, 1936), pp. 301-302.

46. [46] See E. Halévy, The Growth of Philosophic Radicalism (Beacon Press: Boston, 1955), pp. 13, 19, 57.

47. [47] R. T. Malthus, Principles of Political Economy (1820), p. 27. Ricardo in his Notes on Malthus (ibid.) seems to agree with Malthus.

48. [48] For a discussion of the significance of this distinction in Smith's work and of the later controversies over it, see, e.g., E. Cannan, A History of the Theories of Production and Distribution in English Political Economy from 1776 to 1848 (3rd ed.), pp. 14 f.

49. [49] Earl of Lauderdale, Inquiry into the Nature and Origin of Public Wealth (Edinburgh, 1804), p. 57.

50. [50] It is not quite clear whether Lauderdale really intended his definition to be interpreted as broadly as it was. It is noteworthy that in his reply to the scathing review of his book in the Edinburgh Review, Lauderdale speaks of himself as having defined wealth as consisting "of the objects of man's desire." Lauderdale, Observations on the Review of his Inquiry into the Nature and Origin of Public Wealth, published in the VIIIth number of the Edinburgh Review (Edinburgh, 1804).

51. [51] R. T. Malthus, Principles of Political Economy (1820), p. 27.

52. [52] J. R. McCulloch in the Supplement to the Encyclopaedia Britannica, quoted in Malthus, Definitions in Political Economy (London, 1827), pp. 70 f.

53. [53] See n. 16 above; Read, Political Economy (Edinburgh, 1829,), p. 1.

54. [54] D. Ricardo, Principles of Political Economy and Taxation (1817). Original Preface, (Everyman's ed., p. 1); P. Sraffa, ed., The Works and Correspondence of David Ricardo, Vol. VIII, Letter No. 392, Ricardo to Malthus, 9th October, 1820. Ricardo's stress on distribution was noticed by, among others, G. Ramsay, Essay on the Distribution of Wealth (Edinburgh, 1836), p. v. There is perhaps room for conjecture concerning Ricardo's position in 1817. Early in 1817 Malthus had written to Ricardo referring to "the causes of the wealth and poverty of nations" as the "grand object" of economic enquiries (Sraffa ed., Volume VII, Letter 200), and we have no record of any adverse reaction from Ricardo. Although in his Principles (1817) Ricardo had referred to distribution as the "principal problem" in political economy, this is not quite the same as his declaration to Malthus in 1820 that the laws of distribution are "the only true objects" of the subject. To Malthus in 1820 Ricardo was writing that he was "every day...more satisfied" of the correctness of his view. This might support the conjecture that Ricardo's 1817 statement was meant to be less emphatic than his later views. There is some support for the view that the scope of Ricardo's Principles (which treated distribution as the "principal problem") was not meant to cover the whole science. On this see Ricardo's letter to Mill (Sraffa ed., Vol. VII, Letter No. 196); see also T. De Quincy's remarks to this effect in Dialogues of Three Templars on Political Economy, in Vol. X of De Quincy's Works, 1877, p. 205. For a contrary view see Trower's letter to Ricardo (Sraffa ed., Vol. VII, Letter No. 214).

55. [55] M. Bowley, Nassau Senior and Classical Political Economy (London, 1937), p. 303 n., and see above n. 8.

56. [56] Read, Political Economy, Preface, p. ix.

57. [57] On Hume's views in this regard, see J. Bonar, Philosophy and Political Economy, p. 107.

58. [58] See above n. 7.

59. [59] Ganilh in his Inquiry into the Various Systems of Political Economy (English ed.; New York, 1812), pp. 2-4, cites Palmieri's Pubblica felicità (1787) and Canard's Principes d'économie politique (1801) for the view that wealth is superfluous. Boileau (An Introduction to Political Economy [London, 1811], Ganilh himself (op. cit. p. 22) and the American economist Raymond (The Elements of Political Economy, [2nd ed.; Baltimore, 1823], p. 40) all defined wealth as surplus over current expenditure for "wants." This position seems to have considerable bearing on the classical attitude towards the consumption of wealth. (On this see J. N. Keynes, Scope and Method of Political Economy, [4th ed.; London, 1930], pp. 105 f; L. Robbins, The Theory of Economic Policy, p. 7.) The conception of wealth as surplus after expenditure implies a finite area of human "needs" which are objectively fixed. This conception led to the view that the consumption of wealth is the destruction of wealth rather than the consummation of the process of production. One recalls J. S. Mill's unhappy description of the desire for present enjoyment of goods as being antagonistic to the desire for wealth (Essays on Some Unsettled Questions of Political Economy, London reprint, p. 138).

60. [60] Bentham recommended the use of the term "matter of wealth" in place of "wealth" to make it absolutely clear that political economy was not confined to the treatment of great riches. Malthus in a letter to Ricardo in 1817 explicitly included the poverty of nations in the scope of economics (Sraffa ed., Vol. VII, Letter No. 200). Samuel Bailey, celebrated critic of Ricardian value theory, ascribed the popular view of political economy as a "degrading" inquiry to the mistaken belief that it treats only of excessive wealth. S. Bailey, Discourses on Various Subjects Read Before Literary and Philosophical Societies (London, 1852), p. 125. For examples of later writers clinging to the "surplus" view of wealth, see Sargent, Science of Social Opulence (London, 1856); M. Liberatore, Principles of Political Economy (English ed.; London, 1891).

61. [61] F. H. Knight, The Ethics of Competition (Harper & Bros.), p. 24. See also on this point K. Mannheim, Essays on the Sociology of Culture (New York, 1956), p. 35. For bibliography on the materialist interpretation of history, see W. J. Blake, Elements of Marxian Economic Theory and Its Criticism (New York, 1939), pp. 686-691. See also T. Parsons, "Some Reflections on 'The Nature and Significance of Economics,'" Quarterly Journal of Economics, May, 1934, p. 534, n. 4.

62. [62] K. Marx, Capital (English ed.; Ch. Kerr & Co., Chicago, 1915), I, 406, n. 2. See, however, the significantly different translation of this note by E. and C. Paul (Everyman's ed.; 1930), p. 393 n.

63. [63] K. Marx, A Contribution to the Critique of Political Economy (translated by N. Stone, Chicago, 1904), pp. 10-11.

64. [64] See E. R. A. Seligman, The Economic Interpretation of History (New York: Columbia University Press, 1902), p. 43.

65. [65] See Eastman's edition of selections from Marx (Modern Library), p. 10.

66. [66] F. Engels, The Origin of the Family, Private Property, and the State (English translation, Moscow, 1940), p. 5. For another statement by Engels in virtually the same words, see Knight, Ethics and Competition, p. 24 n.

67. [67] From a letter by Engels to Der sozialistische Akademiker (1895), quoted in Seligman, The Economic Interpretation of History, pp. 58-59.

68. [68] Karl Kautsky, Die materialistische Geschichtsauffassung (Berlin, 1927), I, 3-6.

69. [69] The following references are to later writers who seem to have formulated their definitions with stress on "subsistence": B. Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, ed. by Gehrig (Jena, 1922), p. 305: E. Sax, Das Wesen und die Aufgaben der Nationalökonomie (Vienna, 1884), p. 12; P. Leroy-Beaulieu, Précis d'économie politique (Paris, 1888), p. 1; C. Perin, Premiers principes d'économie politique (Paris, 1896), p. 2.

70. [70] Thorstein Veblen, The Theory of the Leisure Class (Modern Library, 1934), p. 24.

71. [71] T. Veblen, The Place of Science in Modern Civilization and Other Essays, (New York: Viking Press, 1919), p. 91.

72. [72] T. Veblen, "The Limitations of Marginal Utility," Journal of Political Economy, 1909; reprinted in The Place of Science in Modern Civilization, p. 241. A list of passages in Veblen's writings in which the material-means-of-life criterion is used would include: T. Veblen, "Why Is Economics Not an Evolutionary Science?" Quarterly Journal of Economics, 1895, reprinted in The Place of Science in Modern Civilization, pp. 71, 76; T. Veblen, "Mr. Cummings' Strictures on 'The Theory of the Leisure Class.'" Journal of Political Economy, 1899, and "The Instinct for Workmanship and the Irksomeness of Labor," American Journal of Sociology, 1898, both reprinted in Essays in Our Changing Order (New York, 1943), pp. 27, 78, 80. It is of special interest to note that Veblen uses the phrase "material means of life" as synonymous with the object of Marx's materialism. (See his "The Socialist Economics of Karl Marx and His Followers," Quarterly Journal of Economics, 1906, reprinted in The Place of Science in Modern Civilization, p. 415.)

73. [73] Franklin Giddings, "The Economic Ages," Political Science Quarterly, June, 1901, p. 195. For a similar distinction between human economy and its biological analogues, see Lester F. Ward, "Psychological Basis of Social Economics," Annals of the American Academy of Political and Social Science, 1893, pp. 464-465.

74. [74] S. Sherwood, "The Philosophical Basis of Economics," Publications of the American Academy of Political and Social Science (October 5, 1897), p. 71.

75. [75] J. E. Cairnes, The Character and Logical Method of Political Economy (London, 1875), p. 31. (The lectures published in the book were delivered during the 1850's.)

76. [76] Cairnes, op. cit., p. 18.

