1800-1900: Economics Classics, Including Neoclassical Thought

PRINT
Bagehot, Walter, The Postulates of English Political Economy.
    Overview of the features of political economics as developed in England (as opposed to the French school of thought). For labor mobility, see particularly, Chapter I, The Transferability of Labor, which discusses the importance of the condition of mobility of labor as a condition for the assumptions of much economic theory. There is also an interesting discussion of the substitution effects between free and slave labor. Difficulty Level 1: College
Bagehot, Walter, Lombard Street Bastable, Charles, Public Finance. Bastiat, Frederic, Economic Sophisms, Selected Essays on Political Economy, and much more.
    Bastiat was one of the liveliest economics essayists who ever wrote for the popular press. He had a theme of the inconsistencies of government taxation and regulation. See the incomparable Petition of the candlemakers in Economic Sophisms, for a memorable satire. Bastiat, a political reformer who discovered economics late in life, never claimed to be adding to new academic thought to the mix, but his writings highlighted up-to-date economic thinking. His extraordinary and often-unnoticed essay on the insurance effects of wages contracts in Economic Harmonies was as modern, clear, and prescient as if it had been written a century later. See also the Annotated Bibliography by Sheldon Richman. Difficulty Level 0: High School

Böhm-Bawerk, Eugen V., Capital and Interest

Clark, John Bates, The Distribution of Wealth
    This work, first published in 1899, was the book that presented the concept of marginal productivity to the economics profession in the last decade of the 1800s. Incomparably clear and well-organized, though slow-paced by today's standards, this book explained production, wages, rents, profits, labor, capital, and land so clearly that economists never got it wrong again. In a systematic manner, he demonstrated in the text and footnotes the differences between marginal productivity theory and the assumptions and implications of common, though often already suspect, theories of wage determination, from the wages-fund theory to the labor theory of value.

    Clark's work went head-to-head with Eugen v. Böhm-Bawerk's contemporaneous and comparably detailed work, though the latter in its focus on interest rates rather than wages, headed at the distribution question from the other side. For a discussion, see the Brief Review of Eugen v. Böhm-Bawerk's Capital and Interest.

    Clark explicitly set aside the issue of investment creating new capital, ("dynamics," as he termed it, as opposed to "statics"), a distinction that enabled him and subsequent economists to isolate current from intertemporal economic forces. Difficulty Level 2: Graduate School

Jevons, William Stanley, Theory of Political Economy

Macaulay, Thomas Babington, Southey's Colloquies on Society.

    A scathing review of the ignorant economic meanderings of the poet laureate, Robert Southey. Difficulty Level 1: College
Mackay, Charles, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds
    Mackay, an editor and documentary reporter, brought his incessantly skeptical eye to business bubbles, the lures of riches, and the hopes of unscientific claims ranging from alchemy to ghosts. The first three chapters, on the Mississippi Land Scheme, the South Sea Bubble, and his famous chapter on Tulipomania, are the most useful to economists. However, many other chapters in this entertaining book convey his succinct, objective historical reporting style. Difficulty Level 0: High School
Malthus, Thomas Robert, An Essay on the Principle of Population. The First Edition, and Sixth Edition.
    The First Edition, a short work discussing both supply and demand factors influencing population size, was an immediate popular hit, but was widely misunderstood and oversimplified at the time and ever since. Although Malthus's famous example (see specifically Chapter II) showing how population grows exponentially while the food supply grows arithmetically is often used to illustrate a morose prospect for economic conditions in the future, in fact the example was intended only to illustrate conditions in the absence of economic choices and economic "checks" to the population exercised by humans. (For more on the popular misunderstandings of Malthus see the related Teacher's Corner by Morgan Rose.)

    In the second and subsequent editions, culminating in the extraordinary final Sixth Edition, Malthus successively clarified his explanations and provided extensive, path-breaking empirical work, country by country, to test his hypotheses about the interaction of human, economic-based choice as a check to the lock-step progressions of arithmetic. This work, wonderfully readable today and recognized by academic economists of its day, set the stage for a major theme in economics-as-a-social-science: an objective separation of theory, evidence, and applications.

