Here is a fact that seems to surprise many deeply learned scholars. The term “dismal science” was applied to British political economy as the 1840s ended because of its role bringing about the emancipation of West Indian slaves in the 1830s. This paper addresses the consequences that follow from our ignorance of the role of classical economic theory in the anti-racial slavery coalition of Biblical literalists and utilitarians.

The controversial question of whether the millennium began on January 1, 2000 or on January 1, 2001 weighed heavily on my mind as I composed my talk. The dilemma is, I should think, evident: Should a historian of thought want to give the last address of the old millennium, or the first address of the new one? I couldn't make up my mind about this, so I decided to consult my friends, particularly those whom I felt had given the question their considered attention. I asked David Colander, and he assured me that my preferences didn't matter, since he in fact had certainly given the final presidential address of the last millennium when he spoke in Greensboro the previous June. I then asked John Davis, and he assured me that my preferences didn't matter since he, in fact, was certainly going to give the first one of the new millennium, in 2001. Now being not nearly so stupid as I look, it occurred to me that if I listened to both of these individuals, there was a chance that I was going to give neither the last address of the old nor the first address of the new millennium. Feeling that this was, to put it mildly, an unacceptable outcome, I decided to disregard the ill-considered advice of my so-called friends and take firm control of the situation. Ladies and gentleman, I am very proud to be before you here today, delivering both the last presidential address of the old millennium and the first of the new one.

Each year, new economics Ph.D. students learn the proof of the existence of a competitive equilibrium as if it were a rite of passage. From the utility-maximizing behavior of consumers and the profit-maximizing behavior of firms, neophyte economists soon can demonstrate that under certain conditions there exists a competitive market-clearing general equilibrium price vector. While there are a number of proofs that establish the existence of such an equilibrium, the validity of these proofs is indubitable. Indeed, economists with even scant knowledge of the history of economics can identify Kenneth J. Arrow and Gerard Debreu's Econometrica paper as having provided the proof that settled the issue.

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.

In 1798, Sophie de Grouchy, the marquise de Condorcet, published a translation of the seventh edition of Adam Smith's Theory of Moral Sentiments (1792), along with a series of eight “letters” on the subject of sympathy. These letters are, in fact, substantial essays that allow us to discern how she read Smith. Intellectual historians have a tendency to privilege an author's intent, and to read the Theory of Moral Sentiments in order to determine what Smith actually meant, and how meaning was constructed in the context of a particular intellectual environment. As long ago as 1978, literary theorists such as Wolfgang Iser suggested that a reader's response is at least as interesting a question as an author's intent (Iser 1978). And Sophie de Grouchy is no ordinary reader. Her translation of, and commentary on, Smith's work allow us to see how a theory constructed in the intellectual context of the Scottish Enlightenment would be received by a different intellectual community. While de Grouchy shared much of the background that informed Smith's work, she could not write a commentary on sympathy during the Terror without taking into account recent French political experience and debate. And, I argue, her reading was not merely idiosyncratic, but rather representative of a particular group of intellectuals seized with the problem of adapting Enlightenment theory to the political reality of the Republic.

Mikhail Ivanovich Tugan-Baranovsky (1865–1919) has not unjustly been calle the greatest Russian economist of all time (Jasny 1972, p. 159). This neglecte the fact that he was born near Kharkov and towards the end of his life came to see the Ukraine as his homeland, but the evaluation itself is not so far from the truth. However, opinion about the precise importance of Tugan-Baranovsky work to the development of trade cycle analysis has varied widely. J. M. Keynes and A. H. Hansen were both highly respectful of Tugan's contribution. For example, in the Treatise on Money, Keynes wrote in regards to business cycle theory that he was “in strong sympathy with the school of writers … of which Tugan-Baranovski was the first and most original” (Keynes 1930, vol. 2, p. 100 In his 1951 work, Business Cycles and National Income, Hansen was enthusiastic describing Tugan as “cutting his way though the jungle to a new outlook” (Hansen 1951, p. 281). This suggests that some aspects of both British an American Keynesianism might have originated in Tugan's work, or at least bee influenced by it. W. W. Rostow was also impressed by Tugan's approach, statin that it “took business cycle analysis some distance beyond Juglar and Marx” (Rostow 1990, p. 261).

