History of Economic Analysis part 85 doc

bound differences, we find strong similarity in the visions or general conceptions of the process and, in particular, with respect to economic evolution. Also we find an approximately equal distribution of weights as between ‘theory’ and ‘facts,’ although Marshall’s superior art succeeded in banishing mere narration from the pages of the Principles—so that to readers who neglect Industry and Trade, his treatment looks more ‘purely theoretical’ than it is and much more so than does A.Smith’s. But the similarity extends still further to the aim, plan (I am not referring to non-essentials such as sequence of topics), and nature of the performance. Marshall was aware of this. He is reported to have said: ‘It’s all in A.Smith.’ There is more in this remark than mere recognition of the fact that today’s work necessarily grows out of yesterday’s—there is recognition of kinship. And there is a final similarity: both the Wealth and the Principles are what they are, partly at least, because they are the result of the work of decades and fully matured, the products of minds that took infinite care, were patient of labor, and indifferent to the lapse of years. This is all the more remarkable because both Smith and Marshall were extremely anxious to preach their wisdom and to influence political practice—yet neither of them allowed himself to be hurried into print before his manuscripts were as perfect as he felt able to make them. 9 A reader’s guide through the Principles is superfluous, I trust. Suffice it, then, to say that Book V (Theory of the Equilibrium of Demand and Supply) contains the core of the analytic performance. Book VI on Distribution is an extensive application of the analysis of Book V. Book I presents first ‘an economic history in one lecture,’ so severely scaled down that what remains reads like a series of trivialities and almost entirely fails to convey the breadth and depth of the research that actually went into it; and second an almost unbelievably insular sketch of the history of economics. Book II, Some Fundamental Notions (concepts), could have been written by any nineteenth-century hewer of wood and drawer of water. Books III (Wants) and IV (Agents of Production) contain several novelties and, occasionally, deep insights (e.g. in ch. 12, 11 and 12), all smothered by a mass of things that might have been improved by pruning. The reader who pierces the highly polished surface, on which everything seems to be reduced to commonplace, is first of all struck by the tremendous wealth of analytic and factual detail, drilled into order by a stupendously skilled taskmaster to whom it never seems to have occurred that nothing will make a book more difficult than will the attempt to make it too easy. Everything finds its appointed niche in a vast structure and everything is, before being displayed in its niche, analytically chiseled into shape by an artist in neat and economical conceptualization. In the second place, that reader will 9 To my mind this was wholly a virtue. Reason for a different opinion will be found in Keynes’s essay. But Lord Keynes’s arguments read like an oratio pro domo. And though Marshall did indeed lose some of the claims to priority he might have had in the matter of money, it is not true that delay of publication robbed him of any as regards the topics treated in the Principles. The position of the Principles would, in this respect, be no different if it had appeared in 1880. History of economic analysis 802 discover a quality that comes near to constituting Marshall’s chief claim to immortality: in Marshall he beholds not only a high-powered technician, a profoundly learned historian, a sure-footed framer of explanatory hypotheses, but above all a great economist. Unlike the technicians of today who, so far as the technique of theory is concerned, are as superior to him as he was to A.Smith, he understood the working of the capitalist process. In particular, he understood business, business problems, and businessmen better than did most other scientific economists, not excluding those who were businessmen themselves. He sensed the intimate organic necessities of economic life even more intensively than he formulated them, and he spoke therefore as one who has power and not like the scribes—or like the theorists who are nothing but theorists. I am afraid that this achievement—so remarkable in one who moved primarily within academic circles and largely shared their prejudices—together with the Olympian repose, which his attitudes to hotly debated practical problems display, accounts in part for the unpopularity that surrounds his name today. In the third place, the reader who gets still further and knows how to see the analytic skeleton under the smooth skin and all the flesh will behold the apparatus of what we now call Partial Analysis, that is, the set of tools that have been forged for the purpose of analyzing the phenomena in relatively small sectors of the economy—individual ‘industries’ that are too small to call forth, through variations