77. [77] Bonamy Price, Chapters on Practical Political Economy (London, 1878), p. 19. For further references in which the wealth-focus of economics was retained, see the quotation from a speech by Robert Lowe in Cliffe Leslie, Essays in Political Economy (2nd ed.; 1888), p. 21; H. Sidgwick, The Principles of Political Economy (2d ed.; 1887), p. 12; W. F. Marriott, A Grammar of Political Economy (London, 1874), p. 1; J. N. Keynes, The Scope and Method of Political Economy (4th ed.; 1917), p. 100. Jevons and Marshall made free use of such terms as "the laws of wealth" and the "study of wealth." W. S. Jevons, "The Future of Political Economy," Fortnightly Review, November, 1876, reprinted in his Principles of Economics and Other Papers (London, 1905), p. 193; A. Marshall, Principles of Economics (8th ed.; London, 1920), p. 1. When Mr. Norman, a veteran member of the Political Economy Club, rose at the club dinner in 1876 to express his sentiments, he was not fighting an uphill battle when he asserted that the "real essence of Political Economy" is the explanation of wealth phenomena; Revised Report of the Proceedings at the Dinner of 31st May, 1876, held in Celebration of the Hundredth Year of the Publication of the "Wealth of Nations" (Political Economy Club: London, 1876), p. 26.

78. [78] References to writers in German who defined economics with special attention to Güter or Sachgüter include: G. v. Schönberg, "Die Volkswirtschaft," Handbuch der politischen Oekonomie (4th ed.; Tübingcn, 1896), p. 15; K. Knies, Die politische Oekonomie vom geschichtliche Standpuncte, (Braunschweig, 1883), p. 158; C. Menger, Untersuckungen (1883), p. 232 n.; E. v. Philippovich, Über Aufgabe und Methode der politischen Ökonomie (Freiburg, 1886), pp. 20-21; E. Sax, Das Wesen und die Aufgaben der Nationalökonomie (Vienna, 1884), H. Dietzel, Ueber das Verhaltnis der Volkswirthschaftslehre zur Sozialwirthschaftslehre (Berlin, 1881), p. 9; see also Dietzel "Beitrage zur Methodik der Wirtschaftswissenschaft," Conrads Jahrbucher, 1884, p. 18.

79. [79] See J. K. Ingram's Preface to Ely's Introduction to the Study of Political Economy (quoted by Ely in his Introduction to the enlarged edition of Ingram's A History of Political Economy [London, 1915], p. xvii); and Cliffe Leslie, "On the Philosophical Method of Political Economy," Hermathena, 1876 (reprinted in his Essays in Political Economy, p. 189).

80. [80] Cliffe Leslie, op. cit., p. 212.

81. [81] Besides the references to Dietzel's works in note 47 above, see also his "Der Ausgangspunkt der Sozialwirtschaftslehre und ihr Grundbegriff," Tübinger Zeitschrift, 1883; and his article "Selbstinteresse" in the Handwörterbuch der Staatswissenschaften (3rd ed.; Jena, 1911), VII, 435 ff.

82. [82] H. Dietzel, Theoretische Sozialökonomik (Leipzig, 1895), p. 182.

83. [83] R. T. Ely, The Past and the Present of Political Economy (Baltimore, 1884), p. 20.

84. [84] E. de Laveleye, "Les lois naturelles et l'objet de l'économie politique," Journal des économistes (April, 1883), p. 92. French writers of this period stressing richesses include: Arendt, Limousin, Landry, Beauregard, Herve-Bazin, Courtois, Worms, and Levasseur.

85. [85] For an interpretation of classical economics generally as seeing the central economic problem in the struggle of man against nature, see M. Dobb, Political Economy and Capitalism, pp. 19 f.; H. Myint, Theories of Welfare Economics, pp. 2 f.

86. [86] H. Storch, Cours d'économie politique (St. Petersburg, 1815), I, ii.

87. [87] See W. E. H. Lecky, History of the Rise and Influence of the Spirit of Rationalism in Europe (1865; American ed., 1955), pp. 335 f. On the possible influence on Lecky exerted by Comte, see Hayek, Counter-Revolution of Science, p. 187.

88. [88] For passages in his writings in which the Aussenwelt is stressed, see A. Schäffle, Die Nationalökonomie oder allgemeine Wirtschaftslehre (Leipzig, 1861), pp. 2, 24; Das gesellschaftliche System der menschlichen Wirtschaft (3rd ed.; Tübingen, 1873), p. 2; "Die ethische Seite der Nationalökonomischen Lehre vom Werthe," Gesammelte Aufsätze (Tübingen, 1885).

89. [89] On Mangoldt's and Sax's position, see E. Sax, Das Wesen und die Aufgaben der Nationalökonomie (Vienna, 1884), pp. 14-15. On Cohn's position, see Menger, Untersuchungen, p. 243. Julius Lehr in his Grundbegriffe und Grundlagen der Volkswirtschaft (Leipzig, 1893), p. 67, instead of referring to Güter, speaks of "die Dinge der Aussenwelt."

90. [90] C. A. Tuttle, "The Fundamental Economic Principle," Quarterly Journal of Economics, 1901, p. 218.

91. [91] On the existence of a line of subjective development in economics after the death of Ricardo, see M. Bowley, Nassau Senior and Classical Political Economy, ch. II.

92. [92] See A. Schäffle, "Mensch und Gut in der Volkswirtschaft" (1861) in his Gesammelte Aufsätze, pp. 158 ff.; Droz's very strongly held position is cited by an American economist, Stephen Colwell, in a preliminary essay to an edition of F. List's National System of Political Economy (Philadelphia, 1856), p. xxxvii; see also P. Cauwés, Précis du cours d'économie politique (Paris, 1881), p. 6.

93. [93] R. T. Ely, An Introduction to Political Economy (New York, 1889), p. 105.

94. [94] This continuity between the classical conception of economics as a science of wealth and the later emphasis on welfare gains in significance if classical economics is interpreted as "welfare analysis at the physical level" on the grounds that the classical economists implicitly assumed "that quantities of satisfaction of given wants are roughly proportional to quantities of physical products." H. Myint, Theories of Welfare Economics, p. xii.

95. [95] E. Cannan, A History of the Theories of Production and Distribution in English Political Economy from 1776 to 1848 (3rd ed.; London, 1917), p. 312. The quoted passage first appeared in the second edition (1903).

96. [96] On the distinction between "classificatory" and "analytical" definitions of economics, see L. Robbins, Nature and Significance of Economic Science (2nd ed.), pp. 16 f.; A. L. Macfie, An Essay on Economy and Value, p. 2; L. Fraser, Economic Thought and Language, pp. 26 f.

97. [97] "Welfare was like a fluid or a gas which, although perhaps difficult to measure, was in principle measurable..." I. Little, A Critique of Welfare Economics (Oxford, 1950), p. 9.

98. [98] Dugald Stewart, Political Economy, ed. Hamilton (1855), I, 9. The passage was written about 1810. Cf. Bonar, Philosophy and Political Economy (London, 1922), p. 152.

99. [99] J. C. L. Simonde de Sismondi, Nouveaux principes d'économie politique (3rd ed.; Geneva, 1951), p. 66.

100. [100] See W. S. Jevons, The Principles of Economics (London: Macmillan & Co., 1905), p. 49; H. H. Powers, "Wealth and Welfare," Publications of the American Academy of Political and Social Science (April 4, 1899), p. 16.

101. [101] Among French writers of the period who expressly condemned the objectivism of the definitions formulated in terms of richesses were: H. Dameth, Introduction à l'étude de l'économie politique (Paris, 1878), p. 89; A. Girault, "Les grandes divisions de la science économique," Revue d'économie politique, 1900, p. 796; E. Villey, Principes d'économie politique (Paris, 1894), p. 5; C. Gide, Principles of Political Economy (2nd American ed.; Boston, 1905), p. 3 n.; G. Tarde, Psychologie économique (Paris, 1902), I, 127.

102. [102] See L. Robbins, Nature and Significance, p. 4 and footnotes.

103. [103] For a more detailed discussion of Marshall's conception of the economic point of view, see below, chap. V. See also T. Parsons, "Wants and Activities in Marshall," Quarterly Journal of Economics, November, 1931, pp. 106 ff. For a discussion of the limitations circumscribing Marshall's adoption of the welfare formulation, see also F. Fetter, "Price Economics Versus Welfare Economics," American Economic Review, 1920, p. 721.

104. [104] E. Cannan, review of L. Robbins' Nature and Significance in Economic Journal, September, 1932, pp. 424-427.

105. [105] F. Fetter, "Price Economics Versus Welfare Economics," American Economic Review, 1920; W. C. Mitchell, The Backward Art of Spending Money and Other Essays, p. 381.

106. [106] For an informative survey of these problems, see Streeten's Appendix to his translation of Myrdal's The Political Element in the Development of Economic Theory (1954).

107. [107] D. H. Robertson, "Utility and All What?" Economic Journal, December, 1954, reprinted in his Economic Commentaries (London: Staples Press), pp. 57-58. Robertson has coined the term "ecfare" to denote the specific area of human welfare which is of concern to the economist.

108. [108] S. Bailey, "On the Science of Political Economy," in his Discourses on Various Subjects Read Before Literary and Philosophical Societies (London, 1852), p. 125. This essay was written about 1835.

109. [109] On the disrepute in which the "economic virtues" had been held, see, e.g., R. H. Tawney, Religion and the Rise of Capitalism (London, 1926), ch. IV.

110. [110] In his Inquiry into the Various Systems of Political Economy (translated by D. Boileau, New York, 1812), Ganilh devoted some thirty pages to a survey of classical and modern civilizations, attempting to show that in the latter the desire for wealth bears no similarity to its objectionable counterpart in the former.

