A principal objective of Malthus, Ricardo, and Marx was to discover the laws that regulate and limit the growth of the wealth of nations and, in particular, the unprecedented growth of capitalism. The central theme of this paper is that their productive and unproductive labor concepts are critical to understanding their analyses of capitalist growth and the tendency for the rate of profit to fall which regulates and limits this growth. The way in which they identify productive and unproductive labor and how they apply this distinction is critical to understanding the common thread that runs through and marks the differences between them.

So true is it that, in science as elsewhere, we fight for and against not men and things as they are, but for and against the caricatures we make of them.

(Schumpeter, 1954, p. 90)

The body of enquiry known as economics grew out of the practical needs of economic life and statesmanship, and also out of philosophical speculation on the nature of man and society. Adam Smith reflects both aspects, but I would locate him predominantly in the philosophical wing. When he switched from considering the theory of moral sentiments to dealing with the causes of the wealth of nations, I don't believe that he saw himself as engaging in a fundamentally different mode of enquiry. He was, of course, concerned with practical questions--of ethical behaviour in the one case and of economic policy in the other--but discussion of both was from a broad philosophic viewpoint. Ricardo, on the other hand, seems to me to exemplify, and at a high level, someone who falls predominatly in the other wing. Although his thought was abstract, it was much more an attempt to deal pragmatically with important issues of practice than it was an attempt, in the philosophical tradition, to understand the general nature of men's interaction in society. Indeed, utilitarianism by then offered a strictly philosophic rationale for concern with practice (albeit a piggish one in some eyes) which did much to confound and confuse the dual origins of economics. Mill and Sidgwick, among others, maintained the tradition of a close connection between philosophical and economic enquiry, within the framework of a broadened utilitarianism, and the continuing affinity of the two disciplines has been exemplified more recently in the work of writers such as Rawls and Sen, not to mention the recent upsurge in discussion of economic methodology.

In order that this essay may be clear to the reader, some understandings about terminology must be established. First, if we speak of “theories that were formulated in the past,” ordinarily we mean to leave open the question of whether they are still valid, and if we speak of “past theories,” ordinarily we imply that they have been discarded and that implies that they were defective and were supplanted by current theories. Nevertheless, in this essay the latter term, used for the sake of brevity, will have the same meaning as the former expression. If a past theory is considered to be invalid, that will be staled explicitly.

In this article, I argue that looking at lesser known intellectuals can help the history of economics to uncover new ways of seeing the world. My focus is the beginnings of “Indian economics” and its conceptualization of development. The Indian economists, despite their elite status in India, were from an imperial context where they were never considered economists. Studies throughout the twentieth century continued to treat them only as nationalists, rarely as contributors to economic knowledge. My research gives agency to these economists. I show how the position of Indian economics from the margins of discursive space offered a unique perspective that enabled it to innovate at the margins of development discourse. Indian economics redefined the concept of universality in the existing nineteenth-century idea of development by rejecting the widely accepted comparative advantage model and assertion that progress originated in Europe. Moreover, the economists pushed for universal industrialization, even for imperial territories, arguing that universal progress was beneficial to all.

In The General Theory, John Maynard Keynes broke with the quantity theory of money, not just in working out a monetary theory of production but, as he says, in arguing the case for a monetary theory of value. Keynes writes (CW, 7, pp. xxii-xxiii):

A monetary economy, we shall find, is essentially one in which changing views about the future are capable of influencing the quantity of employment and not merely its direction. But our method of analyzing the economic behaviour of the present under the influence of changing ideas about the future is one which depends on the interaction of supply and demand, and is in this way linked up with our fundamental theory of value. We are thus led to a more general theory, which includes the classical theory with which we are familiar, as a special case.

It has been almost fifteen years since Arjo Klamer and I published “The Making of an Economist” (1987), which described the graduate school experience of economics students at six top graduate schools. The students who responded to that survey are now in their late thirties and early forties, and hence are in the prime of their careers. This paper follows up on our earlier study; it reports the results of a survey that was sent to those respondents who voluntarily listed their names on the previous survey and said that they would be open to further contact. It is meant to capture the respondents' reflective views of the profession and their graduate school experience, along with how they have changed over the past fifteen years. To encourage participation, the survey was relatively short. To facilitate comparisons, it repeated a number of the questions asked in the previous survey. (Appendix A reproduces the survey.)

During several decades and until the end of the 1990s, the theory of structural economic dynamics has been absent in the field of so-called mainstream economic analysis. The literature included only either empirically oriented contributions or developments that were related to so-called critical theoretical approaches of structural change. At the end of the twentieth century, however, mainstream economic theorists changed this situation and began to investigate the field of structural dynamics, often using the Solovian theory of economic growth. During the last two decades, they contributed to change substantially the state of the theory of structural change. This contribution first provides an assessment of the advances realized by these theorists. It then confronts these advances with the so-called alternative or critical theoretical approaches of structural dynamics—namely, Luigi Pasinetti’s contribution and ‘evolutionary’ approaches—in order to provide a more complete picture of structural dynamics in the short and the long run.

In an episode that reflects tellingly on the state of the economics profession in England circa 1870, John Morley presented himself as a candidate for the London University Chair of Political Economy that John Elliot Cairnes was obliged to vacate because of advancing paralysis. Morley, perhaps the most unswervingly loyal disciple of John Stuart Mill and the editor of the Fortnightly Review, was undeterred by the fact that he had published nothing on the subject, apart from an article on Turgot. Nor, in his letter seeking Mill's endorsement, did Morley feel the need to hint at any prospective scholarly contributions to the discipline. He suggested only that he was “a competent person and likely to discharge the duties of the post industriously” (Morley 1872).