in their own outputs, prices, and demands for factors, repercussions in the social aggregates (especially in real and monetary national income), so that everything that happens outside of such sectors may be treated as given (see below, ch. 7, sec. 6). Book V is the classic masterpiece of this partial analysis that has been so much admired by some and so severely criticized by others. The questions involved will be discussed later on. At the moment another matter calls for our attention. The partial-analysis viewpoint is so much in evidence throughout Marshall’s text, and the handy concepts of partial analysis that he forged or refurbished have been so generally received into current teaching that there is some excuse for those who see in Marshall the master of partial analysis and nothing more. All the same, this fails to do justice to the depth and range of Marshall’s thought. It is not only that the wider conception of the general interdependence of all economic quantities receives intermittent attention in the Principles: Marshall actually formulated this wider conception—embryonically but still explicitly—in the notes XIV and XXI of the Appendix. And the Memorials contain a passage (p. 417), rightly emphasized by Mr. Shove in the article referred to above, that reads: ‘My whole life has been given and will be given to presenting in realistic form as much as I can of my note XXI.’ It seems fair, therefore, to list Marshall also among the builders of the general-equilibrium system as well as of the marginal utility analysis per se. There is more to another opinion that restricts Marshall’s achievement. His theoretical apparatus is strictly static. This does not prevent him from dealing with evolutionary phenomena or indeed any phenomena of economic life that are refractory to the application of the methods of statics. As Keynes pointed out in his Treatise on Money (II, p. 406), Marshall ‘was a little disposed sometimes to camouflage the essentially static character of his equilibrium theory with many wise and penetrating obiter dicta on dynamical problems.’ But in order to do so he had to get off the driver’s seat of his analytic engine, the arms of which do not reach these problems: the range of the Principles is much wider than that of the theory which the work expounds, and the theory The general economics of the period 803 itself is impaired by the strain to which it is subject, especially in the neighborhood of the phenomena of decreasing average cost. In the fourth place, no unbiased reader can fail to perceive the twin facts that will be fully discussed later on, namely, that Marshall’s theoretical structure, barring its technical superiority and various developments of detail, is fundamentally the same as that of Jevons, Menger, and especially Walras, but that the rooms in this new house are unnecessarily cluttered up with Ricardian heirlooms, which receive emphasis quite out of proportion to their operational importance. It is therefore understandable that a few English writers and the majority of non-English ones have put Marshall down as an eclectic, who tried to reconcile and to combine (or to compromise between) the analytic principles of the English ‘classical school’ (meaning Ricardianism) and the analytic principles of the ‘marginal utility school’ (meaning, mainly, Jevons and the Austrians). It is not less understandable that both Marshall himself and the Marshallians refused to accept this interpretation, not without irritation. They are right. Marshall’s powerful engine of analysis—though it may look antiquated by now—was the result of a creative effort and not of a synthetic one: especially those will have to admit this who, like myself, discount the importance of the Ricardianism in it. This leads, however, to the questions of the roots of Marshall’s work and of its originality. These questions are no mere matters of dusty records. They must be answered in order to light up an important phase in the history of economics. The roots of Marshall’s work are easy to lay bare. As an economist, he was trained, or rather trained himself, in the tradition of A.Smith, Ricardo, and J.S.Mill. In particular, his acquaintance with economics commenced with reading Mill in 1867–8 (Memorials, p. 10), and he retained what might be called a filial respect for J.S.Mill throughout his life though he was under no delusion concerning the latter’s intellectual stature. In addition, the preface to the first edition of the Principles extends guarded recognition to the influence of Cournot and Thünen, which is indeed unmistakable. No economist other than these five, not even Jevons, Dupuit, or Jenkin, 10 is credited with 10 H.C.Fleeming Jenkin (1833–85) was an economist of major importance, whose main papers belong chronologically to the previous period but who has been reserved for discussion here because these papers form an obvious stepping stone between J.S. Mill and Marshall in four important respects: he was the first Englishman to discuss, with nearly the same clearness as had Verri and Cournot, demand