111. [111] See R. Whately, Introductory Lectures on Political Economy (4th ed.; London, 1855), p. 25; M. Longfield, Lectures on Political Economy (Dublin, 1834), p. 3.

112. [112] R. Jennings, Natural Elements of Political Economy (London, 1855), p. 41.

113. [113] W. Bagehot, Works (Hartford, 1889), V, 224.

114. [114] See W. S. Jevons, The Theory of Political Economy (1871); (4th ed.; London: Macmillan & Co., 1911), p. 26; F. Y. Edgeworth, Mathematical Psychics (London, 1881), pp. 52-53.

115. [115] See W. S. Jevons, "Future of Political Economy," reprinted in Principles of Economics and Other Papers, pp. 197-199.

116. [116] See F. A. Hayek, The Road to Serfdom (Chicago, 1956), pp. 88-89, for an interesting commentary on the possible sinister consequences of the belief that economic affairs pertain to the more sordid sides of life.

Chapter 3

1. [1] J. Ruskin, Unto This Last, Preface, sec. 5, note.

2. [2] H. T. Buckle, History of Civilization (New York, 1871), II, 343. See also W. H. Hutt, Economists and the Public (London, 1936), p. 301, n. 2.

3. [3] Mill's essay was published originally in the October, 1836, number of the London and Westminster Review. The essay had been written several years previously. On this point see J. Bonar, Philosophy and Political Economy (3rd ed.; London, 1922), p. 239; see also Ashley, Introduction to his 1909 edition of J. S. Mill's Principles of Political Economy, p. xvi.

4. [4] J. S. Mill, "On the Definition of Political Economy," reprinted in Essays on Some Unsettled Questions of Political Economy (1844), p. 127. (All references are to the 1948 reprint by the London School of Economics and Political Science.)

5. [5] Ibid., pp. 129-132.

6. [6] Ibid., p. 137.

7. [7] Ibid., p. 140.

8. [8] The earlier classical economists had used the concept of "economic man" but had not felt the need to define his nature, to state explicitly the degree of abstraction of which he is the product, or even to say whether he exists at all. This is easily understandable. In a science of wealth it is an obvious simplification to take into account only those aspects of human nature that seem to bear most directly on the phenomena of wealth. It is only for a Mill, for whom political economy deals exclusively with the "laws of mind," that it becomes imperative to demarcate those areas in human nature that pertain specifically to the investigations of political economy. For an analysis of the role of economic man in classical political economy, see A. Fey, Der Homo Oeconomicus in der klassischen Nationalökonomie, und seiner Kritik durch den Historismus (Limberg, 1936).

9. [9] J. S. Mill, System of Logic, Book VI, ch. 9, sec. 3. A position remarkably similar to that of Mill seems to have been taken independently by Samuel Bailey, the author of A Critical Dissertation on the Nature, Measures, and Causes of Value; Chiefly in Reference to the Writings of Mr. Ricardo and His Followers (1825). It is unfortunate that Bailey's other writings, especially his essay On the Science of Political Economy, have received less attention. This essay was published as Discourse IV in S. Bailey, Discourses on Various Subjects Read Before Literary and Philosophical Societies (London, 1852); a footnote on p. 112 declares the essay on political economy to have been written in 1835 (that is, about a year before the publication of Mill's essay). Bailey objects forcefully to the usual definition of the subject in terms of wealth (pp. 107 f.). Like Mill, Bailey is concerned with distinguishing between the technical laws of production (which involve the physical sciences) and the economic laws relevant to political economy. Bailey unequivocally shifted the conception of economics from that of a science of wealth to that of a science of man and, in so doing, seems to have been tempted to create something suspiciously resembling Mill's economic man.

10. [10] R. Whately, Introductory Lectures on Political Economy (4th ed.; London, 1855), p. 16; N. Senior, An Outline of the Science of Political Economy (London, 1938), p. 27; for Senior's view of Mill's economic man, see M. Bowley, Nassau Senior and Classical Political Economy, pp. 61 f.

11. [11] See F. Y. Edgeworth, Papers Relating to Political Economy (London, 1925), I, 173. Edgeworth was aware of Marshall's denial of the necessity of self-interest for economics. See Edgeworth's review of the third edition of Marshall's Principles in Economic Journal, V, 586. On Cunningham, see his "The Perversion of Economic History," Economic Journal, II, 498. For a fuller discussion of the place of self-interest in neoclassical economics, see W. H. Hutt, Economists and the Public (London, 1936), ch. XIX. See also F. H. Knight, "Professor Parsons on Economic Motivation," Canadian Journal of Economics and Political Science, 1940, pp. 461 f.

12. [12] See especially M. Bowley, Nassau Senior and Classical Political Economy, ch. II.

13. [13] N. Senior, An Outline of the Science of Political Economy (George Allen & Unwin), p. 26.

14. [14] Henry George, The Science of Political Economy (New York, 1898), p. 88.

15. [15] F. Hermann, Staatswirtschaftliche Untersuchungen (2nd ed.; Munich, 1870), pp. 67-68. See especially p. 68 n., where Hermann cites from a review that he wrote in 1836 ideas closely similar to those written at the same time by Mill and Bailey.

16. [16] W. S. Jevons, The Theory of Political Economy (Macmillan & Co.), p. 23. See also the quotation from Jevons in Cliffe Leslie, Essays in Political Economy, p. 101.

17. [17] See A. Schäffle, Das gesellschaftliche System der menschlichen Wirthschaft (3rd ed.; Tübingen, 1873), I, 46, cited in C. Menger's Untersuchungen, p. 242.

18. [18] See A. Wagner, Grundlegung der politischen Oekonomie, Vol. I, Grundlagen der Volkswirtschaft (2d ed.; 1879), p. 9; and (3rd ed.; 1892), p. 81.

19. [19] See H. Dietzel, "Der Ausgangspunkt der Sozialwirtschaftslehre, und ihr Grundbegriff," Tübinger Zeitschrift für gesamte Staatswissenschaften, 1883; H. Dietzel, Theoretische Sozialökonomik (Leipzig, 1895), p. 81;F. J. Neumann, Grundlagen der Volkswirtschaftslehre (Tübingen, 1889), pp. 4 f; see also E. V. Philippovich, Grundriss der politischen Oekonomie, Vol. I (1913), p. 2, and W. Sombart, "Die Elemente des Wirtschaftslebens," Archiv für Sozialwissenschaft und Sozialpolitik, 1913, XXXVII, for similar expressions. For Sax's views on the usefulness of the economic principle for definition, see his Das Wesen und die Aufgaben der Nationalökonomie (Vienna, 1884), p. 12.

20. [20] It is of interest to note that Robbins has in fact used an argument almost identical with that of Dietzel to reject the material-welfare criterion towards which Dietzel was drawn. To the material-welfare economists Robbins points out the peculiar accident that generalizations valid for material-welfare activities prove to have equal applicability to other activities as well. L. Robbins, "Robertson on Utility and Scope," Economica, May, 1953, p. 105.

21. [21] A. T. Hadley, "Economic Laws and Methods," in Science Economic Discussion (New York, 1886), p. 93; for other United States writers of the period who discussed the economic principle, see J. B. Clark, Philosophy of Wealth (Boston, 1892), p. 57; R. T. Ely, Introduction to Political Economy (New York, 1889), pp. 58-59; E. R. A. Seligman, Principles of Economics (10th ed.; 1923), p. 4.

22. [22] F. B. Hawley, Enterprise and the Productive Process (New York, 1907), p. 73.

23. [23] H. J. Davenport, Outlines of Economic Theory (New York, 1896), p. 32.

24. [24] See, however, K. Kautsky, Die materialistische Geschichtsauffassung (Berlin, 1927), I, 3-6, for the denial of this.

25. [25] Of course, where maximization is itself expressed in terms of wealth, it leads back to the old notion of a specifically economic impulse (see, e.g., B. M. Anderson, Social Value [Cambridge, 1911], pp. 144-145).

26. [26] James S. Early, "The Growth and Breadth of Theoretical Economics," in Economic Theory in Review, ed. C. L. Christenson (Indiana University, 1949) p. 13.

27. [27] W. Roscher, Geschichte der National-Oekonomik in Deutschland (Munich, 1874), p. 1033.

28. [28] P. Wicksteed, Common Sense of Political Economy, ed. Robbins, I, 163-165. For some later views on the subject see Z. Clark Dickinson, "The Relations of Recent Psychological Developments to Economic Theory," Quarterly Journal of Economics, May, 1919, p. 388; see also his book Economic Motives (Harvard, 1922); T. Parsons, "The Motivation of Economic Activities," Canadian Journal of Economics and Political Science (1940).

29. [29] Among the writers who rejected the economic principle as a means of definition of the economic point of view, see especially the discussion by Oswalt of a paper by Voigt in Verhandlungen des ersten Deutschen Soziologentages, published in Schriften der Deutschen Gesellschaft fur Soziologie, 1911, p. 270; H. Halberstaedter, Die Problematik des wirtschaftlichen Prinzips (1925), p. 76; F. Zweig, Economics and Technology (London, 1936), p. 19. Compare also P. Wicksteed, The Common Sense of Political Economy, ed. Robbins, I, 159 f.

30. [30] J. Viner, "Some Problems of Logical Method in Political Economy," Journal of Political Economy, March, 1917, (Copyright 1917 by the University of Chicago), p. 248.

31. [31] K. E. Boulding, The Skills of the Economist (Cleveland: Howard Allen, 1958), p. 179.

32. [32] A. L. Macfie, An Essay on Economy and Value (London, 1936). For further discussion of Macfie's position, see chapter VI of this essay.

