Economists From England

"For philosophy and history alike have taught...to seek not what is "safe," but what is true."

"Now, I agree with Mill in holding that the scientific study of the structures and functions of the different governments that have actually existed in human societies cannot well be pursued in complete separation from the scientific study of other important elements of the societies in question: whether the aim of the student is to ascertain the causes of the differences in such governments or to examine their effects. But I do not think that there is any fundamental difference, in this respect, between the study of political relations and the study of economic relations, or, again, of religion, of art, of science and philosophy, as factors of social life. In each of these eases the student concentrates his attention on one element of human history which can only be partially separated from other components of the whole complex fact of social development. Experience seems to show that this kind of concentration, and consequent partial separation of historical and sociological study into special branches, is unavoidable in the division of intellectual labour which the growth of our knowledge renders necessary in a continually increasing degree."

"How far we are to consider the interests of posterity when they seem to conflict with those of now-existing human beings? The answer to this, though, seems clear: the time at which a man exists can’t affect the value of his happiness from a universal point of view; so the interests of posterity must concern a utilitarian as much as those of his contemporaries—except in that the effect of his actions on the lives and even the existence of posterity must be more uncertain."

"One of the unhappy casualties of World War I, it seems, was the old-fashioned treatise on economic "principles." … Since the brilliant burst that gave us the works of Wicksteed (1910), Taussig (1911), and Fetter (1915), this type of treatise has disappeared from economic thought, and economics has become appallingly fragmented, dissociated to such a degree that there hardly is an economics any more; instead, we find myriad bits and pieces of uncoordinated analysis."

"Wicksteed's first contribution to theoretical Economics was an application of the Jevonian analysis to the criticism of the Marxian theory of value—an article on Das Kapital which appeared in the socialist journal, To-Day, in October, 1884. The article is not merely a criticism; it is an independent exposition of the new theory which carries it further forward and, on more than one point, adds important new corollaries, The Labour Theory is shown to be false. The cases which it appears to explain are explained more convincingly as special instances of a more comprehensive theory. … It was the first scientific criticism of Marx's theory—written years before Böhm-Bawerk's or Pareto's—and in some respects it remains the most decisive. The argument is developed with the ease and certainty of a man who is completely sure of himself, not because of any self-deception or premature synthesis, but because he has mastered the essential material. Mr. George Bernard Shaw, at that time a Marxian Socialist, made a controversial reply; but as Mr. Shaw, who, as he has subsequently related,1 was eventually persuaded by Wicksteed that he was wrong, would be the first to admit, the significance of his reply lay not so much in what it itself contained, but rather in the fact that it elicited further elucidations of Jevons.2 It is, perhaps, worth noting that Wicksteed's rejoinder contains one of the earliest recognitions of the relative nature of the concepts invoked by the utility theory of value."

"In a proto-Austrian manner, Donisthorpe also distinguished between directly useful and indirectly useful goods, and showed how the latter had varying degrees of remoteness from the pleasure-giving stage of goods; in short, Donisthorpe engaged in a sophisticated analysis of the time-structure of production. He also had a pioneering analysis of the influence of substitutes and complements ('co-elements') upon values. While Donisthorpe's discussion of demand curves (i.e. schedules), supply, and price was interesting but hopelessly confused (e.g. he denied that an increased desire of consumers for a product would raise their demand for the product), he did present a remarkably clear foreshadowing of Philip Wicksteed's insight of four decades later that witholding the stock of a product by suppliers really amounts to the suppliers' 'reservation demand' for that product."

"If we engraft the current meaning of the word "economy" (the avoiding of waste) upon its etymological meaning (the administration of a household), we shall arrive at "the administration of the affairs and resources of a household in such a manner as to avoid waste and secure efficiency" as our conception of "Economy." "Political" Economy would, by analogy, indicate the administration, in the like manner, of the affairs and resources of a State, regarded as an extended household or community, and regulated by a central authority; and the study of Political Economy would be the study of the principles on which the resources of a community should be so regulated and administered as to secure the communal ends without waste."

