Since the 1980s, institutional change has become a matter of great interest as economists faced the necessity and the challenge to provide a theory of economic or cultural evolution. Their first reaction was to refer to biology, a field in which theories of evolution have reached a high degree of sophistication. This was all the more legitimate and relevant given that biology has been largely influenced by economics (Schweber 1977, 1980; Gordon 1991; Kresge and Wenar 1994; Depew and Weber 1995). Indeed, the influence of classical political economy on the views of one of the fathers of the modern theory of evolution, Charles Darwin, is widely admitted. Darwin borrowed from economists fundamental ideas such as spontaneous order and methodological individualism (from Adam Smith), the positive role of diversity and variety (from Charles Babbage) and the concept of the struggle for life (from Thomas Malthus). Therefore, the ideas promoted by the founding fathers of political economy, sometimes called “Darwinians before Darwin” (Hayek 1973, p. 23), have shaped Darwin's theory of biological evolution.

This article examines the early regulation of futures markets in the 1920s and 1930s. We contrast the analysis of speculation developed by the Grain Futures Administration (GFA) with Holbrook Working’s. Within the GFA we focus on Paul Mehl, who directed the statistical analysis of order flows, trade volumes, and positions that supported the GFA’s policy recommendations. In retrospect Working was the most prominent academic analyst of futures markets. The relationship between the GFA and Working was complex and at times intimately collaborative, but the New Deal provoked sharp disagreement. Working rejected the tighter trading rules advocated by the GFA as counterproductive and tried to persuade the Secretary of Agriculture to embrace a discretionary approach to regulation based upon his analysis of neighboring futures prices (the Working curve) and his distinctive conception of “perfect markets”—a nuanced version of the subsequent efficient market hypothesis.

The USDA Graduate School was founded in 1921 to provide statistical and economic training to the employees of the Department of Agriculture. The school did not grant degrees, but its graduate courses were accepted for credit by a significant number of universities.

In subsequent years, the activities of the school grew rapidly to provide training in many different subject areas for employees from almost all federal departments. The training in statistics provided by the school was often highly advanced (instructors included Howard Tolley and, later, Edwards Deming), while the economics taught displayed an eclectic mix of standard and institutional economics. Mordecai Ezekiel taught both economics and statistics at the school, and had himself received his statistical training there. Statistics instruction in 1936 and 1937 included seminar series from R.A. Fisher and J. Neyman, and courses on the probability approach to sampling involving Lester Frankel and William Hurwitz became important after 1939. The instruction in economics was noticeably institutionalist in the period of the New Deal. Towards the end of the period considered here, the instruction in economics became narrower and more focused on agricultural economics.

The activities of the school provide a basis for understanding some of the sources of the relative statistical sophistication of agricultural economists and of the statistical work done in government in the interwar period. It is noteworthy than within the USDA Graduate School, and in contrast to the Cowles Commission, statistical sophistication coexisted with an approach to economics that was not predominantly neoclassical. It also provides a light on the place of institutional economics in the training of government economists through the same time span.

Having in the General Theory quoted a passage from John Stuart Mill’s Principles as representative of ancient confusion, John Maynard Keynes has been accused of misinterpreting that passage and thus mistakenly identifying Mill as an upholder of the “classical” proposition that “supply creates its own demand.” Certain critics, seizing on Keynes’s misunderstanding, draw the conclusion that little was actually wrong with Mill’s analysis and that Keynes’s attack on Mill was therefore without justification.

Our contention, however, is that, despite his error with respect, so to say, to the “letter” of Mill’s exposition, Keynes was right about the essential “substance” of Mill’s thesis. Mill’s thinking, we suggest, was deeply in thrall to the ideas of his father and Jean-Baptiste Say. The purpose of this paper is to demonstrate that Mill did indeed stand for a “classical” position, albeit qualified, but nevertheless vulnerable to Keynes’s critique as developed in the General Theory.

Robert Heilbroner (1990) challenges us to re-examine our preconceptions about the development of economic analysis in the twentieth century. John Maynard Keynes (1951, p. 141) once said, in a discussion concerning Alfred Marshall, that the “master economist…must study the present in light of the past for the purposes of the future,” and in this regard Heilbroner's essay is the work of a historian of economics who commands our attention and respect. The purpose of his essay “is to inquire into the successes and failures of economic thought in anticipating the march of actual events” (Heilbroner 1990, p. 1097). The failures, Heilbroner points out, considerably outweigh the successes. But, he conjectures, even in those cases of success, the success is not due to superior analysis. Rather, “the success of the farsighted seem accounted for more by their prescient ‘visions’ than by their superior analyses” (ibid., p. 1098).

