In 1954, Paul A. Samuelson presented on just two and a half pages what he claimed to be “a pure theory of government expenditure on collective consumption goods” (1954c, p. 388). Just a year later, he supplemented this theory by an equivalent diagrammatic formulation and a few clarifying comments (Samuelson 1955). Although his initial paper was strongly criticized on various grounds, an industry was launched and public goods—or, as referred to initially by Samuelson, collective consumption goods—now play a crucial role in a number of theories like fiscal competition or endogenous growth, and in almost all textbooks on public economics or microeconomics at least a paragraph is devoted to public goods. In fact, Samuelson's 1954 paper is conventionally considered the foundation of the modern theory of public goods (for example, see Richard A. Musgrave 1983a, p. 141). However, the many contributions to the modern theory of public goods, including Samuelson's subsequent writings, have revealed that there is widespread disagreement both on fundamental aspects of the theory as well as on its significance for the determination of government expenditure.

Being the President of a society such as this is a position that brings with it relatively few benefits. One very definite benefit it does confer, however, is the opportunity to address one's peers on a subject of one's choice, for an indefinite period of time, and with no fear of contradiction; no referees, no discussants, and not even any questions from the audience. I intend to make use of this unconstrained state by being somewhat more speculative in my remarks than I could otherwise be.

We argue that Fritz Machlup’s (1995) interpretation of Mises’s epistemology is at least as, if not more, plausible than Murray N. Rothbard’s (1957) interpretation. The implications of Machlup’s interpretation of Mises and of Austrian epistemology affect Austrians and non-Austrians in their academic interaction. Machlup’s interpretation shows that Austrian epistemology is well grounded in post-Popperian epistemology and that most criticisms of Austrian economics based on its aprioristic character are misplaced. Furthermore, Machlup’s interpretation provides us with a setting to rebuild the academic interaction between Austrians and non-Austrians that was characteristic of the early twentieth century.

The term revolution is normally used to indicate a sharp change in the direction of evolution of a given phenomenon, a catastrophe, in the jargon of modern dynamic theory. In this sense we often talk of the Newtonian revolution in physics or of a Neoclassical revolution in economics.

The article contrasts an intellectual history perspective on the transition from classical to neo-classical economics with doctrinal accounts of the marginal revolution. Marshall's opinions on the mixture of theoretical, methodological, and moral and political elements involved in the generational divide shows that more was at stake than accounts in which theory alone is stressed suggest. It is also argued that in other respects less was at stake: drawing a sharp dividing line between pre- and post-marginal treatments of policy issues does not do justice to underlying continuities in the empirical utilitarian tradition. The article is dedicated to the memory of R. D. C. (Bob) Black, whose work on Jevons illustrates the benefits of an intellectual historian's approach to this significant transition in economic thinking.

In his contribution to the 1987 conference that celebrated the fiftieth anniversary of Ronald Coase's “The Nature of the Firm” (1937), Harold Demsetz noted that from the birth of modern economics to 1970, “only two works seem to have been written about the theory of the firm that have altered the perspectives of the profession: Knight's Risk, Uncertainty, and Profit (1921) and Coase's ‘The Nature of the Firm’” (Demsetz 1993, in Williamson and Winter 1993, p. 159). It is easy to feel uncomfortable with this observation. First, Coase's article was ignored for decades. Second, Knight's book did not receive much attention because of its theory of economic organization, but because of its statement of the theory of perfect competition (Stigler 1957; Machovec 1995), its distinction between risk and uncertainty, and its theory of profits (see, e.g., Boulding 1942 and Papandreou 1952).'