33. [33] See Professor Robbins' Introduction to his edition of Wicksteed's Common Sense, p. xxi.

34. [34] Wicksteed's "nontuism" was noted by Roche-Agussol in his Etude bibliographique des sources de la psychologie économique (1919), p. 61, n. 1. Roche-Agussol also points out the similarity of Wicksteed's "nontuism" to the ideas of Hawley (see especially "A Positive Theory of Economics," Quarterly Journal of Economics, 1902, pp. 233 f; and his Enterprise and the Productive Process [New York, 1907].

35. [35] P. Wicksteed, Common Sense of Political Economy, ed. Robbins, p. 175.

36. [36] P. Wicksteed, "Scope and Method of Political Economy" (reprinted in op. cit., II, 782).

37. [37] P. Wicksteed, Common Sense, p. 182.

38. [38] To be compared with Wicksteed's position is that of Viner, "Some Problems of Logical Method in Political Economy," Journal of Political Economy, March, 1917, (Copyright 1917 by the University of Chicago), p. 249: "...the economic transaction becomes non-moral in the sense that each party excludes the other from his moral situation."

39. [39] N. Senior, An Outline of the Science of Political Economy (London: George Allen & Unwin, 1938), p. 28. One recalls, in connection with this analogy, Gossen's claim to qualify as the Copernicus of economics.

40. [40] M. Pantaleoni, Pure Economics (1889; English translation, London, 1898), p. 5. (The term "mathematical economics" thus had for Pantaleoni an unusual meaning, for he gave it the task of solving "the problem of inscribing in a given triangle a rectangle of maximum dimensions, or that of circumscribing a given sphere with a minimum cone.") See also I. Little, Welfare Economics (1950), p. 21.

41. [41] See Pantaleoni, op. cit., pp. 7, 19. See also M. Pantaleoni, "An Attempt to Analyse the Concepts of 'Strong and Weak' in their Economic Connection," Economic Journal, 1898.

42. [42] See B. Croce, "On the Economic Principle I," in International Economic Papers, No. 3, p. 177.

43. [43] See J. Schumpeter, Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie (Leipzig, 1908), p. 86, for the explicit view that the economist must consider the changes in "economic quantities" as if they were caused automatically, without paying attention to the human beings who may have been involved in the appearance of such changes.

44. [44] Schumpeter's outlook on economics may be related to the influence which Mach in Vienna was exerting at the time on scientific thought. For a characterization of mechanics parallel to Schumpeter's view of economics, see Ernst Mach, The Science of Mechanics (Chicago, 1919), pp. 256 f. It is to be remarked that Schumpeter was surprisingly reticent about precisely what he understood under his güter. (See op. cit., p. 80 n.) At least one of his critics seems to have understood Schumpeter to include all that is meant by "utility." (See A. Amonn, Objekt und Grundbegriffe der theoretische Nationalökonomie, 1911, p. 129.)

45. [45] J. Schumpeter, Wesen und Hauptinhalt, pp. xvi, xvii, 47, 64.

46. [46] See, e.g., Schumpeter's paper "Über die mathematische Methode der theoretischen Okonomie," Zeitschrift für Volkswirtschaft, Sozialpolitik, und Verwaltung, XV (1908), 30-49.

47. [47] For the similarity of Pareto's position to that of Schumpeter, see his "On the Economic Phenomenon," in International Economic Papers, No. 3, p. 184, and his "Anwendungen der Mathematik auf Nationalökonomie," in Encyclopädie der mathematischen Wissenschaften, 1902, pp. 1107-1108. For a recent example of the hardiness of the Schumpeter view, see Boulding, The Skills of the Economist, pp. 28-29.

48. [48] B. Croce, "On the Economic Principle II," in International Economic Papers, No. 3, p. 197.

Chapter 4

49. [49] T. Malthus, Definitions in Political Economy, pp. 70 f. Mill's position is in his Commerce Defended (1808), p. 22; McCulloch's, in his Principles of Political Economy (1825), part I, p. 5. Parallel to the exchangeability condition required for wealth by these writers is the requirement that items of wealth be capable of appropriation and alienation. (See, e.g., S. Read, Political Economy [Edinburgh, 1929], p. 1.] Sismondi explicitly denied that exchangeability is a prerequisite for wealth (Nouveaux principes d'économie politique [Geneva, 1951], p. 71).

50. [50] Count DeStutt de Tracy, A Treatise on Political Economy (English ed., Georgetown, 1817), "Of Action," pp. 6, 15.

51. [51] R. Whately, Introductory Lectures on Political Economy (4th ed.; London, 1855), p. 4.

52. [52] Ibid., p. 5. See N. Senior, Outline of the Science of Political Economy, p. 25. Torrens, apparently, was in disagreement (ibid.), See also E. Cannan, Theories of Production and Distribution, 1776-1848, p. 7.

53. [53] On the existence of a Dublin "school" in economics during this period, see R. D. Black, "Trinity College, Dublin, and the Theory of Value, 1832-1863," Economica, New Series, XII (1945), 140-148.

54. [54] The Whately professors who endorsed the catallactic view were J. A. Lawson, Five Lectures on Political Economy, delivered before the University of Dublin, 1843 (London and Dublin, 1844), pp. 12 f.; and W. N. Hancock, An Introductory Lecture on Political Economy (Dublin, 1849), p. 7. The writer who wrote under the pseudonym Patrick Plough (and was noticed by Seligman in his "On Some Neglected British Economists," Economic Journal, 1903), bestowed on his book (London, 1842) the following title: Letters on the Rudiments of a Science, called formerly, improperly, Political Economy, recently more pertinently, Catallactics.

55. [55] Among writers who condemned the narrowness of the catallactic view were F. W. Newman, Lectures on Political Economy (London, 1851), p. 19; J. Cazenove, Thoughts on a Few Subjects of Political Economy (London, 1859), p. 70. See also W. E. Hearn, Plutology (London and Melbourne, 1864), p. 6. For later criticism of the narrowness of Whately's position, see W. Roscher, Geschichte der National-Oekonomik in Deutschland (Munich, 1874), pp. 844, 1072; P. Cauwèes, Précis du cours d'économie politique (Paris, 1881), p. 7; P. Leroy-Beaulieu, Traité théorique et pratique d'économie politique (Paris, 1896), I, 16.

56. [56] H. D. Macleod, The Elements of Political Economy (London, 1858), p. 5. Macleod stresses his independent arrival at the catallactic position. In his notion of exchange Macleod is narrower than some of his precursors. Thus he dismisses taxation from political economy on the grounds that it is not the subject of exchange. Whately expressly considered taxation as exchange (Introductory Lectures, p. 7 n.). Senior too (Outline of the Science of Political Economy, p. 87) viewed "all that is received by the officers of Government as given in Exchange for Services...." In his History of Economics, published some forty years later, Macleod carefully collected favorable references to his own work by later writers and cites the American Perry, about whom more below.

57. [57] J. A. Lawson, Five Lectures on Political Economy, pp. 12-13.

58. [58] A. Smith, Wealth of Nations, ed. Cannan (Modern Library edition), p. 13.

59. [59] See J. A. Lawson, op. cit., p. 26. (A similar ambivalence seems visible also in Plough's work cited above, n. 6.)

60. [60] A. L. Perry, Elements of Political Economy (14th ed.; New York, 1877), pp. 1, 54.

61. [61] F. A. Walker, Political Economy (New York, 1883), p. 3. Henry George's criticism is in his The Science of Political Economy (New York, 1898), p. 130.

62. [62] Albert S. Bolles, Political Economy (New York, 1878), p. 3.

63. [63] Franklin H. Giddings, "The Sociological Character of Political Economy," read at the second annual meeting of the association; published in the association's Publications, III (1889), 43. It is of some interest that Giddings, who here castigates the "absurdity" of the Perry position, has elsewhere (Essays in Honor of J. B. Clark, 1927) gratefully cited Perry's book as having been his own first textbook in economics.

64. [64] See, e.g., A. Amonn, Objekt und Grundbegriffe der theoretische Nationalökonomie (2nd ed.), pp. 160 f., for Max Weber's position; Felix Kaufmann, "On the Subject Matter and Method of Economic Science," Economica, November, 1933, pp. 384 f; H. Halberstaedter, Die Problematik des wirtschaftlichen Prinzips (1925), p. 76. Schumpeter's position is discussed later in this chapter.

65. [65] A. L. Perry, An Introduction to Political Economy (New York, 1877), p. 12.

66. [66] P. Wicksteed, "The Scope and Method of Political Economy," Economic Journal, March, 1914, reprinted in Common Sense of Political Economy, II, 781.

67. [67] See S. Newcomb, Principles of Political Economy (New York, 1886), p. 6; F. B. Hawley, "A Positive Theory of Economics," Quarterly Journal of Economics, 1902, pp. 233 f.

68. [68] A. Marshall, The Present Position of Political Economy (London, 1885), pp. 22-25.

69. [69] See especially G. Tarde, Psychologie économique (Paris, 1902), pp. 151 f., for the use of this aspect of exchange to distinguish between economics and politics. On Weber's position, see above, n. 16; see also shils and Finch, eds., Max Weber on the Methodology of the Social Sciences (Glencoe, 1949), p. 63; M. Weber, Gesammelte Aufsätze zur Wissenschaftslehre (Tübingen, 1922), pp. 365-366.