"It is true also that Marx elsewhere virtually defines value so as to make it essentially dependent upon human labour (p. 81 [43a]). But for all that his analysis is based on the bare fact of exchangeability. This fact alone establishes Verschiedenkeit and Ghichheit, heterogeneity and homogeneity. Any two things which normally exchange for each other, whether products of labour or not, whether they have, or have not, what we choose to call value, must have that "common something" in virtue of which things exchange and can be equated with each other; and all legitimate inferences as to wares which are drawn from the bare fact of exchange must be equally legitimate when applied to other exchangeable things. Now the "common something," which all exchangeable things contain, is neither more nor less than abstract utility, i.e. power of satisfying human desires. The exchanged articles differ from each other in the specific desires which they satisfy, they resemble each other in the degree of satisfaction which they confer. The Verschiedenheit is qualitative, the Gleichheit is quantitative.It cannot be urged that there is no common measure to which we can reduce the satisfaction derived from such different articles as Bibles and brandy, for instance (to take an illustration suggested by Marx), for as a matter of fact we are all of us making such reductions every day. If I am willing to give the same sum of money for a family Bible and for a dozen of brandy, it is because I have reduced the respective satisfactions their possession will afford me to a common measure, and have found them equivalent. In economic phrase, the two things have equal abstract utility for me. In popular (and highly significant) phrase, each of the two things is worth as much to me as the other.Marx is, therefore, wrong in saying that when we pass from that in which the exchangeable wares differ (value in use) to that in which they are identical (value in exchange), we must put their utility out of consideration, leaving only jellies of abstract labour. What we really have to do is to put out of consideration the concrete and specific qualitative utilities in which they differ, leaving only the abstract and general quantitative utility in which they are identical.This formula applies to all exchangeable commodities, whether producible in indefinite quantities, like family Bibles and brandy, or strictly limited in quantity, like the "Raphaels," one of which has just been purchased for the nation. The equation which always holds in the case of a normal exchange is an equation not of labour, but of abstract utility, significantly called worth. … A coat is made specifically useful by the tailor's work, but it is specifically useful (has a value in use) because it protects us. In the same way, it is made valuable by abstractly useful work, but it is valuable because it has abstract utility."

"PHILIP HENRY WICKSTEED, the author of the Common Sense of Political Economy and the other works collected in these volumes, was one of the most remarkable intellectual figures of the half-century which has just past. He was a leading member of the Unitarian ministry. He was one of the foremost mediæval scholars of his time. He was an economist of international reputation. He was a savant who made contributions of permanent value to highly technical branches of knowledge. He was a teacher who, without vulgarisation, succeeded in making intelligible to many the main significance of the various fields of learning in which he moved. There can be few men who have so successfully combined such a wide range of intellectual pursuits with such conspicuous excellence in each of them."

"But neither can anything we desire be got without money, or what money represents, i.e. without the command of exchangeable things. All the things that we so often say "cannot be had for money" we might with equal truth say cannot be had or enjoyed without it. Friendship cannot be had for money, but how often do the things that money commands enable us to form and develop our friendships! … But even "waiting" requires money, if not so much as marrying does. In fact, a man can be neither a saint, nor a lover, nor a poet, unless he has comparatively recently had something to eat. The things that money commands are strictly necessary to the realisation on earth of any programme whatsoever. The range of things, then, that money can command in no case secures any of those experiences or states of consciousness which make up the whole body of ultimately desired things, and yet none of the things that we ultimately desire can be had except on the basis of the things that money can command. Hence nothing that we really want can infallibly be secured by things that can be exchanged, but neither can it under any circumstances be enjoyed without them."

"Now the leap by which this reasoning lands us in labour as the sole constituent element of value appears to me so surprising that I am prepared to learn that the yet unpublished portions of Das Kapital contain supplementary or elucidatory matter which may set it in a new light. Meanwhile the analysis appears to be given as complete and adequate, so far as it goes, and I can, therefore, only take it as I find it and try to test its validity. But instead of directly confronting it with what seems to be the true analysis of the phenomenon of exchange, I will follow it out a little further, and we shall see that Marx himself introduces a modification into his result (or develops a half-latent implication in it), in such a way as to vitiate the very analysis on which that result is founded, and to lead us, if we work it out, to what I regard as the true solution of the problem."