Adam Smith starts his account of economic life supposing two trading individuals, and not with Robinson Crusoe alone on an island. It is a consequence of this modeling strategy that, when considering an actor's choice, the model builder automatically has access to the judgment of the spectator. Thus it is that when Smith describes the actor gambling for money, he takes into consideration the fact that the spectator will make note of unusual events. In particular, the winner of a large-number lottery will become famous. To the extent that fame is desired, the actor's decision will be influenced by the spectator's judgment. The gambling model Smith describes is an exchange between the actor–who takes risk–in return for the chance of applause from the spectator. Everything in Smith's account is an exchange; hence, we denote Smith's model as a katallactic model, thus remembering Richard Whately's suggestion to rename political economy as the science of exchange, from the Greek καταλλατειγ–to exchange.

The New Neoclassical Synthesis that Michael Woodford puts forward in his Interest and Prices (2003) is primarily a synthesis of New Classical and New Keynesian ideas. Yet Woodford presents it as an encompassing approach that goes much further back in time to integrate the pre-Keynesian macroeconomics of Knut Wickseil and his followers. Starting with the title, the book contains many references to Geldzins und Güterpreise (1898), Wicksell's landmark contribution to monetary theory which was translated as Interest and Prices in 1936. Woodford relates his concept of a “monetary policy without money” to Wicksell's concept of the pure credit system and to Wicksell's proposal to eliminate inflation by adjusting nominal interest rates to changes in the price level—an idea that has much in common with modern policy rules à la Taylor. He presents the core model of the new synthesis (in shorthand: IS + AS + Taylor rule) as a “neo-Wicksellian framework” that serves to analyze the dynamics of interest-rate gaps and output gaps (2003, chapter 4). Referring to the Wicksellians of the 1920s and 1930s (primarily Erik Lindahl, Gunnar Myrdal, and Friedrich A. Hayek), Woodford grounds his advocacy of rules to fight inflation on the potential non-neutrality of monetary policy: “[I]t is because instability of the general level of prices causes substantial real distortions—leading to inefficient variation both in aggregate employment and output and in the sectoral composition of economic activity—that price stability is important” (2003, p. 5). He thus sees his analysis of interest-rate and output gaps as “an attempt to resurrect a view” that the old Wicksellians had developed in their analyses of cumulative processes.

In this paper we address the subject of Keynes as a speculator. We look first at the primary sources of information, which are in the form of unpublished letters and broker’s statements. Secondly, we look at the theory Keynes sparingly presented in his writings, but which nevertheless is grounded on his first-hand knowledge of speculative behavior. Thirdly, we examine the focus on speculation in commodities, which had great weight in his portfolio, and have chosen a particular commodity -wheat- for our investigation. In particular, we examine some of Keynes’s dealings in wheat futures with the aim of shedding light on the underlying investment strategy.

Renewed interest has been kindled in the status and “meaning” of William T. Thornton (1813–1880) in the history of economic thought. Thornton is often credited, rightly or wrongly, with re-orienting J. S. Mill's thought on the wages fund—a critical cornerstone of classical economics. While Thornton's actual influence on Mill in this matter

After three or more decades of mainly positivistic readings of the economics of Adam Smith, there was a decided movement following the bicentennial of the publication of the Wealth of Nations to broaden the agenda of Smithian studies. The publication in 1978 of the Report of 1762–63 of Smith's lectures in jurisprudence added impetus to this movement. In particular, historians of ideas began to pay increased attention to Smith's concern with justice in economic life. That attention has evoked renewed interest in certain of Smith's intellectual antecedents who may have played a part in shaping his ideas, but whose influence has remained a matter of relative neglect in modern scholarship.

It is not news that the history of economics is disesteemed by most economists. There have been almost annual discussions at professional meetings about the institutional role of the history of economics. Indeed, a conference in 2001 documented the precarious state of the field in North America, and its even more perilous position in the United Kingdom and the Antipodes (Weintraub 2002b). With the exception of Duke University there are no longer any regularly scheduled graduate courses, let alone programs, in the history of economics at any “top” university in North America (Gayer 2002).

Torrens [in 1815] clearly preceded Ricardo [in 1817] in publishing a fairly satisfactory formulation of the doctrine [of comparative costs]. It is unquestionable, however that Ricardo is entitled to the credit for first giving due emphasis to the doctrine, for first placing it an appropriate setting, and for obtaining general acceptance for it by economists.