70. [70] Schumpeter's definition of economics in terms of exchange was set forth in his Das Wesen und der Hauptinhalt der theoretische Nationalökonomie (Leipzig, 1908); see especially pp. 55, 582. For Schumpeter's maturer view of exchange, see his History of Economic Analysis (1954), p. 911. For what seems to be a change in Schumpeter's appraisal of Whately's stress on catallactics, see Wesen und Hauptinhalt, p. 50 n., and History of Economic Analysis, p. 536 n.

71. [71] See A. Amonn, Objekt und Grundbegriffe der theoretischen Nationalökonomie (1st ed., 1911), p. 128; L. Robbins, Nature and Significance of Economic Science (2nd ed.), p. 21 n.

72. [72] E. R. A. Seligman, "Social Elements in the Theory of Value," Quarterly Journal of Economics, May, 1901, p. 327. See also L. Mises, Socialism (English ed., London: Jonathan Cape, 1936), pp. 114, 117.

73. [73] J. A. Schumpeter, Wesen und Hauptinhalt, p. 53.

74. [74] Op. cit., p. 49.

75. [75] Carl E. Parry, "A Revaluation of Traditional Economic Theory," American Economic Review (Supplement, 1921), p. 125.

76. [76] "If economic theory is interpreted as a critique of the competitive system of organization, its first and most general problem is that of determining whether the fundamental tendencies of free contractual relations under competitive control lead to the maximum production of value as measured in price terms." (F. H. Knight, "Fallacies in the Interpretation of Social Cost," Quarterly Journal of Economics, 1924, reprinted in The Ethics of Competition, p. 218.)

77. [77] J. E. Cairnes, "Bastiat," reprinted in his Essays in Political Economy (London, 1873), pp. 312 f.

78. [78] F. Bastiat, Harmonies économiques (8th ed.; Paris, 1881), pp. 25-28.

79. [79] R. G. Hawtrey, The Economic Problem (London: Longmans, Green & Co., 1925), p. 3.

80. [80] F. A. v. Hayek, "The Trend of Economic Thinking," Economica, May, 1933, pp. 130-131. For similar passages stressing the economic organization for the purposes of definition, see R. T. Bye, "The Scope and Definition of Economics," Journal of Political Economy, October, 1939, p. 626; K. E. Boulding, The Skills of the Economist (Cleveland, 1958), p. 8. See also F. Oppenheimer, "Alfred Amonn's 'Objekt und Grundbegriffe,'" Weltwirtschaftliches Archiv. Bd. 27 (1928), I, Literatur, p. 170.

81. [81] For samples of the literature on this point, see C. Menger's Untersuchungen (Appendix I, "Ueber das Wesen der Volkswirthschaft"); G. Schmoller, "Die Volkswirtschaft, die Volkswirtschaftslehre, und ihre Methode" (1893), reprinted in his Über einige Grundfragen der Sozialpolitik und der Volkswirtschaftslehre (Leipzig, 1898).

82. [82] For one example of German influence in this regard, see Ely's approving reference to the definition of economics as the "science of national housekeeping," an idea which he relates to that of a "Volkswirthschaft" (Introduction to Political Economy [New York, 1889], p. 95).

83. [83] See G. Schmoller, Über einige Grundfragen, p. 217.

84. [84] See G. Schmoller, Grundriss der allgemeinen Volkswirtschaftslehre (11th and 12th ed.; 1919), I, 1.

85. [85] W. Roscher, System der Volkswirtschaft, I (Berlin, 1906), 42.

86. [86] F. Kleinwachter, "Wesen, Aufgabe und System der Nationalökonemie," Conrads Jahrbucher (1889), p. 639.

87. [87] See especially A. Amonn, Objekt und Grundbegriffe (2nd ed.), pp. 153 f.

88. [88] See especially the article by Oppenheimer cited above, n. 32.

89. [89] See, e.g., D. Raymond, The Elements of Political Economy (2nd ed.; Baltimore, 1823), p. 35; Patrick Plough (pseud.), Letters on the Rudiments of...Catallactics, p. 4; R. Whately, Introductory Lectures, pp. 16, 33 f.

90. [90] On this see T. Suranyi-Unger, Economics in the Twentieth Century (English ed., New York, 1931), p. 78. See also the next section in this chapter.

91. [91] For J. S. Mill's emphasis on the social character of economic affairs, see his Essays on Some Unsettled Questions of Political Economy, pp. 133, 135, 137, 140. Amonn, in his sharply critical review of Mill's position (Objekt und Grundbegriffe, 1st ed., pp. 35-36), does not seem to take notice of these passages. Gehrig (in an essay introducing his 1922 edition of Hildebrand's Die Nationalökonomie der Gegenwart und Zukunft, p. 1x), ascribes it to the credit of the "new" economists to have first recognized the social character of their discipline.

92. [92] See Comte's Cours de philosophie positive (2nd ed., 1864), IV, 194 f.; see also the works cited above, ch. I, n. 24.

93. [93] On this see above, ch. II, n. 48. Compare Parsons' view that Marshall's conception of economics turned it into an "encyclopedic sociology," so that any separate identity of economic theory as a discipline is destroyed. (See, e.g., T. Parsons, The Structure of Social Action [Glencoe, 1949], p. 173.)

94. [94] See, e.g., A. Amonn, Objekt und Grundbegriffe (1st ed.), p. 154 n.

95. [95] It comes as not altogether a shock to discover at least one writer who advanced a view precisely opposed to that of Amonn. A. Schor (in his dissertation Die rein ökonomische Kategorie in der Wirtschaft [Königsberg, 1903]) can find the purely economic aspect of affairs only by abstracting completely from the social element.

96. [96] R. T. Bye, "The Scope and Definition of Economics," Journal of Political Economy, October, 1939, p. 625; J. F. Hayford, "The Relation of Engineering to Economics," Journal of Political Economy, January, 1917, p. 59.

97. [97] See above n. 42. See also B. M. Anderson, Social Value (Cambridge, 1911); L. H. Haney, "The Social Point of View in Economics," Quarterly Journal of Economics, 1913; T. Parsons, "Some Reflections on 'The Nature and Significance of Economics,'" Quarterly Journal of Economics, May, 1934, pp. 518 f.; Alec L. Macfie, Economic Efficiency and Social Welfare (London, 1943). The justification for what might seem the perfunctory treatment of the matters touched on in this paragraph must be that, important as they are in other connections, they have far less relevance—and that of a chiefly negative character—for our own discussion.

98. [98] On this, see Talcott Parsons and Neil J. Smelser, Economy and Society (Glencoe, 1956), p. 6.

99. [99] Ibid., Parsons and Smelser ascribe the original suggestion to Professor W. W. Rostow. See also P. A. Sorokin, Society, Culture and Personality (New York, 1947), pp. 7 f.

Chapter 5

1. [1] See, e.g., E. Cannan, A History of the Theories of Production and Distribution in English Political Economy from 1776-1848, ch. I.

2. [2] J. Dupuit, "On the Measurement of Utility of Public Works" (translated in International Economic Papers, No. 2, p. 89).

3. [3] W. Bagehot, Works (Hartford, 1889), V, 324.

4. [4] R. Lowe, "Recent Attacks on Political Economy," Nineteenth Century, November, 1878, p. 864.

5. [5] For passages in which Bagehot consistently refers to economics as the "science of business," see his Works (Hartford, 1889), III, 269; V, 243, 259, 324. See III, 44 for a passage in which Bagehot writes of Cairnes that he defined "the exact sort of science which political economy is" better than any previous writer.

6. [6] The use of money as the criterion for defining the nature of economic activity, on the grounds that human action directed towards consumer goods is first channeled into a search for general purchasing power in the form of money, bears a close similarity to a distinction used later by Robbins and Hayek. In the following chapter we shall notice the identification by these writers of the economic motive with the desire for general opportunity, the ability to achieve unspecified ends. On this point see also L. Robbins, Nature and Significance (2nd ed.), pp. 30-31.

7. [7] For examples of writers who have fairly recently sought for a defining criterion in this division between man's money-getting actions and his other actions, see K. Rivett, "The Definition of Economics," Economic Record, November, 1955, pp. 221, 229; E. Heimann, "Comparative Economic Systems," in Goals of Economic Life, ed. A. D. Ward (New York, 1953), pp. 122 f.

8. [8] Parsons has minimized the importance to Marshall of his criterion of measurability (Structure of Social Action, p. 134). Robbins consistently associates the criterion of money as a measuring rod with Pigou rather than with Marshall. See also J. N. Tewari, "What Is Economics?" Indian Journal of Economics, April, 1947, for a similar implication of a difference between Marshall and Pigou with regard to the idea of money as a measuring rod.

9. [9] A. Marshall, The Present Position of Economics (London, 1885). Passages from this lecture appear again in the Principles; in particular, several passages having reference to this chapter reappear verbatim in Appendix D (in the 8th edition).

10. [10] A. Marshall, Principles of Economics (8th ed.; Macmillan & Co.), p. 1.

11. [11] A. Marshall, The Present Position of Economics, pp. 22 f.

12. [12] Ibid., p. 28.

13. [13] Ibid., pp. 22-25.

14. [14] Ibid., p. 29.

15. [15] Ibid., p. 31.

16. [16] A. Marshall, Principles, p. 38. Similar passages are to be found on pp. 15, 27, 57.

17. [17] A. C. Pigou, Wealth and Welfare (London: Macmillan & Co., 1912), p. 3.

18. [18] Ibid., p. 8. See also Pigou's inaugural Cambridge lecture, published as Economic Science in Relation to Practice (London, 1908).

19. [19] A. C. Pigou, The Economics of Welfare (4th ed.; London: Macmillan & Co., 1932), p. 11.