In 1690, John Locke proclaimed, “Whatsoever [anyone]; removes out of the State that Nature hath provided … hath mixed his Labour with, and joyned to it something that is his own, and thereby makes it his Property.” Ever since this dictum was pronounced philosophers, economists, and, especially, capital theorists have been embarrassed by the virtually universal disregard of it in practice. At the very inception of economic theorizing, Ricardo declared that explaining the division of the national income into wages, rents, and interest was “the principal problem in Political Economy.” He proposed an ingenious explanation, but was far from settling the matter. Some fifty years later, Marx, building on Ricardo's concept of value, brought the debate to a sharp focus; after him, it became largely an argument between Marxists and everyone else. Put starkly, Marx defined the value of any good or service to be the amount of labor required to produce it. Since a worker and his family can be supported for a year by the product of a good deal less than a full year's labor, this definition implies a gap between the value of a year's labor and the value of its products. Owners of land and capital are only too glad to close the gap by claiming the “surplus value.” Marx's diagnosis of the nature and origin of surplus value became the focus of discussions of the distribution of income for most of the following century.

According to a commonly held view, doctrinal history formed a largely uncontested part of the discipline of economics in the early years of the twentieth century. Economists like Edwin Cannan, Jacob Viner, and Joseph A. Schumpeter were at the same time respected economists and historians of economics. Contemporary historians of economics, on the other hand, tend to feel defensive about their field of study. The questions of why, how, and in which discipline one should pursue the history of economics is hotly debated among practitioners, while the number of universities and curricula still offering history courses is in steady decline. This is matched by a corresponding attitude among orthodox economists aptly summarized by Frank H. Hahn (1992, p. 165): “What the dead had to say, when of value, has long since been absorbed, and when we need to say it again we can generally say it much better.”

The one man who has done more than any other to re-establish John Rae's reputation as a political economist of the first rank is R. Warren James. The year 1996 marked the bi-centenary of Rae's birth and coincided with the 500th anniversary celebration of the founding of Aberdeen University, Rae's alma mater. When Omar Hamouda and I discovered that we were independently trying to organize Rae bicentenary conferences in Canada and in Scotland, we felt it made sense to pool our energies and hold a conference in Aberdeen in 1996. In the event, more than thirty Rae scholars attended from around the world and the conference proceedings were published as The Economics of John Rae (1998). Unfortunately, James was unable to attend, but it was the unanimous decision of all assembled that the conference volume be dedicated to him.

The place for the teaching of and research dealing with the history of economics continues to draw attention, at least from within our speciality. Recent examples are the History of Political Economy mini-symposium (1992) that was anchored to Margaret Schabas's paper and Donald Walker's affirming essay in the Journal of the History of Economic Thought (1999). The former asked whether the history of economics, given the neglect shown by mainstream economics, should be incorporated into history of science programs. The latter argued that this neglect is unfortunate because there is a place for the history of economics in the training of economists. (The neglect is documented by Aslanbegui and Naples (1997).) An important feature of Walker's essay is that the argument was based on structural aspects of the discipline. His point of departure was Donald Gordon's (1965) claim that there is little in the history of economic analysis that facilitates the understanding of current economics and the research problems with which it is concerned. Certainly the education of natural scientists, as Gordon noted, is consistent with this claim. George Stigler (1969) made a similar claim, and both more or less took the conclusion to be self-evident. Walker's response was that, at least among a variety of important sub-disciplines, there is not professional consensus and, therefore, there may not be a sharp distinction between current and past theory. This suggests that some form of historical analysis may be useful. Walker's paper moved the discussion away from arguments that begin with the presumption that every educated economist should be versed in the origins of economics. Instead, he focused on questions relating to history as a tool for understanding and for doing today's economics. In this respect, Walker returned to an issue addressed by Filippo Cesarano (1983)—they both focused on historical studies as a source of illumination for current economic analysis.

Notwithstanding considerable efforts by at least two generations of economic theorists, the state of art of general equilibrium theory in the Arrow-Debreu framework is still extremely unsatisfactory, especially with respect to the treatment of the time dimension. Indeed, it is now taken for granted even among general equilibrium theorists that, to play a significant role, equilibrium analysis must account for individual agents' expectations about the uncertain future, and that the Arrow-Debreu procedure of collapsing the entire decision process at an initial date is to be interpreted, at most, as a counterfactual argument, the main message of the Arrow-Debreu approach being that “one cannot argue that markets co-ordinate activity if there are many of them missing” (Hahn 1995, p. 12).