Frank H. Knight held two different concepts of “uncertainty” in Risk, Uncertainty and Profit (1921). The first is based on the possibility of insuring against an outcome. This interpretation can be found in the existing literature on Knight’s work. The second refers to all instances where individuals have subjective expectations about the future. This second meaning forms the basis of Knight’s (1921) theory of profit and entrepreneurial action (Knight I). Knight I is limited; it provides no explanation of the incentive for entrepreneurial action. Knight’s neglected later theory of profit (1942) (Knight II) highlights the deficiencies of Knight I by offering a clear incentive for entrepreneurial action. The differences between the two theories of profit reflect the impact of incorporating historical time into economic analysis.

A central message of Allyn Abbott Young's (1928) seminal paper on increasing returns and economic progress was the seeming tautology that “the division of labor depends in large part upon the division of labor.” From this he deduced that a major source of growth is growth itself. In this fundamental sense growth is endogenous and cumulative. He spoke of the “togetherness” of economic phenomena and doubted that the apparatus of supply and demand and marginal productivity theory could be integrated to give the social picture or explain why growth tends to be self-sustaining rather than self-exhausting.

For a long time, Marshall's chief contribution to economic science was considered to be Book V of Principles of Economics, which is the “analytic core” of his thought. Book V, “General Relations of Demand, Supply and Value,” deals with the important theme of economic equilibrium that ipso facto rules out any possibility of coping with economic development. When Alfred Marshall describes Book V, he points out that “it is not descriptive, nor does it deal constructively with real problems. But it sets out the theoretical backbone of our knowledge of the causes that govern value” (1961, vol. 1, p. 324); in short, it “deals with abstractions” (1898, p. 52). The existence of Book V has been supposed by some scholars to be sound enough proof that Alfred Marshall was not interested in the question of economic development. More recently, however, it has been suggested that one of the main Marshallian concerns was economic development,—“the high theme of economic progress,” as he called it (Marshall 1961, vol. 1, p. 461).

The answer to this question might seem obvious: like Everest, dissent and controversy are there. However, for most academic economists, dissent is negligible and controversy is far less important than it is commonly made out to be. To draw attention to disagreements between economists is to offer a distorted picture of what economics is about. Instead, they argue, the focus of attention should be on the enormous extent to which economists agree. From this perspective, dissent and controversy are not worth much attention. Another justification for studying controversy is that it is exciting. James Tobin once argued (explaining the appeal of Keynesian economics) that when you are young you like theoretical controversy: you like hearing about the good guys and the bad guys, and the idea of being on the side of progressive thought and against an encrusted orthodoxy. Similarly, historians are interested in dissent and controversy in much the same way that writers of thrillers are more interested in neighborhoods where murders happen than in ones where everyone just watches TV all day! What these answers have in common is that they associate controversy and dissent with the pathology of the subject. Disagreement is something to be avoided and which reflects badly on the profession. The most famous representative of this view was probably Alfred Marshall. In his attempt to establish economics as a science that carried authority with the public, he studiously refrained (most of the time) from entering into controversy, and he sought to reconcile within his own work divergent trends that were tearing apart the subject in other countries.

Several recent studies, such as that by David Card and Alan Krueger (1995), have led the economics profession to reconsider the theoretical and empirical arguments for and against minimum wage legislation. Most noteworthy was the fact that two respected members of the mainstream economics profession claimed to have found that an increased minimum wage did not lead to increases in unemployment. Moreover, their result was derived from the market for unskilled labor.

The question we propose to address is how did economics move from the classical period characterized by the hardest possible doctrine of initial human homogeneityall the observed differences among people arise from incentives, luck, and historyto become comfortable with accounts of human behavior which alleged foundational differences among and within races of people? (Darity 1995) In this paper, we shall argue that early British eugenics thinkers racialized economics in the post-classical period.