functions; he both developed and applied to problems of taxation the concept of consumers’ rent; he used diagrammatic representation, in principle, much as Marshall did later on; and he greatly improved the theory of wages, particularly in the matter of the influence of trade unions upon wage rates. In addition, like Sismondi but much more neatly, he History of economic analysis 804 any influence on fundamentals, though many are recognized on individual points of minor importance. But the resulting picture is entirely possible. We have noticed the peculiar character of J.S.Mill’s treatise, which hovers between Ricardo and Say and invites corrective reformulation. A man such as Marshall, who was trained in mathematics and physics and to whom the concept of limits and hence the formal part of the marginal principle would be as familiar as would be his breakfast bacon, need only have allowed his mind to play on Mill’s loose statements and to work out their exact model (system of equations) in order to arrive at a point where the purely theoretical parts of the Principles came in sight. The incidental innovations would then naturally appear to him as mere developments from Mill instead of as ‘revolutionary.’ Moreover, strong leaders who are sure of a disciplined majority do not make revolutions—either in science or in politics—but lead on smoothly, leaving fuss and revolution to minority groups that have to shout in order to be heard at all. I think that this agrees pretty well with the opinion espoused by the Marshallians. 11 In any case it is my justification for attributing to Marshall (within pure theory, remember) creative achievement. By this admission we have already prejudged the question of originality. Though Marshall never left any doubt that he felt under no obligation to Jevons, let alone to the Austrians and Walras, the full extent of his claim to subjective originality was not known to the world before the publication of the Memorials, Keynes’s biographical essay, and Shove’s paper. This claim is accepted here without question. Of course, this does not touch objective originality or priority. A ‘marginalist’ treatise published in 1890—or, for that matter, in 1880—could have improved and developed existing doctrine (which Marshall certainly did) but it could not have revealed fundamentally new truth. According to what I believe to be the ordinary standards of scientific historiography, such merit as there was in the rediscovery of the marginal utility principle is Jevons’; the system of general equilibrium (including the suggested a time-labor system, essentially the ‘guaranteed wage.’ He was an engineer, first a practical, later an academic one, and his contributions to economics passed all but unnoticed. But Marshall referred to him. See Colvin and Ewing eds., Papers, Literary and Scientific (1887), with a life by no lesser celebrity than R.L.Stevenson. However, there is now a London School Reprint of Jenkin’s economic essays with the title, The Graphic Representation of the Laws of Supply and Demand, and other Essays on Political Economy, 1868–1884 (1931). 11 If I take, as I think I may, Mr. Shove’s article as the official pronouncement of the Marshallian group, there remains, so far, only one point of difference. Mr. Shove holds, supporting his statement by quotation, that the basis of Marshall’s work is to be found in Ricardo rather than in Mill. With Mr. Shove’s interpretation of Ricardo and Mill, which minimizes the difference between them, this does not matter a great deal. With my interpretation of the relation between the two, it makes more difference—which roughly coincides with the admission of, or refusal to admit, the importance of the role of J.B.Say in the emergence of Marshallian economics. There is no really practicable bridge between Ricardo and Marshall, though one can, no doubt, be built. There is a bridge, already in existence, between Mill (or even Smith) and Marshall. The general economics of the period 805 theory of barter) is Walras’; the principle of substitution and the marginal productivity theory are Thünen’s; the demand and supply curves and the static theory of monopoly are Cournot’s (as is the concept, though not the word, price elasticity); the consumers’ rent is Dupuit’s; the ‘diagrammatic method’ of presentation is also Dupuit’s or else Jenkin’s. If this had been always clearly understood, there would be no more to be said. 12 But it has not been generally understood—perhaps it is not even understood now by all economists 13 —with the result that the reputation of others has suffered and that there exists, in many minds, a picture of the scientific situation of that time that it is the duty of the historian to correct. This duty is painful because the reason for this state of opinion is largely Marshall’s own fault. The case of the Austrians versus Marshall (and Edgeworth) will be considered later and therefore need not be touched upon here. In striking contrast to the generosity he lavished on Ricardo and Mill, Marshall was less than generous to all those whose contributions were closely related to his own. The one exception is Thünen, whose work was properly recognized not only in a general way in the Preface to the first edition of the Principles but also in the passage (p. 704 of the 1st ed.) that speaks of ‘von Thünen’s great Law of Substitution.’ But Cournot received only general recognition and is not referred to where we should have expected specific reference, primarily in the theory of monopoly. However, we are not concerned with leveling any indictment against Marshall on the score of inadequate acknowledgment of indebtedness—of this charge Keynes and Shove have largely cleared him—but with his inadequate acknowledgment of priority. The case of Jevons is the most obvious one. But the case of Walras is worse. Marshall, of all men, mathematically trained as he was, entertaining as he did the highest opinion of the central importance of his own note XXI, cannot have been blind to the greatness as well as to the priority of Walras’ achievement. Yet Walras’ great name occurs in the Principles only on three unimportant occasions that have nothing to do with that achievement. 14 And exactly the same holds for the 12 The question of the propriety of making, even by implication only, claims to independent discovery of results that to the knowledge of the claimant have appeared in print before is one that everyone of us must settle for himself. Some have scorned to do so. 13 Time and again, I have been impressed by the fact that competent and even eminent economists have an uncritical habit of attributing to Marshall what should, in the ‘objective’ sense, be attributed to others (even the ‘Marshallian’ demand curve!). But we need not go beyond the Cambridge circle. On pp. 222 et seq. of the Essays in Biography, Keynes attempted to list, ‘with the help of notes supplied by Professor Edgeworth,’ some of the ‘more striking contributions to knowledge’ contained in the Principles. There are six of them (excepting the comment on the historical introduction), all evidently meant to be taken as objective novelties. Not one of them can be accepted without qualifying reference to the work of others, though in conjunction and as elements of a general treatise for a wider circle of readers, they were of course new enough. 14 Edgeworth, too, was sadly ungenerous to Walras as well as to the Austrians. But his lack of generosity was somewhat like the lovable ungenerosity of devoted mothers History of economic analysis 806 less important cases of Dupuit and Fleeming Jenkin, who received but footnote recognition and this not in the right places. I hasten to emphasize extenuating circumstances. One of them has been formulated by Lord Keynes: Marshall perceived in the work of Jevons and the Austrians technical faults and other inadequacies that might have impaired the success of the new organon unless the offending authors were kept at arm’s length. There are other such circumstances. Continuity of analytic work is an asset, and the originators of the new theoretical system, or at least Jevons and the Austrians, had needlessly broadened the gulf that separated them from their predecessors. Also Marshall was very conscious of his role as a national leader. He may have felt it his duty to uphold the national tradition. Fortunately, however, I can conclude on a more pleasant note. The greatest thing about Marshall’s great work still remains to be said. Behind the great achievement there is a still greater message. More than any other economist—with the exception, perhaps, of Pareto—Marshall pointed beyond himself. He had no theory of monopolistic competition. But he pointed toward it by considering a firm’s Special Market. It has been stated above that his pure theory was strictly static but also that he pointed toward economic dynamics. He did no econometric work. But he always reasoned with an eye to the statistical complement of economic theory and did his best to frame concepts that would be statistically operational; and in his address on ‘The Old Generation of Economists and the New’ he outlined important parts of the program of modern econometrics. Naturally, his work is out of date. But there is in it a living spring that prevents it from becoming stale. 3. FRANCE The French situation from 1870 to 1914 was curious indeed. Walras was at work (to 1892 or thereabouts) and Cournot was emerging from oblivion. In the factual branch of analysis, there were LePlay and his school, Simiand, Levasseur, Mantoux, Martin, and many others. 1 Counting peak performances only, we might feel inclined to put French economics at the head of all countries. But, excepting those of the factual branch, the peak achievements almost entirely failed to percolate, and there were hardly any symptoms of that wider activity that makes up lost ground so rapidly in our own day. 2 The indifferent and wives who cannot see any merit in competitors of their wholly admirable sons or husbands. He was never, so far as I know, ungenerous on his own behalf. 