Students of economic thought have long associated with the fifteenth and sixteenth centuries the spread of attitudes in Europe more tolerant of market processes. New economic attitudes appear in a variety of literary forms during the fifteenth century (McGovern 1970). As compared to the pronouncements of a number of Patristic figures, relatively greater tolerance of commerce is expressed by medieval theologians. In fact, recent scholarly efforts suggest that by the late thirteenth century, suspicions of economic activity remained, but Scholastic thinkers increasingly recognized the importance of an impersonal market process in everyday life and sought to find ways to understand it in light of their concern with natural order (Kaye 1998a). While condemning avarice, Scholastic writers such as San Antonino of Florence and San Bernadino of Sienna explicitly endorsed trade as legitimate when practiced for the common good and when associated with modest profit (Origo 1962; De Roover 1967). Recognition of this movement in thought, especially as it applied the concerns of economic justice to trade in commodities, is explicit in the literature of preclassical economics. But until recently, less attention has been paid to more specific developments in scholastic thinking on justice in the labor market.

The manuscripts dealing with commercial practices in Europe from the thirteenth to early seventeenth centuries have been the subject of numerous studies by those interested in the history of mathematics and sociology of knowledge. Indeed, these manuscripts shed a great deal of light on how modern mathematics, as well as mechanistic naturalism of the Enlightenment, can be traced to commercial arithmetic of the medieval and Renaissance periods. As such, the recent interest in these early manuscripts is well understood. But there is another aspect of these writings that has received far less attention: the economic contents of these manuscripts and their implications. for economic theory. In what follows, I will attempt to remedy this shortcoming by looking at the monetary lessons of these manuscripts concerning barter.

Charles Whitney Mixter started a minor controversy when he published an article, “A Forerunner of Böhm-Bawerk,” in the Quarterly Journal of Economics in 1897, in which he suggested that John Rae had anticipated some aspects of Böhm-Bawerk's theory of capital. At this time, not much was known in academic circles about Rae's life in Canada except for the remark in the preface to his 1834 book, Statement of Some New Principles on the Subject of Political Economy …: “I exchanged the literary leisure of Europe for the solitude and labors of the Canadian backwoods.”

This article intends to assess and compare the main contributions to our discipline of two major authors and authorities. Both of them originated in Central Europe and, later on, went to work in the United States, where their most important books on the subject were published posthumously during the second half of the twentieth century. At the same time, besides pertaining to different generations, they also were very unlike from each other.

The eldest, Joseph Alois Schumpeter (1883–1950), remains much better known among contemporary economists, although very few of them seem to have read in its entirety his imposing History of Economic Analysis (1954a), still a model of our trade. The same probably also applies to his shorter and previous book on the same subject, Economic Doctrine and Method, which had been initially published in Germany forty years earlier, as well as to the essays collected in his Ten Great Economists: From Marx to Keynes.

The individual's labor supply model, usually called leisure-income, is very well known in labor economics. It determines the time a person spends on the labor market by studying it as the outcome of a trade-off between leisure and income. The model is developed in almost every book on microeconomics. But strangely enough, although all economists know the model, no one seems to know precisely its origins.

Popular texts typically assert that guilds of craftsmen “monopolized” markets in medieval England. Norman Cantor's Medieval Reader declares “craft guilds' … main purpose and activity was narrow regulation of industrial productivity in order to restrain competition” (Cantor 1994, p. 278). Douglass North's Structure and Change in Economic History asserts “… guilds organized to protect local artisans … [and their strength] in preserving local monopolies against encroachment from outside competition was frequently reinforced by the coercive power of kings and great lords” (North 1981, p. 134). Henry Pirenne's Economic and Social History of Medieval Europe proclaims:

craft guilds, under a diversity of names, officium or ministerium in Latin, metier or jurande in French, arte in Italian, ambacht or neering in the Netherlands, amt, innung, aunft, or handwerk, in German, craft-gild or mistery in English, … fulfilled the need of economic protection. The pressing necessity to stand by one another, so as to resist competition from newcomers (Pirenne 1937, pp. 177–79).

One of the significant contributions of the The Wealth of Nations was to bring to the consciousness of economists the centrality of the pursuit of self-interest in economic affairs. Following the publication of the The Wealth of Nations, economists increasingly assumed that the pursuit of self-interest was the prime psychological drive of mankind. As economics developed, modifications of the self-interest postulate occurred. Economists began to formally model the pursuit of self-interest and a specific form of the pursuit of self-interest ultimately came to dominate economists' thinking. Specifically, economists have taken a methodologically individualistic approach to this question. With rare exception, economists presume that the individual pursues self-interest more or less in “isolation.” As Frank Knight pointed out, the purely rational action of the economic man requires the complete absence of personal relations, in effect requiring persons to treat each other as vending machines (Knight 1960, p. 73). Robinson Crusoe alone on his island is thus the epitome of the economic man assumed by neoclassical economic theory.