"Social reformers and legislators will never be economists, and they will always work on economic theory of one kind or another. They will quote and apply such dicta as they can assimilate, and such acknowledged principles as seem to serve their turn. Let us suppose there were a recognised body of economic doctrine the truth and relevancy of which perpetually revealed itself to all who looked below the surface, which taught men what to expect and how to analyse their experience; which insisted at every turn on the illuminating relation between our conduct in life and our conduct in business; which drove the analysis of our daily administration of our individual resources deeper, and thereby dissipated the mist that hangs about our economic relations, and concentrated attention upon the uniting and all-penetrating principles of our study. Economics might even then be no more than a feeble barrier against passion, and might afford but a feeble light to guide honest enthusiasm, but it would exert a steady and a cumulative pressure, making for the truth. While the experts worked on severer methods than ever, popularisers would be found to drive homely illustrations and analogies into the general consciousness; and the roughly understood dicta bandied about in the name of Political Economy would at any rate stand in some relation to truth and to experience, instead of being, as they too often are at present, a mere armoury of consecrated paradoxes that cannot be understood because they are not true, that every one uses as weapons while no one grasps them as principles."

"Somehow the discussion got around to Gary Becker, and I opined that Gary was also quite a good economist. However, Cordemí began to shake his head in a doleful manner, and I sensed, first, that he did not approve of Becker and, second, that I was losing his respect because of my own good opinion of Becker. Then Cordemí said that Becker’s problem was his lack of originality. This was really a surprise—many people object to Gary because he is outrageous, not because he is unoriginal. Then Cordemí dropped his bombshell: all of Becker’s ideas are in Philip Wicksteed’s book, The Common Sense of Political Economy.After this revelation, I was pretty eager to get home to consult my copy of The Common Sense, which I owned but had not studied. When I read the book, I discovered quickly what Cordemí was referring to. Wicksteed urged his fellow economists to apply economics broadly to a variety of social interactions, not just to usual business matters. However, as far as I could tell, he had not gone anywhere with this idea. Therefore, Gary’s originality seemed to be intact. Nevertheless, I filed away this incident and figured I could use it against Gary at some future time.[…] I figured that I needed to create something of a psychological edge, and I arranged for my younger son, Josh (then eight years old), to be on the tennis court prior to the big match. He was set up to be reading the Common Sense of Political Economy. I figured that Gary would ask Josh what he was reading, and I told Josh to report the author and title and then say, “I understand that you got all your ideas from this fellow.”[…] Gary quickly responded, “Oh, yes, I copied all his work.”"

"I picked up a copy of Lionel Robbins’s 1934 book The Great Depression in a used book shop in Norwich. It's quite revealing: judicious in tone, full of tables and facts, clearly meant to be seen as the work of a wise observer – indeed, a Very Serious Person.And utterly, utterly wrongheaded"

"I shall always regard this aspect of my dispute with Keynes as the greatest mistake of my professional career, and the book, The Great Depression, which I subsequently wrote, partly in justification of this attitude, as something which I would willingly see be forgotten. […] Now I still think that there is much in this theory as an explanation of a possible generation of boom and crisis. But, as an explanation of what was going on in the early ’30s, I now think it was misleading. Whatever the genetic factors of the pre-1929 boom, their sequelae, in the sense of inappropriate investments fostered by wrong expectations, were completely swamped by vast deflationary forces sweeping away all those elements of constancy in the situation which otherwise might have provided a framework for an explanation in my terms. The theory was inadequate to the facts. Nor was this approach any more adequate as a guide to policy. Confronted with the freezing deflation of those days, the idea that the prime essential was the writing down of mistaken investments and the easing of capital markets by fostering the disposition to save and reducing the pressure on consumption was completely inappropriate. To treat what developed subsequently in the way which I then thought valid was as unsuitable as denying blankets and stimulants to a drunk who has fallen into an icy pond, on the ground that his original trouble was overheating."

"Lionel Robbins's The Great Depression (Macmillan, 1934) is one of the great economic works of our time. Its greatness lies not so much in originality of economic thought, as in the application of the best economic thought to the explanation of the cataclysmic phenomena of the Great Depression. This is unquestionably the best work published on the Great Depression. … To his work, Robbins brought a clarity and polish of style that I believe to be unequalled among any economists, past or present. Robbins is the premier economic stylist."

