Nearly a half-century has passed since Ronald Meek (1956, p. 63) warned us that Adam Smith's notion of the labor commanded by a commodity in the marketplace is to be understood not as an expression of the “substance” of value, varying “directly with the quantity of social labor used to produce” the object, but rather as nothing more than a unit of value measure with no fixed relationship to the labor “embodied” in production. It was this distinction that he sought to fix in our minds with his memorable image of the magnet. Indeed, it is more than three times as long since John Stuart Mill (1848, p. 568) conveyed the same distinction with his particularly apt metaphor of “the thermometer and the fire.” Further, it is now forty years since Mark Blaug (1959), reminding us of that distinction, returned our attention to Smith's use of his measure as an expression of potential productive capacity (a view advanced earlier yet by Hla Myint 1948, pp. 20–21 and by Meek 1956, p. 65), but one that conveys a subjective dimension as well. Yet in spite of a now widespread concurrence in this reading, the “legend” that Smith's concept of labor commanded is to be understood as expressing, in some way, price ratios proportional to ratios of labor embodied in production remains remarkably resilient.

I was motivated to consider the topics of this paper by repeatedly encountering the same problems in pondering the history of economic thought, not only in my own work but when retereeing papers and reading the publications of others. The problems that I will consider are important because they involve fundamental issues in the selections and representations we make of the history of economic thought. I do not have solutions for all of the problems, nor do I believe that each of them has a single solution. My objective in this address is not precisely to solve the problems, although I will suggest some ways of dealing with some of them. My purpose rather is to identify the problems in a clear way and to review how they have been treated in order to provide a common basis for further discussion. They can be divided into technical problems and problems of approach.

In the aftermath of the so-called Marginal Revolution of the last end of the nineteenth century, economic analysis split into two branches. The first one was made up of economists who took as the methodological starting-point of their analyses the static or stationary state of a barter economy and considered that this basic framework was likely to be extended in order to account for monetary and financial considerations, as well as dynamics. However, in such a setting, the introduction of money, bank-credit, or any factor of growth did not substantially alter the features that are associated with the rudimentary economy of static real exchange.

Division of labor is thought to imply increasing returns to scale, which in turn implies that wages rise continually with economic growth. Yet the price theory of Wealth of Nations rests upon the assumption that the “natural” price of labor (and capital) is determined at any steady-state rate of balanced growth. There would seem, therefore, to be an irreconcilable contradiction between Smith’s exposition of the division of labor in Book I, chapters 1 to 3, and his price theory as set out in Book I, chapters 6 to 9.

The early Methodenstreit (1871–1883) between Gustav Schmoller and Carl Menger is one of the defining moments in the development of today’s discipline of economics. However, recent interpretations of the debate no longer identify a substantial point of controversy. I reconstruct the debate to show that the pivotal topic was the scope of economics. Menger claims that his marginalist Principles of Economics more or less captures the entire subject matter of the discipline, which Schmoller denies. I also discuss recent scholarship, which follows Friedrich Hayek to situate Menger at the edges or even outside the marginalist mainstream. I show that support for this reading is weak and in parts based on a misrepresentation of the available sources, putting into question Menger’s status as a forbear of today’s Austrian school.

Oral history has always held a rather ambiguous position within the study of economics. While widely read and enjoyed, such interviews are secretly scorned, dismissed as merely a lightweight diversion. Yet, to conduct revealing and insightful work of this type is difficult, requiring a firm grasp of economics, especially individual contributions to the discipline. This article examines my own attempts to come to grips with the methodology and ideology of the Chicago School through a series of conversations with some nineteen of George Stigler’s contemporaries. Oral history, if skillfully conducted, can prove to be one of the more useful tools in recapturing and understanding the past history of economics as a fiercely fought over discipline.