The Nobel Prize of Piero Sraffa and Joan Robinson that Stockholm never awarded might have pleased at least one of them. Its citation would have included: “Their investigations uncovered a fatal normative flaw in Böhm-Bawerkian and modern mainstream capital theory.”

Just prior to Alfred Marshall's 1890 ascendancy as leading world economist, Eugen von Böhm-Bawerk (1851–1914) perhaps wore that crown thanks to his three-volume treatise on the history and fundamentals of interest theories. Böhm (1884, 1889, 1909, 1912) somewhat independently followed in the footsteps of Stanley Jevons (1871) and himself strongly stimulated Knut Wicksell (1893), Irving Fisher (1906, 1907, 1930), and Friedrich Hayek (1931, 1941). Pugnacious and somewhat incoherent, Böhm and his disciples battled cogently the competing school of John Bates Clark (1899) and Frank Knight (1934, 1935a, 1935b), which idealized a permanent scalar capital alleged to be virtually permanent and with a marginal productivity determining its interest rate in much the same way that primary labor's marginal productivity determines its real wage rate and primary land's marginal productivity determines its real rent rate(s). The Clark-Knight paradigm—and, for that matter, Frank Ramsey's 1928 mathematical clone—shares the Böhm-Hayek vital normative flaw.

Before the emergence of the field of development economics in the mid-1940s, the mainstream of Western economists had very little to say about the world outside western Europe. However, perhaps due to Russia’s ambivalent location as a nation considered not fully European (nor completely Asiatic) and to her status as a major player in the international arena despite the fact of her modest economic achievements, from the eighteenth century onwards the “Russian case” called the attention of some of the most prominent Western minds, including the first economists. By discussing Russia’s economy, they came to notions and concepts regarding development and backwardness that, to a great extent. informed the twentieth-century debate. The aim of this article is to explore the way in which Russia as a case study affected the evolution of ideas on economic growth or development. The evidence of things Russian, it will be argued, raised doubts about common economic views, thus enabling new thinking that pointed either to criticism of liberal orthodoxy, or to expansion and refinement of its arguments.

Dumping actions and anti-dumping policies were regularly on the political agenda for several years in the pre-World War I period in Europe and the United States. In Italy, politics, economic circles, and scholars were engaged in debate on whether to protect sensitive industries threatened by sales below cost in their home markets, practiced by foreign competitors. Einaudi and his school of economics tackled the issue with several publications. In this paper we focus on Jannaccone’s essays, which he contributed to both a symposium in Riforma sociale in March 1914 and an issue in Rivista delle società commerciali in June 1914. Although we recognize that Viner (1923) theoretically systematized dumping in the wider framework of international trade, we nevertheless claim that the theoretical origin of dumping, in a context of imperfect competition, was Jannaccone’s essay. We show that Jannaccone proposed an early theory of dumping as an instance of the more general theory of price discrimination. He defined and classified dumping; he developed a static analysis of its profitability; he investigated the effects of dumping in both domestic and foreign markets; and he analyzed the effect of protectionism and its policy implications.

This paper is an exploration of the genesis of Paul Samuelson’s Foundations of Economic Analysis (1947) from the perspective of his commitment to Edwin B. Wilson’s mathematics. The paper sheds new light on Samuelson’s Foundations at two levels. First, Wilson’s foundational ideas, embodied in maxims that abound in Samuelson’s book, such as “Mathematics is a Language” or “operationally meaningful theorems,” unified the chapters of Foundations and gave a sense of unity to Samuelson’s economics. Second, Wilson influenced certain theoretical concerns of Samuelson’s economics. Particularly, Samuelson adopted Wilson’s definition of a stable equilibrium position of a system in terms of discrete inequalities. Following Wilson, Samuelson developed correspondences between the continuous and the discrete in order to translate the mathematics of the continuous of neoclassical economics into formulas of discrete magnitudes. In Foundations, the local and the discrete provided the best way of operationalizing marginal and differential calculus. The discrete resonated intuitively with data; the continuous did not.

Although the ground I cover in this address is familiar, I approach it as a novice (Clower, 1973). I have written some history of economic thought papers over the past fifty years, but the bulk of my work has been theoretical; and I have known too many good historians of thought to imagine I belong in that class. As W. J. Ashley (1891) observed, “The economic historian … is apt to be confused in theory; [and] the … theorist runs the risk of being unhistorical” (compare Wicksell, 1904, p. 61). Unhistorical or not, I shall discuss some major vicissitudes of economic inquiry over the past three centuries.

Modern Austrian economists employ the Austrian Theory of Capital as an analytical construct with which to interpret policy-induced business cycles and suggest an appropriate remedy. The argument is that the structure of production, particularly the degree of capital intensity or “length of the production period” among different sectors of a non-collectivized economy, depends on the level of interest rates. Low interest rates encourage greater capital intensity in production while high interest rates reduce the degree of capital intensity or roundaboutness. Thus a greater capital intensity encouraged by an artificially low rate of interest created by a central bank's credit inflation must be followed by increased unemployment of labor when interest rates rise again to reflect the ensuing price inflation and the credit inflation stops. Restraint on central bank credit creation is thus prescribed as the remedy for fluctuations in output and employment in the business cycle.

Following the appearance of John Barton Condition of the Labouring Classes of Society (1817), David Ricardo admitted, in the third edition (1821) of his Principles, that the process of mechanization may prove injurious to the working class.1 Michio Morishima claims, however, that he carefully investigates Ricardos chapter on machinery and shows that the introduction of machinery does not create unemployment (Morishima 1989, p. 14). In view of the importance of Ricardos machinery problemin the history of economic thought,2 aS well as its applicability in past and current cases of rapid industrialization,3 it is worthwhile to scrutinize Morishimas criticism of Ricardo carefully.