More than 100 years have passed since Alfred Marshall introduced the representative firm to economic theory in 1891. During this long period of time, many arguments have been raised giving either support or opposition to the concept. In recent years, macroeconomists have taken an increasing interest in the representative firm. Since the beginning of the modern microfoundations literature in the early 1970s, the representative firm and its big brother, the representative agent, have been made essential analytical tools for linking macroeconomics and microeconomics. Within this debate, the microfoundation of business cycle theory has played a prominent role.

Recent scholarship has noted differences and even discrepancies among the members of the so-called Austrian school. It has been possible to identify discontinuities between generations (Hayek 1968), along methodological lines (Caldwell 1988, Hutchison 1981), among the various threads of the “Austrian revival” (Vaughn 1990), and between heterogeneous intellectual systems (Dufourt and Garrouste 1993). Brian Loasby (1989) has remarked that Friedrich Hayek was one of the few scholars to develop one of Carl Menger's outstanding contributions to economics, his theory of social institutions (Langlois 1989). The purpose of this paper is to appraise the continuities and discontinuities between the two authors' conceptions of institutions. In what follows, I shall present successively Menger's and Hayek's conceptions of institutions, and then I shall compare them.

In his Journal of the History of Economic Thought article, “A Suggestion for Clarifying the Study of Dissent in Economics,” Roger Backhouse usefully proposed some terminological clarifications with respect to studying the ideas of disagreement, controversy, and dissent in (Western) economic discourse, heterodoxy being defined as a more narrow category than dissent. Backhouse also wrote that “the ideas on which Marxist, Radical, and Post Keynesian economics are based were arguably never widely held” (Backhouse 2004, p. 265).

The Physiocrats “New Science” of Political Economy is often represented as unrelated to the pursuit of national power. A recent study (Fourquet 1989), which rests on the approaches of Fernand Braudel (1979) and Immanuel Wallerstein (1980), has radicalized the thesis already propounded by Edmond Silberner (1939) who claimed that Quesnay was profoundly ignorant of military matters and failed to understand the power struggles being played out on the seas and in the colonies. Did not Quesnay propose turning back to an agricultural economy, banishing industry, trade, and the navy—in short, all the active forces thanks to which Great Britain had snatched domination of the world economy from Holland and thanks to which she would prevent France from obtaining it?

Yet this thesis is weak. It must be remembered that Quesnay's first economic writings date from 1756–57, that is to say a period when confrontation between France and England was at a peak, with the start of the Seven Years' War. How could an author who claims to de ne the economic government ofan agricultural nation ignore the military problems which were so crucial in this period? Even if he wanted to, how could he succeed in doing so once he came to deal with taxes and the highly sensitive question of finance? How could he make himself understood by his contemporaries with a political theory that set aside all the burning issues of the day? How could he find an audience among those developing the science of commerce who always accorded great importance to the pursuit of power?

Under scrutiny the traditional thesis appears inaccurate. After recalling the writings of some of his contemporaries, whom Quesnay knew and read (section 1), I shall show that articles drafted between 1756 and 1757, like published or unpublished works which Mirabeau and Quesnay elaborated between 1757 and 1760, give significant room to the nation's military power, particularly when the economic government is in question (section 2). From the years 1763–64 the idea of a natural order does not lead Quesnay to neglect the pursuit of power (section 3). These links between power and wealth in the work of the founder of Physiocracy will lead finally to some remarks on political economy as a form of rationalization of politics.

It is understood that Charles Cobb and Paul Douglas (1928) were not the first to use the production function named after them. Joseph Schumpeter (1954, p. 1042), Carl-Axel Olsson (1971), and Henry Spiegel (1991, p. 816) all note that the production function Y = AKαL1-α had been used by Knut Wicksell (1901, 1906) more than twenty years before Cobb and Douglas published their study. While it is quite possible that Wicksell was the first to use the Cobb-Douglas functional form to study production, he was not the first to apply it to economic analysis in general. Vilfredo Pareto had worked out several implications of a specific version of the Cobb-Douglas utility function as early as 1892. Later, he repeated and extended this analysis in the mathematical appendix to the French translation of his Manual of Political Economy (1909).

