Michael Woodford's 2003 Interest and Prices has been regarded as the most important contribution to monetary economics since the publication of Don Patinkin's Money, Interest and Prices fifty years ago. Like Patinkin, Woodford sought inspiration in Knut Wicksell's 1898 Interest and Prices. But, while Patinkin built on Wicksell's incipient formulation of the real balance effect and stability analysis of the price level (see Boianovsky 1998), Woodford has elaborated on Wicksell's concept of a pure credit economy (called “cashless economy” in the 2003 version), a theme largely disregarded by Patinkin. This difference in perspective is in part related to the fact that Patinkin's concern was mainly monetary theory, whereas Woodford has focused on monetary policy instead. In early 2004 I invited a group of scholars to discuss Wood-ford's book from the point of view of the history of thought and methodology in a session at the History of Economics Society meetings, held in June of that year at Victoria University, Toronto. Michael Woodford was also invited to participate in the session and reply to the comments. The revised papers are published here as a mini-symposium.

John Maynard Keynes’s analysis of the Great Depression has strong parallels to recent theorizing about the post-2008 Great Recession. There are also remarkable similarities between the two historical episodes: the collapse of demand for new fixed investment, the role of the zero lower bound liquidity trap in hampering conventional monetary policy, the multi-year period of near-zero short-term rates, and the protracted period of subnormal prosperity. A major difference between then and now is that monetary authorities in the recent situation actively pursued an unconventional policy with massive purchases of long-term securities. Keynes couldn’t convince authorities of his era to pursue such a plan, but it was precisely the monetary policy he advocated for a depressed economy stuck at the zero lower bound of nominal interest rates.

Adam Smiths adding up theory (Sraffa 1951, p. xxxv) has generally been interpreted as an expression of the harmonious view of the mechanisms governing exchange ratios and distribution In two preceding works (Nistico 1988,1991) I tried to show that Smith's theory of prices is instead fully compatible with the classical approach to the theory of value and distribution based on the essential role played by class antagonism in a capitalist system.

In his attempt to improve Carl Menger’s economics, Friedrich von Wieser frequently discussed methodological issues. This paper proposes that Wieser’s epistemological position can be understood as the result of a reformulation of the empirical position that Menger (1871) developed in his Grundsätze der Volkswirthschaftslehre. This paper proposes four ways of interpreting Wieser’s concept of “experience”: i) experience stored in language, ii) experience as introspection, iii) experience as a mental experiment, and iv) experience as observation. Because Wieser applied the concept of “motivational power” derived from psychological induction in order to explain observable social phenomena, this paper calls his position “methodological motivationalism.” This particular position can help explain his later shift to sociological studies.

The paper investigates how Arthur Pigou came to adopt the reasoning essentially based on the working of the IS-LM model and to admit that money wage cuts are neutral to employment under the liquidity trap. This occurred through his involvement in the controversy with John Maynard Keynes in 1937–38. In the first instance, Pigou used a simple model to oppose Keynes’s assertion on such neutrality. Pigou (and Keynes too) applied verbal logical analysis to the model to derive his conclusions. Submitting a paper to the Economic Journal, Nicholas Kaldor analyzed Pigou’s model in mathematical terms and asserted that Pigou derived inconsistent conclusions from his model. Kaldor’s method eventually convinced Pigou, Keynes, and Dennis Robertson (who participated in the debate in correspondence). The paper thus argues that the controversy was concluded when one form of model analysis replaced another; specifically, when mathematical analysis replaced verbal logical analysis. This study provides a case study to the first category of Mary Morgan’s two functions of economic modeling: models as an object to inquire into and models as an object with which to inquire.

The purpose of this essay is to analyze Léon Walras’s theory of public interest goods. For him, “services and products of public interest are theoretically those that interest men as members of the community or of the State emanating from the authority to establish social conditions, that is, from the satisfaction of needs that are the same and equal to all” ([1875, 1897a] 1992, EEPA, p. 187). In Walras’s mind, this definition meant that public interest goods could not be factored into the utility function, in sharp contrast with the standard approach in public goods theory. Walras did not imply that public interest goods were not useful, but he maintained instead that their utility was felt only by the community as a whole and not by the individual. Walras developed an anti-individualistic view of the State in which the collective interest was not reducible to the sum of private interests.

The Wealth of Nations (WN) is not a book from which we expect much enlightenment about class conflict. In spite of well-known passages referring to the diverging interests of workers, landlords and capitalists, the impression most have of WN is one of relative harmony among the classes. Nevertheless, Book III, “Of the different Progress of Opulence in different Nations,” which is the briefest and also the least studied of the five books comprising WN, provides considerable insight into the historical origin of conflict among social classes that derive from economic causes, and the circumstances under which conflict promises to become a characteristic feature of the economic process in any society.1 A re-examination of Adam Smith's theory of natural price in the context of the “stages of social history” developed in Book III, leads to interpreting the prospect for class conflict as a more integral and substantive part of WN than is generally recognized by historians of economic thought.

Based on archival evidence, this paper demonstrates that Keynes did not borrow the concept of the marginal efficiency of capital from Fisher, but, rather, developed it himself.

On October 1, 1936 the Stockholm economists hosted a very distinguished guest, John Maynard Keynes. Homeward bound from a visit to the Soviet Union, Keynes appeared at the Political Economy Club. The minutes, as recorded by Ingvar Svennilson, relate:

1. 1. At the invitation of the club, Mr. J.M. Keynes lectured at the Institute of Social Science on the subject “My grounds for departure from orthodox economic traditions.” The lecture was arranged with support from J.H. Palme's fund for economic education and economic research. Some 100 persons attended the lecture.

2. 2. Following the lecture, the club arranged a dinner at the student union building. In addition to Mr. and Mrs. Keynes, the dinner was attended by: the chairman Professor Ohlin, Miss Kock, Messrs. Björ, Böök, Cederwall, Dahlgren, Hammarskjöld, Helger, Johansson, Lagercrantz (guest), Lundberg, Myrdal, Rothlieb, Rooth, Suoviranta (Finland, guest) and Wigforss, as well as the undersigned. After dinner there was a discussion that continued until midnight.

Although the capitalist entrepreneur played a significant role in the early classical explanation of capital markets and economic development, mainstream opinion in the history of economic thought merely holds that eighteenth-century economists failed to distinguish the entrepreneurial function from that of supplying financial capital. Accordingly, one considers the conception of the capitalist entrepreneur an erroneous view—characterized by the confusion between profits and interest—that Jean-Baptiste Say corrected at the turn of the century (Schumpeter 1954, p. 555; Koolman 1971, p. 276). Moreover, this conception has been mainly ascribed to British authors (Perroux 1929, p. 1665; Cole 1942, pp. 120–1; Hoselitz 1951, p. 212; Blaug 1985, pp. 459–60), a claim which certainly goes back to Say's opinion that:

Quantitative techniques have received increasing attention in the history and methodology of economics. Nonetheless, a “text as data” approach has mostly been overlooked and its applicability to the history of economics remains to be examined. To understand what we gain from such quantitative techniques in relation to existing historical analyses, we apply some “text as data” techniques to Adam Smith’s The Theory of Moral Sentiments and The Wealth of Nations. We explore the books’ topics, styles, and sentiments. We show how word frequency analysis can be used to examine the differences between the books, shed light on conceptual discussions, and reveal an important stylistic aspect, specifically Smith’s use of personal pronouns. Style analysis shows the similarities and differences in terms of lexical richness and readability between the two books. We also show the limitations of a third technique, sentiment analysis, when applied to historical economic texts.

David Ricardo indicated in his famous numerical example in the Principles that it would be advantageous to Portugal to import English cloth made by 100 men, although it could have been produced locally with the labor of only 90 Portuguese men. As the production of the cloth required less quantity of labor in Portugal, it has been commonly inferred that this country had a production cost advantage over England in cloth making. This inference will be proven wrong here by showing that the English cloth had a lower cost of production than the Portuguese cloth. This finding refutes the widespread belief that Ricardo had formulated a new law, principle, or rule for international specialization, known as “comparative advantage.” He used the same rule for specialization as Adam Smith in the Wealth of Nations. Thus, the popular contraposition of Smith’s absolute versus Ricardo’s comparative cost advantage has to be dismissed.

