John Bates Clark was one of the leading American economists of the late 19th and early 20th centuries. He made contributions in the areas of utility theory, marginal productivity theory, capital theory, and competition and antitrust. In his later years, he focused on how to end war.

Much of Clark’s early work was collected in The Philosophy of Wealth (1886). In that collection is Clark’s statement of the idea of marginal utility, which he called “effective utility.” He was not the first economist to adopt the concept of “marginal utility.” That distinction goes to the three founders of marginal utility theory, William Stanley Jevons of England, Carl Menger of Austria, and Leon Walras of Switzerland. But, according to George J. Stigler, Clark independently discovered it. Clark stated it well:

Give to a man one unit of the article A, and then another and another, till he has ten of them. While each of the articles in the series may do him some good, the amount of the benefit will Steadily diminish, as the number of the articles grows larger, and the tenth one will benefit him least of all. In order to add to his stock of A, the man will never sacrifice more than what is, in his view, a fair offset for the benefit that he will get from the tenth and last unit of it. In order that an article may be wealth at all, each unit of the supply of it must, as we have seen, be of some importance to its owner. The law that we have just cited marks the last unit of the supply as the least important unit. This is one of the universal laws of economics. (Distribution of Wealth, p. 42.)

Clark also gave a nice exposition of how the marginal product of labor determines the wage rate. He wrote:

Looking first at market values, rather than natural ones, we noted that there is a commercial principle which causes the final or marginal part of the supply of anything to be strategic in its action on the value of the whole supply. The value of the whole crop of wheat, for example, conforms to that of the marginal bushel of it. If there are marginal laborers, in the sense in which there are marginal quantities of wheat, cotton, iron, etc., then these final or marginal men are likewise in a strategic position; for their products set the standard of every one’s wages. (Distribution of Wealth, p. 90)

Clark argued that laborers got their just rewards if they received what they produced. George Stigler criticized this view, wanting to keep the issue of justice out of the discussion. By equating marginal product and just rewards, argued Stigler, “Clark was a made-to-order foil for the diatribes of a Veblen.”[1]

One refreshing insight from his 1886 book that seems to be lost to modern economists, at least in their written work, is the idea that few people are purely laborers and few are purely owners of capital. Clark wrote:

Nearly every man’s income, furthermore, is more or less composite. Laborers own some capital, capitalists perform some labor, and entrepreneurs usually own capital and perform a kind of labor. (Distribution of Wealth, p. 5.)

Clark was also an early contributor to the theory of capital. Clark made a strong distinction between capital and capital goods. He wrote:

Again, capital is perfectly mobile; but capital goods are far from being so. It is possible to take a million dollars out of one industry and put them into another. Under favorable conditions, it is possible to do this without waste. It is, however, quite impossible to take bodily out of one industry the tools that belong to it and to put them into another. The capital that was once invested in the whale fishery of New England is now, to some extent, employed in cotton manufacturing; but the ships have not been used as cotton mills. As the vessels were worn out, the part of their earnings that might have been used to build more vessels was actually used to build mills. The nautical form of the capital perished; but the capital survived and, as it were, migrated from the one set of material bodies to the other. There is, indeed, no limit to the ultimate power of capital, by changing its forms of embodiment, thus to change its place in the group-system of industry. (Distribution of Wealth, p. 118)

Therefore, what equalizes returns to capital in various uses is the introduction of new capital. So, for example, if capital in the form of railroads is earning more than capital in other forms, housing and auto manufacturing, for example, investors will tend to invest additional funds into building railroads. Given that what Clark called capital goods are in many forms, Clark was never able to come up with a satisfactory way to aggregate capital; economists have still not figured out how to do so.

Clark was writing at a time when large trusts, taking advantage of economies of scale, formed in various industries and changed the industrial landscape. At first, he believed that competition would discipline the trusts and that the only regulation required was of railroad rates. He expressed that view in The Control of Trusts: An Argument in Favor of Curbing the Power of Monopoly by a Natural Method (1901). Later, however, his views changed. In the revised edition, The Control of Trusts (1914), written with his son, John Maurice Clark, the authors advocated a more expansive antitrust law. They advocated regulations against what is now called “predatory pricing.” They also wanted to limit the size of “combinations.” In The Control of Trusts, they wrote:

In preventing the growth of combinations so big as to dominate the field, we shall probably follow the method of issuing federal charters, or licenses, to corporations of large size wishing to do interstate business, and these licenses will be withheld or withdrawn from any concern so great as to have a monopoly power. To make this effective, we shall have to prevent these corporations from combining, either through holding each other’s voting stock or through communities of interest, just as we shall have to prevent these measures from being used to cement the pieces of trusts that have been dissolved under the Sherman Act. We may find it necessary to limit the rights of individuals to vote stock in competing companies, and to prevent the choosing of directors who have substantial interests in outside and presumably competing enterprises. (pp. 194-195)