20. [20] See G. Tarde, Psychologie économique (Paris, 1902), p. 77.

21. [21] B. Croce, "On the Economic Principle II," in International Economic Papers, No. 3, p. 197.

22. [22] A. Marshall, The Present Position of Economics, p. 27.

23. [23] See the article by L. Mises in Studium Generale, VI, No. 2, 1953.

24. [24] F. H. Knight, "The Nature of Economic Science in Some Recent Discussion," American Economic Review, June, 1934, p. 236.

25. [25] S. Pattern, "The Scope of Political Economy," reprinted in S. Patten, Essays in Economic Theory, ed. R. Tugwell (New York: Alfred Knopf, 1924), p. 192.

26. [26] Ibid., p. 185.

27. [27] Ibid. For other passages on economics and measurable motives, see O. R. Trowbridge, Bisocialism (1903), p. 106; R. Scoon, "Professor Robbins' Definition of Economics," Journal of Political Economy, August, 1943, p. 321.

28. [28] On the possibility of infinite utility, see P. H. Wicksteed, "On Certain Passages in Jevons' Theory of Political Economy," Quarterly Journal of Economics, 1889, reprinted in Common Sense, II, 736.

29. [29] L. Mises, Socialism (London: Jonathan Cape, 1936), p. 116.

30. [30] Writers who have criticized the criterion of money as a measuring rod include J. A. Hobson, Free Thought in the Social Sciences (New York, 1926), pp. 97 f.; R. G. Hawtrey, The Economic Problem (London, 1925), p. 184; F. A. Fetter, "Price Economics Versus Welfare Economics," American Economic Review, 1920, pp. 721, 736; A. L. Macfie, An Essay on Economy and Value (London, 1936), pp. 72-73.

31. [31] See, e.g., V. Pareto, "On the Economic Phenomenon," International Economic Papers, No. 3, p. 190; H. J. Davenport, "Fetter's 'Economic Principles,'" Journal of Political Economy, March, 1916; W. Mitchell, The Backward Art of Spending Money, pp. 232-233, 256-257; J. Viner, "The Utility Concept in Value Theory and Its Critics," Journal of Political Economy, 1925, p. 659.

32. [32] At least one writer explicitly identified the position of the "priceeconomists" as the "catallactic point of view" (Carl Parry, "A Revaluation of Traditional Economic Theory," American Economic Review [Supplement, 1921], p. 123.)

33. [33] For a discussion of the restriction of price-economics to monetary phenomena see F. A. Fetter, "Davenport's Competitive Economics," Journal of Political Economy, June, 1914, pp. 554 ff.

34. [34] See above, ch. I, n. 4.

35. [35] L. Mises, Nation, Staat and Wirtschaft (1919), p. 133. See also L. Mises, Human Action (1949), p. 232 on the same point.

36. [36] W. C. Mitchell, "The Role of Money in Economic Theory," American Economic Review (Supplement, 1916), reprinted in The Backward Art of Spending Money, p. 171.

37. [37] The Backward Art of Spending Money, pp. 256-257.

38. [38] W. C. Mitchell, "Thorstein Veblen," in The Backward Art of Spending Money, pp. 304-305.

39. [39] Op. cit., p. 256.

40. [40] C. H. Cooley, especially, expanded on the pecuniary influences on society in a number of papers in the second decade of this century. See also A. A. Young, "Some Limitations of the Value Concept," Quarterly Journal of Economics, May, 1911, p. 415.

41. [41] L. Robbins, "Live and Dead Issues in the Methodology of Economics," Economica, August, 1938, p. 344.

Chapter 6

1. [1] L. Robbins, The Nature and Significance of Economic Science (2nd ed.; Macmillan & Co.), p. 16.

2. [2] Ibid., pp. 12-14.

3. [3] L. Robbins, The Economic Causes of War (London: Jonathan Cape, 1939), pp. 117-118. This point is discussed further in a later section of this chapter.

4. [4] Earl of Lauderdale, Inquiry into the Nature and Origin of Public Wealth (Edinburgh, 1804), pp. 56-57.

5. [5] See, e.g., N. Senior, An Outline of the Science of Political Economy, pp. 14 f.

6. [6] On this point see Hayek's essay "Carl Menger," Economica, 1934, printed as the Introduction to the edition of Menger's Collected Works of the London School of Economics, p. xiii. See also Knight's critical comment on this in his Introduction to the English edition of Menger's Grundsätze (Glencoe, 1950), p. 13, n. 5.

7. [7] C. Menger, Principles of Economics (trans. Dingwall and Hoselitz, Glencoe, 1950), p. 96.

8. [8] H. Dietzel, Theoretische Sozialökonomik, p. 160.

9. [9] See A. Schäffle, Das gasellschaftliche System der menschlichen Wirthschaft (Tubingen, 1873), p. 2; G. Cohn, Grundlegung der Nationalökonomie (Stuttgart, 1885), p. 4 (see, however, an earlier passage by Cohn cited in Menger's Untersuchungen, p. 254).

10. [10] F. J. Neumann, Grundlagen der Volkswirtschaftslehre (Tübingen, 1889), p. 16.

11. [11] L. Haney, History of Economic Thought (New York: Macmillan & Co., 1949), p. 600; see also K. Wicksell, Lectures on Political Economy (London, 1934), I. 32, for the same point.

12. [12] For these references to precursors of Robbins' definition, see Nature and Significance, pp. 15, 16; L. Robbins, "Live and Dead Issues in the Methodology of Economics," Economica, August, 1938, p. 344; A. Lowe, Economics and Sociology (London, 1935), p. 42; A. Emery, "The Totalitarian Economics of Othmar Spann," Journal of Social Philosophy, April, 1936, pp. 270-271; F. Oppenheimer, "Alfred Amonn's 'Objekt und Grundbegriffe,'" Weltwirtschaftliches Archiv, Bd. 27 (1928), I, 174-175. A. Voigt, "Die Unterscheidung von Wirtschaft und Technik, Erwiderung," Zeitschrift fur Sozialwissenschaft, 1915, p. 395; Shils and Finch, eds., Max Weber on the Methodology of the Social Sciences (Glencoe: Free Press, 1949), pp. 63 f.; Gesammelte Aufsatze zur Wissenschaftslehre von Max Weber (Tübingen, 1922), p. 365. See, however, Weber's comment on Voigt's position, in Verhandlung des ersten Deutschen Soziologentages (Schriften der Deutschen Gesellschaft für Soziologie, 1911), pp. 265 f.

13. [13] See D. H. MacGregor, Economic Thought and Policy (London, 1949), pp. 1-6; see also O. F. Boucke, A Critique of Economics (New York, 1922), p. 249.

14. [14] See H. Myint, Theories of Welfare Economics (Harvard, 1948), pp. 2 f., for a discussion of the position of the classical economists towards the scarcity view of economics.

15. [15] L. Robbins, Nature and Significance, p. 15 n.; for examples of writers who seem to view the act of economizing as being essentially identical with that of maximizing, see F. H. Knight, "The Nature of Economic Science in Some Recent Discussion," American Economic Review, June, 1934, p. 228; F. Machlup, "Marginal Analysis and Empirical Research," American Economic Review, September, 1946, p. 519.

16. [16] L. Robbins, Nature and Significance, pp. 16-17; see also Robbins' Introduction to his edition of Wicksteed's Common Sense of Political Economy, p. xxii.

17. [17] Among the writers who have hailed Robbins' stress on the concern of economics with an aspect of action are A. L. Macfie, An Essay on Economy and Value, pp. 2-6; G. Tagliacozzo, "Croce and the Nature of Economic Science," Quarterly Journal of Economics, May, 1945, pp. 308 f; W. H. Hutt, Economists and the Public (London, 1936), pp. 308-309.

18. [18] L. M. Fraser, Economic Thought and Language, p. 32.

19. [19] These writers include E. Heimann, "Comparative Economic Systems," in Goals of Economic Life, ed. by A. D. Ward (New York, 1953), p. 122; J. S. Early, "The Growth and Breadth of Theoretical Economics," in Economic Theory in Review, ed. by C. L. Christenson (1949), pp. 12-13; see also S. Schoeffler, The Failures of Economics: a Diagnostic Study (Harvard, 1955), pp. 11 f.

20. [20] For examples see B. Higgins, What Do Economists Know? (Melbourne, 1951), pp. 2-3; L. M. Fraser, Economic Thought and Language, p. 32; L. Robbins, Nature and Significance, p. 22. See also G. J. Stigler, The Theory of Price (revised ed., 1952), p. 1 n.

21. [21] Nature and Significance, pp. 19 f.

22. [22] R. W. Souter, "The Nature and Significance of Economic Science' in Recent Discussion," Quarterly Journal of Economics, May, 1933, p. 384.

23. [23] Ibid., p. 386.

24. [24] Ibid., p. 399.

25. [25] Ibid., p. 390.

26. [26] Ibid., p. 395 n.

27. [27] Ibid., p. 400.

28. [28] T. Parsons, "Some Reflections on 'The Nature and Significance of Economics,'" Quarterly Journal of Economics, May, 1934, pp. 536-537, 530-531.

29. [29] J. S. Early, "The Growth and Breadth of Theoretical Economics," in Economic Theory in Review, p. 13.

30. [30] On these matters see G. Myrdal, Value in Social Theory (London, 1958), pp. 206 ff. See also the Introduction by P. Streeten, pp. xxi f.

31. [31] R. W. Souter, op. cit., p. 379; T. Parsons, op. cit., pp. 513-516; A. L. Macfie, An Essay on Economy and Value, p. 16; see also F. H. Knight's review of Robbins' Nature and Significance in the International Journal of Ethics, April, 1934, p. 359.