Of the published works by William Stanley Jevons, the marginalist theory of value and distribution in the Theory of Political Economy (1871) is principally remembered by economists today. For Jevons in the early 1870s, however, the reception of the Theory (TPE) had “been of the most discouraging character.” The “recognised professor[s] of the science,” for example, had either ignored or, in the case of J. E. Cairnes, “emphatically repudiated it” (Jevons 1875a, p. 4). In November 1874, buoyed by the publication of the first volume of Leon Walras's Elements of Pure Economics and by correspondence with Walras and other European economists, Jevons presented a defense of the marginalist theory and reply to critics in an address titled “The Progress of the Mathematical Theory of Political Economy.” It was delivered to the Manchester Statistical Society, and was extensively reported in the local newspapers. Jevons used those reports to both publicize and obtain comments on the address before the final version was published in 1875. As some of the papers circulated beyond Manchester, London, readers, for example, could also read or hear of his analysis. In that regard, one component of his argument attracted particular attention.

The development of Austrian economics in the interwar period was marked by the contrast between its high esteem at the beginning of the 1930s and its dwindling influence throughout the remainder of the decade. A variety of reasons have been conjectured for this decline (and the eventual dissolution) of the Austrian school of economics (see Caldwell 1988, pp. 517–21). A rarely mentioned factor of a more sociological nature that may have contributed to or that at least indicated the school's decline was its loss of coherence during the late 1930s, when, as a consequence of the emigration of the most prominent members, Vienna lost its role as the Austrian school's main center of communication. Insofar as this lack of coherence led not just to diversity within a unifying framework but to crucial divergences among the school's leading members, this might help to explain why after 1945 the Austrians were no longer perceived as a distinct school—some parts of their thinking had been fused into the neoclassical mainstream and others had largely fallen into disregard.

It is to be regretted that Nikolai Kondratiev's 1928 paper on long cycles—“The price dynamics of industrial and agricultural commodities: the theory of relative dynamics and conjuncture”—was omitted from the Pickering and Chatto English language edition of his works published in 1998. This is one of the two most important papers excluded from this edition, the other being the full text of his plan for agriculture and forestry, 1924–28. In response, this note discusses some modifications that occurred in Kondratiev's explanation of long cycles between 1925 and 1928, and puts to rest the suggestion that these changes might have taken place as the result of political factors rather than a genuine change of mind. I also counter some ofmy critics who have taken issue with my presentation of Kondratiev's conception of long cycles (most notably Jan Reijnders (2001) in this journal), and link this with a more general discussion of some of the methodological issues involved.

This paper explores C. F. W. Launhardt's (1885) model of exchange and his associated welfare analysis. Launhardt's analysis, starting from the exchange models of W. S. Jevons and Leon Walras, is noteworthy for his derivation from explicit utility functions of algebraic forms of general equilibrium supply and demand curves expressed as functions of relative prices. Whereas Jevons and Walras concentrated on the pricetaking equilibrium properties of their exchange models, Launhardt explored a process of disequilibrium trading in which successive trades take place at the “short end” of the market, that is, the minimum of supply and demand at a price. His main concern was, however, to examine the welfare aspects of exchange, comparing the gains from trade under competitive and monopolistic behavior. Launhardt has been criticized for suggesting that aggregate utility, and thus the aggregate gain from trade, is maximized at the price-taking equilibrium (see for example, Wicksell 1954, p. 76, n. 2; 1934, p. 81, n. 1). He nevertheless showed that a process of disequilibrium trading, in which the price initially favors the relatively poorer individual, can improve the aggregate gains from trade as compared with the equilibrium with no disequilibrium transactions, subsequently called a price-taking equilibrium.

This article is an addition to the revisited history of financial economics. While Markowitz (1952, 1959), Roy (1952), and Tobin (1958) are recognized as the founding fathers of Modern Portfolio Theory, we recall that its origins should be traced prior to 1914. We consider two, turn-of-the-century, French, financial analysts and suggest that notions such as risk aversion and risk premium, international diversification and correlation, specific and systematic risks and arbitrage were common sense for Leroy-Beaulieu (1906) and Neymarck (1913). The contribution of these authors to the development of Modern Portfolio Theory—long before the 1950s—should not be underestimated.