1 Concerning LePlay, see above, Part III, ch. 4; Simiand and Levasseur are discussed in ch. 4 of this Part. 2 But mention must be made of the Walrasian work of Aupetit and the textbook presentations of Walrasian or Paretian doctrine by Laurent and Antonelli. Albert Aupetit’s Essai sur la théorie générale de la monnaie (1901), a youthful work of striking quality that still deserves perusal, marks a not unimportant step in the theory of money but is mentioned here because of the still greater significance of the relatively early reformulation of Walrasian equilibrium theory it presents. Hermann Laurent (1841–1908) wrote a brief but very good abstract of the Walras-Pareto theory (Petit The general economics of the period 807 reputation of academic French economics in that period is, however, not due to its deficiencies in the field of ‘pure theory’—and there is no reason to think little of it so far as applied fields are concerned—but to something else that will preclude recognition by modern radicals a limine, namely, to liberalism in the Gladstonian sense. So obvious were the political affiliations of the leading group of French economists and so completely did their politics dominate every line they wrote that we have no choice but to adopt political criteria for the rest of this sketch. Accordingly, we consider first the laissez-faire ultras who are known as the Paris group because they controlled the Journal des économistes, the new dictionary, the central professional organization in Paris, the Collège de France, and other institutions as well as most of the publicity—so much so that their political or scientific opponents began to suffer from a persecution complex. It is extremely difficult, even at this distance of time, to do justice to this group that was also a school in our sense. I shall mention only a few names that will guide any interested reader to its works and, instead of characterizing individuals, attempt to characterize, in a few lines, the group as a whole. The most distinguished names, then, were Paul Leroy-Beaulieu, Courcelle-Seneuil once more, Levasseur, the indefatigable Gustave de Molinari, Yves Guyot, Maurice Block, 3 and Léon Say. They were anti-étatistes, that is to say they indulged in a belief to the effect that the main business of economists is to refute socialist doctrines and to combat the atrocious fallacies implied in all plans of social reform and of state interference of any kind. In particular, they stood staunchly by the drooping flag of unconditional free trade and laissez-faire. This accounts easily for their unpopularity with socialists, radicals, Catholic reformers, solidarists, and so on, though it should not count for us. But what does count for us is the fact that their analysis was methodologically as ‘reactionary’ as was their politics. They simply did not care for the purely scientific aspects of our subject. J.B.Say and Bastiat, and later on a little diluted marginal utility theory, satisfied their scientific appetite. Some who sympathized with the politics of the group—though they were no members of its inner circle and are hence, very significantly, mentioned but rarely—took a higher flight and did notable work. This holds particularly for two men who should always be listed among economists of eminence, Colson and Cheysson. It is not without importance to note that both were engineers by training and in this respect continued a French tradition that is adorned by Traité d’économie politique mathématique, 1902) and Professor Étienne Antonelli actually risked a Walrasian course of lectures at the Collège Libre des Sciences Sociales that he published in 1914 under the title Principes d’économie pure—a pioneer venture. There were various writings on ‘mathematical economics,’ some of which will be mentioned later. They had little influence. 3 Leroy-Beaulieu and Courcelle-Seneuil are discussed above, Part III, ch. 4. Maurice Block’s survey work, Le Progrès de la science économique depuis Adam Smith (1890; 2nd ed., 2 vols., 1897), will be mentioned as a fair specimen of what the school conceived of as purely analytic work. Neither should Leroy-Beaulieu’s Essai sur la répartition des richesses (1881) go unnoticed. History of economic analysis 808 the name of Dupuit and is now more alive than ever: if I were willing to use the term School in any other sense than that adopted in this book, I should certainly form a school from those brilliant French engineers in the public service who contributed, and are contributing, so substantially to scientific economics. 4 But even the others, whose flights cannot be described as high, had one great merit. Their philosophies were deplorable, their theory was weak; but when they wrote on practical questions they, like their predecessors and like Marshall, knew what they were writing about. That is to say, they lived and thought in close proximity to business and political practice, whih most of them knew from experience and not from newspapers. There is an atmosphere of realism and shrewdness about their works that partly compensates for lack of scientific inspiration. 