32. [32] T. Parsons, op. cit., pp. 514 f.

33. [33] For Robbins' views on the purposive element in economic activity, see Nature and Significance, p. 93.

34. [34] F. Kaufmann, "On the Subject Matter and Method of Economic Science," Economica, November, 1933, p. 383.

35. [35] See F. Zweig, Economics and Technology (London, 1936), p. 20.

36. [36] T. Parsons, op. cit., pp. 523 f.

37. [37] Cited in L. Robbins, Nature and Significance, p. 35. See also E. Fossati, The Theory of General Static Equilibrium, ed. G. L. Shackle (1957), p. 9.

38. [38] K. Rivett, "The Definition of Economics," Economic Record, Vol. XXXI, No. 61 (November, 1955), pp. 217-219.

39. [39] G. Tagliacozzo, "Croce and the Nature of Economic Science," Quarterly Journal of Economics, May, 1945.

40. [40] Cf. Parsons, The Structure of Social Action, ch. IV, for a discussion of the degree in which Marshall refused to consider wants as data for economics.

41. [41] On this see, e.g., F. H. Knight, "Professor Parsons on Economic Motivation," Canadian Journal of Economics and Political Science, 1940, p. 464.

42. [42] The fact that means as well as ends are data for the economist is made clear by a number of writers; see A. Lowe, Economics and Sociology, p. 43: F. H. Knight, "The Nature of Economic Science in Some Recent Discussion," American Economic Review, 1934, p. 229. Among the writers apparently not admitting this, see W. C. Mitchell, Backward Art of Spending Money, p. 224.

43. [43] Max Weber, The Theory of Social and Economic Organization (translated by A. M. Henderson and T. Parsons, New York, 1947), pp. 162, 209. For passages in which Weber discusses the distinction between economics and technology, see Shils and Finch, eds., Max Weber on the Methodology of the Social Sciences (Glencoe: Free Press, 1949). pp. 34-35; and "R. Stammler's 'Ueberwindung' der materialistischen Geschichtsauffassung," Archiv fur Sozialwissenschaft und Sozialpolitik, 1907, reprinted in Gesammelte Aufsatze zur Wissenschaftslehre von Max Weber, p. 328.

44. [44] See, e.g., F. Zweig, Economics and Technology (London, 1936), pp. 20 f.

45. [45] For an example of the use of this kind of distinction, see Dorfman, Samuelson, and Solow, Linear Programming and Economic Analysis (1958), p. 202.

46. [46] F. H. Knight, "The Nature of Economic Science in Recent Discussion," American Economic Review, June, 1934, p. 228; see also Knight's review of Robbins' Nature and Significance in the International Journal of Ethics, April, 1934, p. 359; and his "Professor Parsons on Economic Motivation," Canadian Journal of Economics and Political Science, 1940, p. 463.

47. [47] See especially T. Parsons, Quarterly Journal of Economics, May, 1934, pp. 516-518.

48. [48] F. Hayek, The Road to Serfdom (University of Chicago Press, copyright 1956 by the University of Chicago), p. 89, and footnote. See also above, ch. V, n. 6.

49. [49] P. Plough (pseud.), Letters on the Rudiments of...Catallactics (London, 1842), p. 15.

50. [50] For such criticism see K. Rivett, "The Definition of Economics," Economic Record, November, 1955, pp. 227 f.

51. [51] G. Myrdal, Value in Social Theory (London: Routledge & Kegan Paul, 1958), p. 237; see also Myrdal's Political Element in the Development of Economic Theory.

52. [52] J. A. Schumpeter, History of Economic Analysis (1954), p. 805.

53. [53] Nature and Significance, pp. 147 ff.

54. [54] For the claim to have discovered an inconsistency in Robbins' position on this point, see L. M. Fraser, "How Do We Want Economists to Behave?" Economic Journal, December, 1932, p. 557 n.; A. L. Macfie, An Essay on Economy and Value, p. 27.

55. [55] L. Robbins, "Mr. Hawtrey on the Scope of Economics," Economica, 1927, p. 174.

56. [56] On Knight's position in the positive-normative controversy, see his article: "Professor Parsons on Economic Motivation," Canadian Journal of Economics and Political Science (1940), p. 461; see, however, below n. 65.

57. [57] R. Souter, Quarterly Journal of Economics, May, 1933, pp. 402 ff.

58. [58] Cf. T. W. Hutchison, Significance and Basic Postulates of Economic Theory (London, 1938), pp. 153-155.

59. [59] See T. Parsons, Quarterly Journal of Economics, May, 1934, p. 520.

60. [60] A. L. Macfie, An Essay on Economy and Value (Macmillan & Co.), p. 69.

61. [61] Ibid., pp. vii-viii. See also Macfie's article "What Kind of Experience Is Economizing?" Ethics, 1949, pp. 19 ff.

62. [62] See also the discussion concerning Macfie's position above in ch. III of this essay.

63. [63] A. L. Macfie, Economy and Value, p. 34.

64. [64] Ibid., pp. 69-70.

65. [65] See Knight's preface to Macfie, Economic Efficiency and Social Welfare (London, 1943), p. v; see also F. H. Knight, "'What Is Truth' in Economics?" Journal of Political Economy, February, 1940, reprinted in his On the History and Method of Economics (Chicago, 1956), p. 172; F. Kaufmann, "On the Postulates of Economic Theory," Social Research, September, 1942, p. 393.

66. [66] T. Veblen, Theory of the Leisure Class (Modern Library, 1934), p. 15.

67. [67] T. Veblen, Essays in Our Changing Order (New York: Viking Press, 1943), pp. 80-81; see also R. B. Perry, "Economic Value and Moral Value," Quarterly Journal of Economics, May, 1916, pp. 444 f.

68. [68] R. T. Bye, "The Scope and Definition of Economics," Journal of Political Economy, October, 1939 (Copyright 1939 by the University of Chicago), p. 645.

69. [69] T. Scitovsky, Welfare and Competition (London, 1952), p. 9.

70. [70] R. T. Bye, op. cit., p. 646.

71. [71] B. Wootton, Lament for Economics (New York, 1938), p. 106.

72. [72] See Wootton, op. cit., p. 96; cf. also T. W. Hutchison, Significance and Basic Postulates, p. 135.

73. [73] K. Rivett, "The Definition of Economics," Economic Record, Vol. XXXI, No. 61 (November, 1955), p. 217.

Chapter 7

74. [74] On the term "praxeology," see A. Espinas, "Les origines de la technologie," Revue philosophique de la France et de l'étranger, 15th Year, July-December, 1890; L. Mises, Human Action (1949), p. 3; F. A. Hayek, The Counter-Revolution of Science, p. 209, note 20.

75. [75] For such early glimpses of the possibility of a science of human action, see H. Storch, Cours d'économie politique (St. Petersburg, 1815), I, ii; R. Jennings, Natural Elements of Political Economy (London, 1855), p. 41, where political economy is described as "a science of human actions"; W. E. Hearn, Plutology: or the Theory of the Efforts to Satisfy Human Wants (London and Melbourne, 1864).

76. [76] Sidney Sherwood, "The Philosophical Basis of Economics, A Word to Sociologists," Publications of the American Academy of Political and Social Science, October 5, 1897.

77. [77] See further above, ch. II, in the section entitled "The Science of Subsistence."

78. [78] See, however, T. Parsons, "Economics and Sociology: Marshall in Relation to the Thought of His Time," Quarterly Journal of Economics, February, 1932, p. 340, for the emphasis on that aspect of Pareto's thinking which cuts him off from economic behaviorism.

79. [79] See International Economic Papers, No. 3, pp. 190, 204.

80. [80] For a similar charge of implicit metaphysical bias in the position of those denying the concept of human action, see L. Mises, Theory and History (Yale, 1957), pp. 3 f.

81. [81] The writings of R. G. Collingwood reveal some similarity to Croce's views. See, e.g., his "Human Nature and Human History," Proceedings of the British Academy, Vol. XXII (1936): "The self-knowledge of reason is not an accident; it belongs to its essence." See also his "Economics as a Philosophical Science," Ethics, Vol. XXXVI (1926).

82. [82] B. Croce, Philosophy of the Practical (English ed.; London: Macmillan & Co., 1913), pp. 365-371. For a brief exposition of the position which Croce's views on economy occupy within his complete system of philosophy, see G. Tagliacozzo, "Croce and the Nature of Economic Science," Quarterly Journal of Economics, May, 1945.

83. [83] M. Weber, "Die Objektivitat sozialwissenschaftlicher und sozialpolitischer Erkenntnis," Archiv fur Sozialwissenschaft und Sozialpolitik, 1904; translated in Shils and Finch, eds., Max Weber on the Methodology of the Social Sciences (Glencoe: Free Press, 1949), p. 83.

84. [84] See, e.g., M. Weber, "Die Grenznutzlehre und das 'psychophysische' Grundgesetz," Archiv fur Sozialwissenschaft und Sozialpolitik, 1908; reprinted in Gesammelte Aufsatze zur Wissenschaftslehre von Max Weber (Tübingen, 1922), pp. 364-365.

85. [85] For criticism of Weber's conception of economics, see L. Mises, "Soziologie und Geschichte, Epilog zum Methodenstreit in der Nationalökonomie," Archiv fur Sozialwissenschaft und Sozialpolitik, 1929, pp. 465 ff. See further T. Parsons, The Structure of Social Action, ch. XVI, and Essays in Sociological Theory, Pure and Applied (Glencoe, 1949), pp. 67-147.

86. [86] Cf. F. A. Hayek, The Counter-Revolution of Science, p. 209, n. 24.

87. [87] See also L. Mises, Socialism (English ed.; London, 1936), pp. 111 ff.; L. Mises, "Vom Weg der subjektivistichen Wertlehre," Schriften des Vereins fur Sozialpolitik, 183/1, pp. 76-93; L. Mises, "Begreifen und Verstehen," Schmollers Jahrbuch, 1930.

88. [88] See, e.g., L. Robbins, Nature and Significance (1930); also his "Live and Dead Issues in the Methodology of Economics," Economica, August, 1938; F. Kaufmann, Methodology of the Social Sciences (English ed.; New York, 1944), ch. XVI; M. Bowley, Nassau Senior and Classical Political Economy (1937), p. 64; T. W. Hutchison, The Significance and Basic Postulates of Economic Theory (1938); O. Morgenstern, The Limits of Economics (English ed.; 1937), p. 154.

89. [89] See, e.g., L. M. Lachmann, "The Science of Human Action," Economica, November, 1951, p. 413.

90. [90] See, e.g., G. H. Schmidt, "Rapports de l'économie politique avec la morale et le droit," Revue d'économie politique, 1900, p. 334; G. Trade, Psychologie économique (Paris, 1902), p. 151.

91. [91] On the use of teleology for the recognition of causation as running from the future back to the present, see W. C. Mitchell, "Commons on Institutional Economics," American Economic Review, December, 1935, reprinted in The Backward Art of Spending Money, p. 334; Z. C. Dickinson, "The Relations of Recent Psychological Developments to Economic Theory," Quarterly Journal of Economics, May, 1919, p. 388; see also the reference to Weber's writing above in note 10. Cf., however, M. J. Plotnick, Werner Sombart and His Type of Economics (New York, 1937), pp. 88-89.

92. [92] K. Engliš, Grundlagen des wirtschaftlichen Denkens (Brunn, 1925).

93. [93] See J. N. Tewari, "What Is Economics?" Indian Journal of Economics, April, 1947, pp. 421 ff., for the identification of rationality with purposefulness.

94. [94] For an example of this kind of criticism, see J. Robinson, Economics Is a Serious Subject (Cambridge, 1932), p. 10.

95. [95] For this type of objection, see L. M. Fraser, Economic Thought and Language, p. 37 n.; T. W. Hutchison, Significance and Basic Postulates of Economic Theory, pp. 115 ff.

96. [96] Croce's characterization of the action of a man yielding to temptation as placing himself in contradiction to himself finds a recent echo in a passage in Little's Critique of Welfare Economics, p. 23. Little makes it clear that what is meant by a man's maximization of his utility is simply his behaving in the way in which he said he would behave. "Roughly speaking, maximizing utility means telling the truth."

97. [97] International Economic Papers, No. 3, p. 201. For an appraisal of Croce's position, see A. L. Macfie, An Essay on Economy and Value, Appendix B, pp. 143 ff.

98. [98] International Economic Papers, No. 3, p. 177.

99. [99] Professor Mises has not recognized the close similarity to his own position which is evidenced in Croce's writing (see L. Mises, Theory and History, p. 308). What appears to be the principal point of difference between their positions has little relevance to the conception of the character of economic science. Both writers emphasize the rationality of all human action; both recognize that a chosen program may fail to be adhered to either because of a technical error (an error of knowledge) or because of the choice of a new program of ends with respect to which action will be "rational." Where the two writers disagree is that the discarding of a chosen program in favor of one chosen in response to a "temptation of the moment" is, for Croce, itself a special kind of error—an economic error, an error of will. For Mises, there is room for only one kind of error, an error of knowledge (see Theory and History, p. 268). The conscious abandonment of a chosen program under the influence of a fleeting temptation is considered "positively" as merely the adoption of a new set of ends instead of the old, and that is all.

100. [100] G. Tagliacozzo, "Croce and the Nature of Economic Science," Quarterly Journal of Economics, May, 1945, pp. 319-320.

101. [101] Especially relevant to the considerations of this section are Mises' strictures on Weber's "ideal type" of rational economic behavior. See above, note 10.

102. [102] The proposition that the notion of purpose implies a constraint that one select the most suitable means for the fulfilment of the purpose is not a proposition about that purpose. The proposition as such cannot, for example, be "explained" (as Macfie does) by the postulation of a moral urge to fulfil one's purposes. Rather, the proposition, on the praxeological view, sets forth the nature of purpose itself. The statement that man's actions are purposeful is thus only another way of saying that man feels constrained to match means to ends.

103. [103] F. H. Knight, "Professor Parsons on Economic Motivation," Canadian Journal of Economics and Political Science, 1940, p. 463. In this connection it is of interest to notice that the position of economic science in the face of changing hierarchies of chosen programs has been set forth with exceptional clarity by F. S. C. Northrop in his article "The Impossibility of a Theoretical Science of Economic Dynamics," Quarterly Journal of Economics, November, 1941, reprinted as ch. XIII in his The Logic of the Sciences and the Humanities (New York: Macmillan & Co., 1947). Northrop demonstrates the impossibility of theoretical economic dynamics (on the assumptions and with the method of contemporary economic theory) by pointing out the lack, in economic affairs, of the conditions for such a theory. The data of economics (human wants) are, for its theorems, purely formal entities, whose specific properties are necessarily not to be considered. Moreover, there is no way of deducing the structure of future wants from present wants because wants obey no "conservation law." Nor, Northrop adds, is there any a priori reason why the subject matter of economics should be conceived in terms of concepts obeying such a law. The quest for an economic dynamics may well "have its basis in a dogmatic assumption, with respect to which our empirical knowledge already gives the lie." Northrop takes two groups of critics to task: those who mistakenly demand of economics that it take account of changes in the basic data—the relevant chosen ends; and those who, despairing of such an achievement, conclude that economics is of no use whatsoever. Both extremes err in their assessment of the nature of the scientific contribution that it is in the power of economic theory to make.

104. [104] See, e.g., L. Mises, Theory and History, ch. XII; F. H. Knight, "Professor Parsons on Economic Motivation," Canadian Journal of Economics and Political Science, 1940, pp. 463 ff.; F. H. Knight, "'What Is Truth' in Economics?" On the History and Method of Economics (Chicago, 1956), pp. 171-173.

105. [105] For passages in which the a priori view has been compared to scholasticism, see R. F. Harrod, The Trade Cycle, pp. 38-39; E. C. Harwood, Reconstruction of Economics, p. 39.

106. [106] See, e.g., T. W. Hutchison, Significance and Basic Postulates of Economic Theory, p. 116; P. A. Samuelson, Foundations of Economic Analysis (Cambridge, 1948), p. 91.

107. [107] On this see the references in the previous note; see also A. G. Papandreou, Economics as a Science (1958). For a criticism of this position, see F. Machlup, "The Inferiority Complex of the Social Sciences" in On Freedom and Free Enterprise, Essays in Honor of Ludwig von Mises, ed. M. Sennholz (1956).

108. [108] L. Robbins, "Live and Dead Issues in the Methodology of Economics," Economica, August, 1938, p. 348.

109. [109] See, e.g., L. Mises, Theory and History, pp. 283 ff.; F. H. Knight, "'What Is Truth' in Economics?" On the History and Method of Economics, p. 160; F. A. Hayek, Counter-Revolution of Science, Part I, ch. III; cf. also P. A. Sorokin, Socio-cultural Causality, Space, Time (Durham, 1943), ch. I. See also F. S. C. Northrop, Logic of the Sciences and the Humanities, p. 247, for the recognition of the "empirical verification" of economic theory in the confirmation of its logical derivation from the immediately confirmed postulates. On this see also M. Rothbard, "Mises' 'Human Action': Comment," American Economic Review, March, 1951, p. 181; M. Rothbard, "Towards a Reconstruction of Utility and Welfare Economics" in On Freedom and Free Enterprise, Essays in Honor of Ludwig von Mises, ed. M. Sennholz (1956), pp. 225-228.

110. [110] L. Mises, Human Action (Yale, 1949), p. 65; cf. M. Pantaleoni, Pure Economics (English ed.; London, 1898), p. 8.

111. [111] L. Mises, Human Action, p. 66. See also F. A. Hayek, "Economics and Knowledge," Economica, 1937; reprinted in Individualism and Economic Order (1948), pp. 47-48.

112. [112] See especially the remarks on Mises' "apriorism" by H. Bernadelli in his "What Has Philosophy to Contribute to the Social Sciences, and to Economics in Particular?" Economica, November, 1936, p. 449. For an analysis of propositions concerning land rent which displays the a priori nature of the pure economic theory involved as well as its relation to the empirical finding that makes the theory applicable to specific situations, see Hayek, Counter-Revolution of Science, p. 32.

113. [113] For a systematic table of the possible praxeological sciences and the place that economics occupies within the system, see M. Rothbard, "Praxeology: Reply to Mr. Schuller," American Economic Review, December, 1951, pp. 945-946.

114. [114] F. H. Knight, "The Common Sense of Political Economy," Journal of Political Economy, October, 1934, reprinted in On the History and Method of Economics (University of Chicago Press, copyright 1956 by the University of Chicago), p. 110.

115. [115] L. Mises, Human Action, p. 235.

116. [116] C. L. Robbins, Nature and Significance, p. 22.

117. [117] E. Cannan, Wealth (1st ed.), ch. I.

118. [118] L. Robbins, Nature and Significance, p. 22.

End of Notes

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