Notwithstanding considerable efforts by at least two generations of economic theorists, the state of art of general equilibrium theory in the Arrow-Debreu framework is still extremely unsatisfactory, especially with respect to the treatment of the time dimension. Indeed, it is now taken for granted even among general equilibrium theorists that, to play a significant role, equilibrium analysis must account for individual agents' expectations about the uncertain future, and that the Arrow-Debreu procedure of collapsing the entire decision process at an initial date is to be interpreted, at most, as a counterfactual argument, the main message of the Arrow-Debreu approach being that “one cannot argue that markets co-ordinate activity if there are many of them missing” (Hahn 1995, p. 12).

The notion of interdependent preferences has a long history in economic thought. In its general form, it can be found in the works of authors such as Hume, Rae, Genovesi, Smith, Marx, and Mill, among others. In the twentieth century, the idea became more widespread mainly through the works of Veblen and Duesenberry. Recently, an increasing number of theorists are interested in issues such as reference income, relative consumption, and positional goods, which are all based on the concept of interdependent preferences. However, such preferences were never part of the corpus of orthodox theory. For instance, although Pareto and Marshall were aware of their existence, they did not advocate their incorporation into orthodox economic theory. This paper argues that the structure of mainstream economic methodology and the challenging theoretical implications of adopting interdependent preferences were two possible reasons for the mainstream rejection. The discussion includes the more recent orthodox attitudes towards such preferences.

This paper reconsiders the supposed agreement of David Ricardo and William Nassau Senior on the question of the method of political economy. The first part shows that Senior was very critical about Ricardo’s approach to economic phenomena and considered that this question of method had important consequences on theoretical points. The second part analyzes the way Ricardo was dealing with economics. It shows that though Senior was right in considering that their respective methods were different and led to important analytical divergences, he nevertheless misunderstood Ricardo’s method with a hypothetico-deductive one. The consequence is that Senior’s criticisms on Ricardo’s theories of rent, natural wages, and of the tendencies of agricultural returns to decrease and of profit to fall are ill-founded, being based on a misunderstanding of the way they were established.

Before the John Bates Clark Medal (JBCM) had become a widely acknowledged professional and public marker of excellence in economics research, in the first twenty years since its inception more than seventy years ago in 1947, it was almost discontinued three times and once even not conferred. These controversies derived from the fact that the medal was originally established to showcase the expertise of economists to other scientists, policy-makers, and the wider public. While earlier awards were given to theorists, in later years empirical and policy-oriented economists gained ground, reflecting how such research became more prestigious in economics. Based on a quantitative analysis of the forty medalists so far, we show that this empirical shift was concomitant with a decrease in the diversity and an increase in concentration of laureates: twenty-four or twenty-five out of forty awardees received their PhD degree or worked at Harvard, MIT, or Chicago at the time of being awarded.

In recent years, water utilities have received increasing attention. Issues of ownership and market structure have been the focus of academic research, policy debates and grassroots activism. These recent concerns echo the contentious debate that raged over water supply in nineteenth century London from 1810 to 1902. Nassau W. Senior and John Stuart Mill were major players in the debates, as both theorists and policy makers.

During August and September 1938, Harrod discussed a first draft of his “Essay in Dynamic Theory” with Keynes and Marschak. The aim of this paper is to discuss Harrod’s correspondence with Marschak in the light of the subsequent interpretations of the “Essay.” Firstly, we show how Marschak focused on some of the features of Harrod’s theory that would later give rise to widely different interpretations and some misunderstandings. Three issues in particular have been broadly debated in the literature: the concept of warranted rate of growth; instability; and non-linearity. Secondly, we show that a possible reason why Harrod neglected Marschak’s remarks lies in their respective methodological approaches. While Marschak tried to frame Harrod’s theory by means of a closed model, Harrod thought that the analysis of equilibrium and of the succession of states belonged to separate stages; this made building a complete model difficult at this stage, when he was presenting a “new tool of analysis.” In spite of their respective conflicting approaches, Marschak’s comments remain of great importance, and if Harrod had followed some of his advice, his theory would probably have improved in several respects, and certainly it would have been clearer and less ambiguous.

Juan Noyola is widely credited as an originator of the Latin American “structuralist” theory of inflation. His key contribution is a 1956 article comparing inflation in Mexico and Chile. However there is disagreement about the nature of this contribution, or even what “structuralist” means in this context. I argue that Noyola's innovation was grounding money and credit in a highly institutional political economy of class conflict. This grounding endogenized not only money, but also policymaking and the State.