The purpose of this paper is to recover Adam Smith's conception of the appropriate rules of argumentation for the political economist in public policy discussion. Our interest will be in Smith's attempt to model the advisory style which he thought appropriate for an economist writing on public policy issues, advising the legislature and debating constitutional problems. Inferences will be drawn from the scope and tone of Smith's work on some selected issues of economic policy reform discussed in The Wealth of Nations (hereafter WN). Extensive reference will be made to Smith's admission of the vital role of rhetoric in human affairs in his Lectures on Rhetoric and Belles Lettres, and to Smith's view of the legislator's perspective on policy as enunciated in the Theory of Moral Sentiments.

Unlike standard accounts, recent research in the history of macroeconomics has given increasing attention to the Old Keynesians’ criticisms of the New Classical Economics. In this paper, I address the case of Edmond Malinvaud, who began opposing the New Classical Economics from the early 1980s and did so throughout the following thirty years. This study shows that his opposition was radical, i.e., multi-dimensional and systematic, and owes to the methodology and the practice of macroeconometric modeling. In turn, this twofold result sheds light on the nature and the rationale of the Old Keynesians’ opposition to the New Classical Economics from the 1970s onwards, which can be interpreted along the same lines.

Adam Smith’s discourses aim to encourage mores, practices, and public policies in service to the common good, or that which a universally benevolent spectator would approve of. The Wealth of Nations illustrates how in pursuing our own happiness within the bounds of prudence and commutative justice, we may be said, literally or metaphorically, to cooperate with God in furthering the happiness of humankind. The Theory of Moral Sentiments elaborates an ethic, here called “focalism,” that instructs us to proportion our beneficent efforts to our knowledge and ability. The relationship between political economy and focalism is bidirectionally reinforcing. In one direction, the ethic of focalism contributes to the moral authorization of self-love, thereby invigorating and dignifying honest commercial activities. In the other direction, the insights of political economy reinforce the ethic of focalism by elaborating how through prudent commerce and focal beneficence, we cooperate, even if only metaphorically, in a grand social enterprise.

The American political economist Henry Charles Carey is generally thought of as a spokesman for industrialization due to his strident protectionism. In fact, his most original contributions came in his discussions of agriculture, the environment, and their relation to technological progress. Carey developed his ideas by drawing on the contemporary discourse of “scientific agriculture,” which enjoyed great influence, thanks to a widespread agricultural reform movement. This allowed him to argue effectively against Malthusian population doctrine and Ricardian rent theory by stressing the almost limitless potential of technological innovation, not only in manufactures but also in agriculture. Analogous views were also expressed by George Perkins Marsh, known today as the “father of conservationism,” indicating a broader contemporary engagement with questions of economic development and humanity’s relationship to nature, an engagement in some ways strikingly parallel to present-day concerns.

In the late 1960s, new environmental policies emerged that attempted to reach predetermined pollution standards in a cost-effective way: i.e., the “standard-and-tax” approach proposed by William J. Baumol and Wallace E. Oates, and the permits market approach proposed by John Dales. This paper describes the early history of the two approaches, and compares them. Although today they refer to different traditions, namely Pigovian versus Coasean, and are often contrasted in the literature, these cost-effective solutions emerged at the same time and for the same reasons. First, they both tried to promote incentives-based policies against traditional regulations; second, they criticized the optimal Pigovian tax, which raised the contentious issue of measuring pollution damage. More broadly, they emerged as a kind of pragmatic compromise, fed by a common attempt to move toward more practical policies: reaching efficiency without optimality, while relying on standards whose setting is a matter for political decision.

Antonio De Viti de Marco is perhaps the most representative scholar at the origin of the Italian tradition in Public Finance, and his main work has been at the disposal of English-speaking economists since 1936 (De Viti de Marco 1936). However, at the time he was not particularly appreciated: his book had at the time one good and one bad review, but certainly left no mark on mainstream economic analysis. The fact is that De Viti's message was too far beyond the range of interests of Anglo-Saxon writers of the time.