"The economist studies the disposal of scarce means. He is interested in the way different degrees of scarcity of different goods give rise to different ratios of valuation between them, and he is interested in the way in which changes in conditions of scarcity, whether coming from changes in ends or changes in means—from the demand side or the supply side—affect these ratios. Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses."

"It has been the object…to show that if recovery is to be maintained and future progress assured, there must be a more or less complete reversal of contemporary tendencies of governmental regulation of enterprise. The aim of governmental policy in regard to industry must be to create a field in which the forces of enterprise and the disposal of resources are once more allowed to be governed by the market.But what is this but the restoration of capitalism? And is not the restoration of capitalism the restoration of the causes of depression?If the analysis of this essay is correct, the answer is unequivocal. The conditions of recovery which have been stated do indeed involve the restoration of what has been called capitalism. But the slump was not due to these conditions. On the contrary, it was due to their negation. It was due to monetary mismanagement and State intervention operating in a milieu in which the essential strength of capitalism had already been sapped by war and by policy. Ever since the outbreak of war in 1914, the whole tendency of policy has been away from that system, which in spite of the persistence of feudal obstacles and the unprecedented multiplication of the people, produced that enormous increase of wealth per head…. Whether that increase will be resumed, or whether, after perhaps some recovery, we shall be plunged anew into depression and the chaos of planning and restrictionism—that is the issue which depends on our willingness to reverse this tendency."

"Roughly speaking, Lundberg argued that Gunnar Myrdal's work has been enormously important, and noted that there was local pressure on the Nobel Prize Committee to recognize him, but wondered how it would be received abroad if this was done. (Remember that the Prize was then rather new, and Lundberg had to be careful about its reputation.) Giersch's reply was that the quality of the work surely merited the award, but maybe the politics of it would be easier if there was a joint recipient who was neither Swedish nor shared Myrdal's views – what about Hayek? That's it – is this where Hayek's prize came from, or was he already high on the list, or what?"

"I did, and still do, think that New Classical Economics has quite a bit in common with the Austrians (so did Robert Lucas, and I am surprised to find that I did not refer to this in the early 1980s, so I was either careless or did not know about it until a bit later)."

"Hobson made his views clear in his earlier book, The War in South Africa. The war was being fought to support Jewish interests. Hobson blames "a small group of international financiers, chiefly German in origin and Jewish in race . . . The rich and powerful liquor trade . . . is entirely in the hands of Jews . . . the stock exchange is needless to say, mostly Jewish . . . the press of Johannesburg is chiefly their property . . . we are fighting in order to place a small international oligarchy of mine owners and speculators in power at Pretoria.""

"Yet central to Hobson’s analysis of the "pressures that were hard at work" were the finance houses controlled by Jews. "These great businesses — banking, booking, bill discounting, loan floating, company promoting — form the central ganglion of international capitalism," he writes in Imperialism. ... Hobson follows this up with: "Does anyone seriously suppose that a great war could be undertaken by any European state, or a great state loan subscribed, if the house of Rothschild and its connections set their face against it?" ... Having established that the finance houses (“this little group of financial kings”) are controlled by the Jews, Hobson goes on to say that “there is not a war, a revolution, an anarchist assassination, or any other public shock, which is not gainful to these men; they are harpies who suck their gains from every new forced expenditure and every sudden disturbance of public credit"."

"The money received for sales has no other significance or value than its power to buy, and trade can only be imaged truly as an exchange of goods for goods in which the processes of selling and of buying are complementary."

"Perhaps the worst of the three fallacies, and in a sense the deepest-rooted, is the concept of export trade as of more value than import trade."

"If the interests of consumers and the interests of producers weighed equally in the eyes of governments, as they should, the strongest of all obstacles to a peaceful harmonious society of nations would be overcome. For the suspicions, jealousies, and hostilities of nations are inspired more by the tendency of groups of producers to misrepresent their private interests as the good of their respective countries than by any other single circumstance."

"It is untrue that the world market is strictly limited, with the consequence that every advance of one group of traders is at the expense of another group. The world market is indefinitely expansible and is always expanding..."

"The imputation of political significance to... statistics, taken either in aggregate or in relation to separate countries, as if they were themselves indices of public gain or public loss, has most injurious reactions upon the intelligent understanding of commerce."