Donald Dewey, in his biography of John Bates Clark, writes:

The revisions were mostly the work of the son and contain a virtual blueprint for an antitrust policy. The Clayton and the Federal Trade Commission Acts of 1914 which followed shortly received their enthusiastic approval.[2]

Dewey comments further:

By his writing Clark did more than any other economist to confer intellectual respectability on an antitrust policy that had had its origins in the populist discontent that produced the Sherman Act. In retrospect, this may seem to have been a dubious achievement. But in Clark’s favor, it can be said that he was dealing with new and difficult issues and approached them with more objectivity than most of his contemporaries, for example, W.Z. Ripley and F.A. Fetter.

Interestingly, though, the Clarks’ co-authored book is remarkably free of data on prices over time. It is possible that they were unaware of how drastically most of the trusts had cut prices, even deflation-adjusted, and expanded output.[3] This was not short-run predatory pricing.

The Clarks also advocated regulating the prices of what are now called “natural monopolies,” monopolies that come about because the economies of scale are so large relative to the size of the market that one producer can produce at a much lower average cost than multiple producers could do.

At the time the Clarks were writing, some economists argued that “the tariff is the mother of the trust.” The idea was that tariffs protected the domestic market from foreign competition and, therefore, made it easier for domestic firms to monopolize. Byron W. Holt made this argument in “The Relation of the Protective Tariff to the Trusts,” American Economic Review, Feb. 1907, 3rd Series, Vol. 8, No. 1. Holt wrote:

While the tariff is only one of several monopoly-producing factors, yet it is today, in this country, by far the most important factor in producing the hundreds and thousands of industrial combinations popularly called trusts.

The Clarks were presumably aware of this argument. They considered, and rejected, the idea of ending tariffs. While they recognized free trade’s value in restraining competition, they worried that ending tariffs would create too much disruption in domestic industries. (p. 53)

In the early 20th century, Clark turned to the issues of war and peace. In 1910, he became director of the economic and history section of the newly formed Carnegie Endowment for International Peace. His last book, published in 1935, was A Tender of Peace: The Terms on Which Civilized Nations Can, if They Will, Avoid Warfare. In that book he advocated a powerful League of Nations, seeing that as a way of making peace more likely.

Clark, along with Richard Ely and Henry Carter Adams, helped found the American Economics Association and was president of the AEA from 1893 to 1895. One of their main goals, at which they succeeded, was to move the economics profession further away from belief in laissez-faire.  Clark is best known for the John Bates Clark medal. The American Economic Association, which Clark helped found, started awarding this medal biannually in 1953 and, in 2010, started awarding it annually. The award goes to “that American economist under the age of forty who is judged to have made the most significant contribution to economic thought and knowledge.”

Clark was born in Providence, Rhode Island. He attended Brown University and graduated from Amherst College. He also studied in Heidelberg, Germany and Zurich, Switzerland. He taught at Carleton College, Smith College, and Amherst College and at Columbia University.


About the Author

David R. Henderson is the editor of The Concise Encyclopedia of Economics. He is also an emeritus professor of economics with the Naval Postgraduate School and a research fellow with the Hoover Institution at Stanford University. He earned his Ph.D. in economics at UCLA.

Selected Works

  1. The Philosophy of Wealth. Ginn.


  1. The Distribution of Wealth: A Theory of Wages, Interest, and Profits. Macmillan. At: 


  1. The Control of Trusts: An Argument in Favor of Curbing the Power of Monopoly by a Natural Method. Macmillan. At:


  1. (with John Maurice Clark). The Control of Trusts. Macmillan. At:


1935. A Tender of Peace: The Terms on Which Civilized Nations Can, If They Will, Avoid Warfare. Columbia University



[1] Stigler, George J.:  Production and Distribution Theories. Macmillan, 1941

[2] Dewey, Donald (1987): “Clark, John Bates (1847-1938).” The New Palgrave: A Dictionary of Economics. Macmillan: 428-431.

[3] For more on this, see DiLorenzo, Thomas: “The Origins of Antitrust: An Interest Group Perspective,” International Journal of Law and Economics, 1985, 5: 73-90.

Related Entries


Thorstein Veblen

Related Links

Arnold Kling, Dismal Race “Scientists,” at Econlib, May 2, 2016.

Frank A. Fetter, “Clark’s Reformulation of the Capital Concept,” in Capital, Interest, and Rent: Essays in the Theory of Distribution. (1910) Available at: 

Philip H. Wicksteed, The Commonsense of Political Economy. (1910) Available at: