It is well known that the General Theory contains only one diagram, this occurring in chapter 14 criticising the orthodox theory of the rate of interest. Attached to the diagram is a footnote containing an acknowledgement: “This diagram was suggested to me by Mr. R.F. Harrod” (CW VII, p. 180). The impression conveyed by this remark is that Harrod drew the diagram and offered it to Keynes, who then accepted and used it. Further enquiry into the diagram's origins reveals the existence of an initial version which grew out of correspondence between Keynes and Harrod in August-September 1935 (CW XIII, pp. 526-63). Two of Harrod's writings–his (1951) Keynes biography and a letter to Hawtrey in 1951–imply that he was the author of the initial version, and that this was essentially the same as the published version. And, in seeming corroboration of Harrod's comments, there is the virtual equivalence of the initial version given in The Collected Writings of John Maynard Keynes (CW XIII, p. 557) and the final version printed in the General Theory (CW VII, p. 180J. Taken individually and collectively, these items of evidence all point in the same direction. They support the reasonable inference that, apart from trivial changes in lettering, Harrod was the sole author and creator of the initial and final versions of the diagram, and that Keynes was merely the recipient.

The role of traveling as a source of discovery and development of new ideas has been controversial in the history of economics. Despite their protective attitude toward established theory, economists have traveled widely and gained new insights or asked new questions as a result of their exposure to “other” economic systems, ideas, and forms of behavior. That is particularly the case when they travel to new places while their frameworks are in their initial stages or undergoing changes. This essay examines economists’ traveling as a potential source of new hypotheses, from the eighteenth to the twentieth centuries, with a detailed case study of Douglass North’s 1961 travel to Brazil.

Market failures, which are usually viewed as a consequence of self-interest, are also supposed to be a major justification for coercive state interventions. This was the view of, among others, Richard Musgrave and Paul Samuelson, but not of James Buchanan. The latter certainly admitted that individuals are self-interested, that markets fail to allocate resources efficiently, but did not believe in the need for coercion. In this paper, we show that, to Buchanan, coercion can be unnecessary if certain post-constitutional conditions are satisfied. We show that he believed that self-interested individuals voluntarily adopt pro-social behavior in small groups. Small groups or small numbers represent a post-constitutional alternative to the veil of ignorance.

This paper is a sequel to De Vroey (1998d) and (1998e). In these papers, I pondered upon the relationship between the Marshallian and the Walrasian research programs and defended the view that a divide should be drawn between them, contrary to the opinion of the majority of economists who see no need for such. I argued that these research programs differ on two scores. First, they are based on different conceptions of equilibrium. Second, they differ on the way in which they broach the issue of the working of the decentralized economy. The hallmark of the Marshallian approach is that it proceeds in two steps. The working of particular markets is analyzed in a first stage whereas the issue of their coordination is assigned to the second stage of the inquiry. Contrarily, the hallmark of the Walrasian approach is to immediately start the analysis at the level of the economy as a whole. Put differently, in the Marshallian approach, partial equilibrium analysis is seen as a first preliminary step to general equilibrium analysis, whereas in the Walrasian approach one immediately proceeds with the latter. The aim of the present paper is to show the incidence of this twofold difference on the interpretation of Keynesian theory.

The dismissal of academicians from German universities under the Restoration of Civil Service Act (Gesetz zur Wiederherstellung des Berufsbeamtentums), promulgated by the National Socialists on April 7, 1933, and the expulsion of academicians from Germany, Austria, and other European countries interrupted or destroyed promising developments in economics, as well as in physics or other areas. According to this new “law,” which was passed by the Nazis in a short cut immediately after coming to power, “disagreeable” persons could be dislocated from the public service predominantly for racist (section 3) or political (section 4) reasons.

Since its birth in 1944, the World Bank has had a strong focus on development projects. Yet, a project evaluation function was not made operational until the early 1970s. An early attempt to conceptualize project appraisal had been initiated in the 1960s by Albert Hirschman, whose undertaking raised high expectations at the Bank. Yet, Hirschman’s conclusions—published first in internal Bank reports and finally as a book in 1967—disappointed many at the Bank, primarily because they were found impractical. Hirschman attempted to offer the Bank a new Weltanschauung by transforming the Bank’s approach to project design, project management, and project appraisal. Instead, what the Bank expected from Hirschman was not a revolution, but rather an examination of the Bank’s projects and advice on how to make project design and management more measurable, more controllable, and more suitable for replication.

The history of this failed collaboration gives useful insights on the unstable equilibrium between operations and evaluation within the Bank. In addition, it shows that the Bank was active in the development economics debates of the 1960s. These insights should be of interest for those development economists today who reflect on the future of the discipline and emphasize the need for a non-dogmatic approach to the study of development issues. It should also be of interest for the Bank itself, with its renewed attention to the importance of evaluation for effective development policies. The history of the practice of development economics, together with the use of archival material, can bring new perspectives that contribute to a better understanding of the evolution of this discipline.

The paper argues that Terence Hutchison’s (1981) argument that the young F. A. Hayek maintained a methodological position markedly similar to that of Ludwig von Mises fails to support the relevant conclusion. The first problem with Hutchison’s argument is that it is not clear exactly what conclusion he meant to establish. Mises (in)famously maintained a rather extreme methodological apriorism. However, the concept of a priori knowledge that emerges from Hayek’s epistemology as implied in his work on theoretical psychology is the opposite of Mises’s treatment of a priori knowledge. Thus, it cannot be maintained—if, indeed, Hutchison meant to establish—that Hayek was a Misesian apriorist during the years in question. What’s more, the paper shows that Hutchison’s argument does not support a weaker interpretation of the relevant conclusion. There are alternative interpretations of Hutchison’s evidence, more charitable and more consistent with Hayek’s epistemology, which undermine Hutchison’s conclusion.

In the second volume of his Cours, published a hundred years ago, Vilfredo Pareto (1897, section 928) put forward what was probably the first mathematical model of the business cycle. Apart from Knut Wicksell's (1899) review of Pareto's book and Jess Benhabib's (1979) short article (partly based on Wicksell's comments), Pareto's model has gone unnoticed. According to the view advanced by Pareto in the 1890s, concepts from physics are essential, not only in the realm of static equilibrium, but also in the investigation of economic dynamics. The model follows a new presentation by Pareto of his equations of general equilibrium, where he attempted to take into account the influence of “inertia” (habit) by applying d'Alembert's principle of mechanics. He concludes that the solution to the consumption equations has a cyclical pattern and uses that to explain business cycles as oscillations in aggregate production driven by changes in consumption.

Presidential addresses tend to fall into one of two broad categories. Category I speeches-which I shall refer to as the pastoral style speak to the condition of our sub-discipline. Their central themes typically survey the state of the art offer commentary on promising further directions for fruitful research, and provide arguments useful in justifying our existence to skeptics who doubt the utility of studying the works of dead economists.

Frank Steindl poses a surprising question in the title of his 1997 article, “Was Fisher a Practicing Quantity Theorist?” and reaches the conclusion that, “Clearly, with the decade of the Great Depression, Fisher was no longer a practicing quantity theorist” (Steindl 1997, p. 259). Such a change in Fisher's monetary economics would sharply revise the view of Irving Fisher generally prevailing in the history of monetary economics, which is based primarily on The Purchasing Power of Money (Fisher with Brown 1911). Fisher's photograph (along with photographs of Marshall and Wicksell) appears on the cover of The Golden Age of the Quantity Theory (Laidler 1991). As Mark Blaug (1995, p. 3) put it, “isn't Irving Fisher the quintessential quantity theorist if there ever was one [?]” Perhaps the most striking tribute to Fisher in the quantity theory tradition is from Milton Friedman, who, addressing the American Economic Association on the question “Have Monetary Policies Failed?” and having quoted from Fisher's 1910 exchange with J. L. Laughlin, remarked “And now I must cease quoting from Fisher, with whom I am in full agreement, and proceed instead to plagiarize him—albeit with modifications to bring him down to date” (Friedman 1972, p. 12).

Stephen Stigler's JHET article, “Statisticians and the History of Economics,” rightly suggested that more attention should be given to analyzing the contributions of statisticians in the development of economic theory. It also asked in passing whether E. E. Slutsky should best be regarded as a mathematical statistician oran economist, Stiglerhimself opting forthe former characterization (Stigler 2002, p. 159). This seemingly innocuous question opens up a lively and interesting range of issues, one to which this historian would like to make a small contribution from both a “Russian studies” and a “history of ideas” viewpoint.

In the December 1928 issue of the Economic Journal, Frank Ramsey asked the question “how much of its income should a nation save?” Few of the Cambridge economists of the 1930s were convinced by his highly formalized answer. His contribution sank quickly into oblivion, remaining there for about thirty-five years. In the 1960s, the success of the Hamiltonian formalism and the increasing interest for optimal growth led on the contrary to a quasi “natural” use of Ramsey's former intuitions. These mathematical tools became so widespread that, a few years later, new classical macroeconomics uses a new interpretation of the “à la Ramsey” models, within the setting of representative agent models, in order to bypass the Arrow and Sonnenschein-Mantel-Debreu “impossibility results.” The “à la Ramsey” model is the backbone of modern new classical macroeconomics. It is thus not surprising that these successive moves in macro-economic theory came to foster a slanted interpretation of Ramsey's 1928 article. In this respect, Roger E. A. Farmer's point of view is representative of the retrospective tribute sometimes paid to Ramsey's article:

F. Ramsey was one of the first economists to study how an infinitely lived agent should allocate his resources over time. His work was at the forefront of mathematical economics at the time it was written but his approach has now become a standard part of graduate macroeconomic courses. Many applications of Ramsey's work assume that there is only one agent in the economy and that this representative agent can be thought of as a stand-in for the workings of the market mechanism (Farmer 1993, p. 77).

In this paper I propose to investigate the problem of liberty in Adam Smith's work. Suggesting that there is a “problem” may strike some as strange. After all, is not Smith simply the great defender of the system of natural liberty, a set of economic proposals that would remove the State from the business of directing the economy? Does he not maintain unequivocally that individuals are the best judges of their own self-interest and argue that they should be allowed to commit their labor and capital to those enterprises they deem most useful? Is Smith not one of the great defenders of the concept of negative liberty in modern liberal thought?

This paper describes Gary Becker’s theoretical models of marriage. At the micro level, these are all rational choice models. At the market level, Becker offers two major types of models: partial equilibrium models based on price theory as taught by Marshall and Friedman; and optimal sorting models based on optimal assignment models. This paper examines some of the possible intellectual influences on Becker’s theory of marriage, compares Becker’s research on marriage with that of some scholars interested in intra-marriage distribution, and documents that Becker’s students at Chicago were more interested in Becker’s Friedmanian models of marriage than in his optimal assignment models.

To this day, the so-called Arrow–Debreu model represents a trademark of rigorous economic research—be it as a benchmark for extending the model, for weakening its assumptions, for structuring data sets, or for providing alternative models. But who should earn the credit? Arrow or Debreu? This essay presents “the making of” Arrow’s and Debreu’s joint article of 1954 as documented in their extensive letter exchange between their first contact in February 1952 and submission in May 1953. I show, pivotally, that Arrow and Debreu did not share the same interest in their work, that they played different roles, and drew different lessons from it. Moreover, neither Arrow nor Debreu can be identified with the way the profession would later refer to the Arrow–Debreu model. To the contrary, both, in their own ways, sought to counter what others perceived as limitations when placing their hopes in the model.

This article is part of a wider historical research program in which I seek to examine the origins of past methodological debates. It is my opinion that economists ignore methodological and philosophical issues until either the doctrinal conclusions of the school to which they belong are challenged or they themselves contest the doctrinal conclusions of an alternative school. Once this occurs, economists select, reinterpret or construct methodological precepts in order to gain the maximum support for their position. Under this hypothesis the formation and articulation of methodological beliefs are largely endogenous to matters relating to economics; that is, the traditional causal process of methodology to theory to policy is turned on its head and becomes policy to theory to methodology. The aim of what follows is to illustrate this research program by examining the methodological framework expounded by T. E. Cliffe Leslie in the early stages of the English economic Methodenstreit or “battle of methods.”

This paper examines the use of the medical metaphor in the early theories of crises. It first considers the borrowing of medical terminology and generic references to disease, which, notwithstanding their relatively trivial character, illustrate how crises were originally conceived as disturbances (often of a political nature) to a naturally healthy system. Then it shows how a more specific metaphor, the fever of speculation, shifted the emphasis by treating prosperity as the diseased phase, to which crises are a remedy. The metaphor of the epidemic spreading of the disease introduced the theme of the cumulative character of both upswing and downswing, while the similitude with intermittent fevers accounted for the recurring nature of crises. Finally, the paper examines how the medical reflections on the causality of diseases contributed to the epistemology of crises theory, and reflects on the metaphysical shift accompanying the transition from the theories of crises to the theories of cycles.

In his 1898 article Why is Economics Not An Evolutionary Science ,Thorstein Veblen criticized the Austrian School (as represented by Carl Menger) for being unable to break with the classical tradition that economics is a taxonomic science(Veblen 1898, p. 73). The Austrian failure was attributed to a "faulty conception of human nature (ibid.).