"Envisaging the whole range of foreign commerce... the image of it as a prize which governments can, and ought to win for their traders at the expense of the traders supported by other governments, has been a most fertile source of international misunderstanding."

"The richly nourished patriotism of war breeds divisions and antagonisms which are easily exploited afterwards by political, racial, religious, and cultural passions, but most of all by economic interests."

"The present class government means the severance or antagonism of nations, because each ruling class can only keep and use its rule by forcing the antagonisms of foreign policy: intelligent democracies would perceive their identity of interest, and would ensure it by their amicable policy. The genuine forces of internationalism, thus liberated, would first display themselves as economic forces, securing more effective international co-operation for postal, telegraphic, railway, and other transport services, for monetary exchange and for common standards of measurement of various kinds, and for the improved intercommunication of persons, goods, and information. Related and subsidiary to these purposes would come a growth of machinery of courts and congresses, at first informal and private, but gradually taking shape in more definite and more public machinery: the common interests of the arts and sciences would everywhere be weaving an elaborate network of intellectual internationalism, and both economic and intellectual community of needs and interests would contribute to the natural growth of such political solidarity as was required to maintain this real community."

"[T]he instinct for control of land, drives back to the earliest times when a wide range of land was necessary for a food supply for men or cattle, and is linked on to the "trek" habit, which survives more powerfully than is commonly supposed in civilised peoples. ... The animal lust of struggle, once a necessity, survives in the blood."

"This new and enlarged edition of The Evolution of Modern Capitalism contains additions and alterations so great as to constitute it in effect a new book."

"We now stand face to face with the main objection so often raised against all endeavours to remedy industrial and social diseases by the expansion of public control. ...The strife, danger, and waste of industrial competition are necessary conditions to industrial vitality."

"As nations advance towards civilisation it becomes less needful for them to contend with one another for land and food to support their increasing numbers, because their increased control of the industrial arts enables them to gain what they want by conquering nature instead of conquering their fellow-men."

"Much individual enterprise in industry does not make for industrial progress. A larger and larger proportion of the energy given out in trade competition is consumed in violent warfare between trade rivals and is not represented either in advancement of industrial arts or in increase of material wealth."

"The generally accepted image of international trade is one in which a number of trading communities... are engaged in striving each to win for itself, and at the expense of the others, the largest possible share of a strictly limited objective—the world market. ... So far as world or international trade is rightly presented as a competitive process, that competition takes place not between America, Britain, Germany, but between a number of separate American, British, German, firms. The immediate interests of these firms is not directed along political lines."

"Economic nationalism means protective and discriminative tariffs, and a conservation of national, imperial or allied resources within a circle of favored beneficiaries."

"There can, we are told, be no real "rights" of nations because there exists no "sanction," no recognised tribunal to define and enforce rights. ... It may here suffice to say that the maintenance under ordinary conditions of treaty relations, international credit and exchange, a common postal, and within narrower limits, a common railway system, not to mention the actual machinery of conventions and conferences for concerted international action, and the whole unwritten law of war and international courtesies, embassies, consulates, and the like—all these things rest upon a basis of recognition of certain reciprocal duties, the neglect or violation of which would be punished by forfeiture of most favoured nations' treatment in the future, and by the reprobation and the possibly combined intervention of other States."

"If imperial expansion were really nothing other than a phase of the natural history of a nation it would be as idle to protest against it as to argue with an earthquake. But the policy of civilised States differs from that of uncivilised States in resting more largely upon deliberate conscious choice, partaking more definitely of the character of conduct."

"History does not show greed of gain as the motive of the great steps in industrial progress. The love of science, the pure delight of mechanical invention, the attainment of some slight personal convenience in labour, and mere chance, play the largest part in the history of industrial improvements. These motives would be as equally operative under state-control as under private enterprise."

"Since invention is almost never the sole work of a single inventor... and since it is the product of the successive labors of innumerable men... it is merely a figure of speech to attribute an invention to a single person: this is a convenient falsehood fostered by a spurious sense of patriotism and by the device of patent monopolies... Any fully developed machine is a composite collective product: the present weaving machinery, according to Hobson, is a compound of about 800 inventions, while the present carding machinery is a compound of about 60 patents. This holds true for countries and generations as well: the joint stock of knowledge and technical skill transcends the boundaries of individual or national egos: and to forget that fact is not merely to enthrone superstition but to undermine the essential planetary basis of technology itself."