    Greatly respected by economists in his day, but often misunderstood and mis-summarized by laymen then and since, Malthus was one of the first economists to popularize the importance of first-hand research in economics, in the form of his travelling to collect first-hand data (for editions after the 1st, e.g., 6th edition: Books I-II), Malthus cleverly explores dozens of applications (6th edition: Book III), and addresses many moral and religious concerns (6th edition: Book IV). He was also one of the first economists to introduce the power of mathematics to economics, in the form of his often-misunderstood comparison of arithmetic versus geometric progressions as an illustration of possible underlying determinants of differing growth rates when unchecked by economic incentives. Difficulty Level 1: College

Malthus, Thomas Robert, Principles of Political Economy, Considered with a View Towards Their Application

Marcet, Jane Haldimand, Essays.

Marshall, Alfred, Principles of Economics, 8th edition

    The first "modern" economics textbook, leading in various editions from the 19th into the 20th century. The final 8th edition was Marshall's most-used and most-cited. Difficulty Level 1: College
McCulloch, J. R., Principles of Political Economy

Menger, Karl, Principles of Economics

Mill, James, Elements of Political Economy

    The superior exposition in this classic work goes far in explaining James Mill's lasting appeal. Most often remembered as an expositor of David Ricardo and as the most unforgettable home-schooling parent of all time (through the eyes of his ultimately more famous son, John Stuart Mill), James Mill's original work has much to offer. Consider the excellent summaries of diminishing marginal returns in Chapter II, of comparative advantage in Chapter III, Section V, of the quantity theory of money and the market for foreign exchange in Chapter III, Sections VII-XVI, and of the aggregate budget constraint and the relationship between bequests and tax burdens in Chapter IV. Difficulty Level 1: College

    James Mill's exposition of the labor theory of value is so compelling and simple that it stood for over a generation, to much unfortunate misapplication. It still represents a logic so apparently correct that students and laymen alike easily lapse into it. Where is the error? Any classroom explanation of the errors of the labor theory of value would do well to start with reading Mill's clear description, and then to show exactly where and why the logic veers off course.

    Here's a short set of college-level readings on the Labor Theory of Value to address just that:

      From Ch. III, Sect. II, of the Elements of Political Economy by James Mill
      From Book V, Ch. I of Capital and Interest by Eugen v. Böhm-Bawerk. Direct discussion of James Mill's paragraphs on the subject.
      Marxism by David L. Prychitko (in the CEE)
      Carl Menger, biography in the CEE

Mill, John Stuart, Principles of Political Economy, Ashley edition.

    Mill never claimed to be adding new academic economic insights to the existing body of thought, but his meticulous organization of and elaboration on what was available, working to make consistent the existing ideas of Smith, Ricardo, and other English and French academics, made it possible for generations of contemporary and succeeding economists to understand and sort out what was known from what was unknown.

    The Ashley edition documents the various small changes in the work over time and fills in many incomplete references, which, at the time, were not customary to state in full. Difficulty Level 1: College

Pigou, Arthur, Economics of Welfare

Ricardo, David, On the Principles of Political Economy and Taxation

    The work that gave economists meaning to the terms "comparative advantage" and "Ricardian equivalence." Ricardo's writing style was not engaging or lively, but the content addressed important matters that Adam Smith had left unclear and was widely noticed by contemporary and subsequence economists. See Teacher's Corner for more on the concept of Comparative Advantage. Difficulty Level 2: Graduate School
Say, Jean-Baptiste, A Treatise on Political Economy

Senior, Nassau W., Political Economy

Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Cannan edition.

    The book that launched economics as a credible, organized academic pursuit. Introduced concepts such as the "division of labor" (see Book I, Chapter I) and the working of the "invisible hand" as a summary metaphor for market incentives. Introduced (by means of tables) and thereby solidified the importance of using data to support contentions in economics. Although published in 1776, the work instantly created a natural dividing point between earlier, eighteenth-century economic thought, and economics in the nineteenth century.

    The frequently-cited Cannan edition is based on Smith's fifth edition, and thoroughly documents the various small changes in the work over time and fills in many incomplete references, which, at the time, were not customary to state in full. Difficulty Level 1: College

Smith, Adam, The Theory of Moral Sentiments.

Walras, Leon, Elements of Pure Economics, or, The Theory of Social Wealth

Wicksteed, Philip H., The Common Sense of Political Economy

    Contemporaneously with, though slightly following, Marshall, this book was one of the first "modern" textbooks leading from the 19th into the 20th century. Wicksteed substantively furthered the work of John Bates Clark on marginal productivity theory. Although Marshall's Principles generally receives more attention, Wicksteed's explanations are sometimes clearer, more precise, and more modern. Try this book and you may find that you prefer it! Difficulty Level 1: College