Henry Martyn's Considerations Upon the East-India Trade, published anonymously in 1701, stands out as a major contribution to the field of political economy that took root in Britain in the eighteenth century, and to the demonstration of the gains from free trade (Martyn 1701). Martyn provided one of the earliest formulations (and by far the clearest) of what Jacob Viner termed the “eighteenth-century rule” for the gains from trade, that “it pays to import commodities from abroad whenever they can be obtained in exchange for exports at a smaller real cost than their production at home would entail” (Viner 1937, p. 440). The numerical examples that Martyn used to illustrate it went even beyond the case for free trade advanced seventy-five years later by Adam Smith in The Wealth of Nations. Martyn's tract contains other remarkable insights that became important features of classical political economy, such as the nature and advantages of the division of labor, the dependence of the latter on the extent of the market, the workings of a market economy, the role of money, and the impact of international trade on resource allocation, on productivity, and on economic welfare.

Loïc Charles and Philippe Steiner (2000) rightly draw our attention to Quesnay's neglected political views, namely the project of making France strong enough to confront England in economic and in military affairs. Schematically, Quesnay insists more upon wealth than upon population, which makes for a difference with most of the economists of his time, and more upon the navy than upon the army. Walter Eltis (1999) carefully relates the “explanations” of the Tableau économique contained in l'Ami des Hommes and the Philosophie rurale to the policy recommendations of Quesnay. He emphasizes the practical character of these different Tableaux in contrast with the abstract character of the first versions and of the Formule. He also gives a detailed account of the efects of diferent policies, namely the extension of grande culture, free trade of corn (which amounts to a higher price of corn), and tax reform. Gianni Vaggi (2001) insists on the modernization of agriculture as a decisive element of the power of a nation. Such preoccupations seem well in accordance with Quesnay's more general concern—that is, refounding the French monarchy on a natural order in which politics and economics can hardly be distinguished.

Allen V. Kneese is called the “father” or “pioneer” of the field of environmental economics but, despite his contributions to that field and the importance of his works, Kneese has not been acknowledged sufficiently in the history of environmental economic thought, and differences between his research and that in the Pigouvian tradition have been obscured over time. This article focuses on his research in the 1960s on water quality management and inquires into differences between his work and that in the Pigouvian tradition. Kneese alternated between theoretical and empirical work and revised the Pigouvian framework pragmatically. The Kneesian framework consists of a two-stage approach, and its substructure is the institutional form of policy agents. To understand the historical meaning of the Kneesian approach, it is useful to compare it to John Krutilla’s “evaluation of non-market value,” Ronald Coase’s “comparative institutional approach,” and Elinor Ostrom’s “Commons.”

Italy entered the war in May 1915; the USA, in April 1917. One hundred years on, this paper examines the viewpoint of Antonio de Viti de Marco, the renowned Italian economist who was one of the founders of the pure theory of public finance. It first focuses on De Viti’s interpretation of the economic and political aspects of the Great War, and reconstructs his vision of the world conflict as a struggle between liberal democracies and authoritarian states. Second, the paper highlights the convergence of De Viti’s ideals with those of President Wilson, seen as the powerful international leader of the Italian democratic interventionists. It also clarifies that the “Wilsonianism” of this movement originated in the Italian Risorgimento, and suggests that this convergence was not coincidental. Finally, it shows how, after the war, the unconditional admiration De Viti felt for the American positions gave way to bitter disappointment.

The Latin terms commonly used to signify “risk” are absent from Thomas Aquinas’s economic writings. Instead, Aquinas offers a lexicon of probability, prudence, and danger. This ternary lexicon brings with it a triple universalization of risk: first, a universalization through activity, including the activity of analysis considered as part of economic activity; second, a universalization through the agents, since everyone—the observer, the co-contractors, the prince, and the population—is affected by the risk; and, third, a partial universalization of its definition, since the lexicon indicates a risk that is not yet restricted by calculation, as the modern notion is, although some distinctions are already made by Aquinas. However, the lexicon describes only a risk of loss and does not take into account chance of gain.

The following is a transcription of a 2019 conversation with Duke historian E. Roy Weintraub about his intellectual development over the 1980s from mathematician to economist to historian. The conversation also explored Weintraub’s early and continuing attempts to forge new ways to study the history of contemporary economics, and the role of science studies in providing a natural language for such explorations. A French translation has already been published in the journal Zilsel: Science, technique, société.