"Industrial history shows that in modern competitive industry the motive of personal gain is most wastefully applied. On the one hand, the great mass of intelligent workers have no opportunity of securing an adequate reward for any special application of intelligence in mechanical invention or other improvement of industrial arts. Few great modern inventors have made money out of their inventions. On the other hand, the entrepreneur, with just enough business cunning to recognise the market value of an improvement, reaps a material reward which is often enormously in excess of what is economically required to induce him to apply his "business" qualities to the undertaking."

"[T]he tendency of growing civilisation on the national scale has been more and more to divert the struggle for life from a struggle with other nations to a struggle with environment, and so to utilise the fruits of reason as to divert a larger and larger proportion of energy to struggles for intellectual, moral, and aesthetic goods rather than for goods which tax the powers of the earth, and which, conforming to the law of diminishing returns, are apt to bring them into conflict with other nations."

"Is it not the larger and the longer hope and interest of America to live as a great partner in... a society of nations, rather than to live a life of isolated prosperity... ?"

"Not the least advantage of basic communism would be the fact that it would tend to put a brake upon industrial enterprise. But such a brake, instead of being in the form of capitalist sabotage, or in the shocking dislocation of a commercial crisis, would be a gradual lessening of the speed of individual parts and a gearing of the whole organization into a steady routine of productivity. Mr. J. A. Hobson has put this matter with his usual insight and wisdom: "Industrial progress would undoubtedly be slower under state-control, because the very object of such control is to divert a larger proportion of human genius and effort from these occupations in order to apply them in producing higher forms of wealth..." However forbidding such a prospect looks to the enterpriser of the old order, humanly speaking it would represent a tremendous gain."

"Once the major wants of mankind are satisfied by the machine process, our factory system must be on a basis of regular annual replacement instead of progressive expansion—not on a basis of premature replacement through debauched workmanship, adulterated materials, and grossly stimulated caprice. "The case," as Mr. J. A. Hobson again puts it, "is a simple one. A mere increase in the variety of our material consumption relieves the strain imposed upon man by the limits of the material universe, for such a variety enables him to utilize a larger proportion of the aggregate matter. But in proportion as we add to mere variety a higher appreciation of those adaptations of matter which are due to human skill, which we call Art, we pass outside the limit of matter and are no longer slaves of roods and acres and a law of diminishing returns." In other words: a genuine standard, once the vital physical wants are satisfied, tends to change the plane of consumption and therefore to limit, in a considerable degree, the extent of further mechanical enterprise."

"This practical condition, together with the failure of international-political theories to provide either convincing explanations or serviceable guidance for research, has provided adequate temptation to pursue reductionist approaches. The economic theory of imperialism developed by Hobson and Lenin is the best of such approaches. By "best" I mean not necessarily correct but rather most impressive as theory. The theory is elegant and powerful. Simply stated and incorporating only a few elements, it claims to explain the most important of international-political events-not merely imperialism but also most, if not all, modem wars-and even to indicate the conditions that would permit peace to prevail. The theory offers explanations and, unlike most theories in the social sciences, predictions as well. Moreover, it has successfully performed the other tasks that a good theory should accomplish: namely, stimulating and guiding research and· provoking counter-theories that claim to account for the same phenomena. All in all, the literature that can be attributed to the Hobson-Lenin theory of imperialism, both in support of the theory and against it, is as extensive and as sophisticated as the literature associated with any other school in the field of international politics."

"Nations are represented not merely as self-centered, independent moral systems, but as, in some degree, mutually repellent systems. This notion is partly the product of the false patriotic teaching of our schools and press, which seek to feed our sense of national unity more upon exclusive than inclusive sentiments. Nations are represented as rivals and competitors in some struggle for power, or greatness, or prestige, instead of as coöperators in the general advance of civilization."

"On what a slippery slope ...international morality reposes."

"To the extent that people develop personal and esthetic interests, they are immune to trivial changes in style and they disdain to foster such low demands. Moreover, as Mr. J. A. Hobson has wisely pointed out, "if an undue amount of individuality be devoted to the production and consumption of food, clothing, etc., and the conscious, refined cultivation of these tastes, higher forms of individual expression in work and life will be neglected.""