5 The politicians can hardly have liked a group that stood for free trade and otherwise indulged in an impracticable liberalism. So, when the government proceeded to establish chairs in economics in all the law faculties of all the universities of France (1878), it saw to it that the new professors should not all of them be of the political complexion of the Paris group. This wrought a change, of course, but—apart from bringing the light of economics to the most unfortunate provinces that had had to dwell in outer darkness until then—this change was at the beginning more political than scientific. However, the new men who felt themselves to be new men in more senses than one drew together, founded the ‘heterodox’ Revue d’économie politique (1887), doubted (most of them) the Natural Law that booms laissez-faire, looked with 4 Clément Colson (1853–1939) did not follow the vocation for which he was trained but was a public servant in the term’s widest and most honorific acceptance. We cannot go into his many activities—which included teaching—and merits. It must suffice to mention his Transports et tarifs (1890), which still repays perusal, and his Cours d’économie politique (1901–7), a work that is not equally commendable in all its parts but rises to considerable heights in places, especially in transportation. Émile Cheysson (1836–1910; Oeuvres choisies, 1911) was another man of many merits. I shall only refer to a conférence of his that was published in 1887 under the title ‘Statistique géometrique.’ It brims over with suggestions, some of powerful originality, on statistical demand, revenue, and cost curves, location and transportation rates (he has a sort of rate-indifference curve), wages (where he develops a model of the kind that is now known as ‘cobweb’), sales as functions of wages, rational choice of sources of raw materials, quality, variation of product, profit maximization. I am indebted to Dr. H.Staehle for having pointed out to me this amazing assemblage of tools and ideas that I should otherwise have overlooked. 5 The frank contempt with which both higher-powered theorists and anti-liberals treated the group is therefore not justified. Take Yves Guyot (1843–1928) to whom a brilliant theorist has referred as ce pauvre Guyot. This theorist was perhaps right if he had, e.g., Pareto in mind as a standard of comparison. But I have to add that, were I a businessman or politician, I should have consulted Guyot—who was a wizard at practical diagnosis—rather than Pareto in order to be enlightened on, say, the prospects of employment or of metal prices in the next six months. We are all of us liable to deserve the epithet ce pauvre if we are made to confront a task very much out of our line. The general economics of the period 809 more favor on protection that was carrying the day anyhow, and allowed themselves to be caught in modest programs of social reform. Scientifically, very little came of this at first. But in the course of the thirty-five years, counting from those appointments, by the grace of the spirit of the times, substantial improvement was effected and not only by the new professors themselves; the Paris milieu was livened up, though the little knot of laissez- faire stalwarts, not less remarkable for longevity than for strength of conviction, held out like Leonidas’ Spartans at Thermopylae. As for representative names, it will suffice to mention P.L.Cauwès, who, more a jurist than an economist and influenced by German Sozialpolitik and German historism, was a man of sense and force even if not much of a scientific economist; Charles Gide and Charles Rist, who rose into prominence later on; 6 and two men whose performances were among the first harbingers of a new epoch in French economics, Landry and Aftalion. 7 So far as I know, none of the groups that expounded systems of social reconstruction, socialists and solidarists included, made any contribution to be noticed in a history of analysis. 8 4. GERMANY AND AUSTRIA As we know, in Germany Sozialpolitik and the work of the historical school asserted their influence upon general economics more than in any other country. These interests did not entirely destroy tradition nor did they entirely crush out the ‘theoretical’ component in general economics. But in places they came near doing so: although a reaction had set in by 1900 and was running strong by 1914, the men who were then in their twenties were practically untrained in the art of handling analytic tools and some of them actually conceived of ‘theory’ as consisting of philosophies about socialism or individualism and the like and of quarrels about ‘methods’—they had no conception of theory as a ‘box of tools.’ Broadly speaking, genuinely home-grown theory was insignificant and anaemic and the only live impulses came from the Austrian and the Marxist schools. The situation, thoroughly decentralized as it was—much as in the preceding period—is difficult to describe by means 6 Charles Gide (1847–1932) cannot occupy any great place in a history of analysis but played a most useful and most creditable role all the same. He was an all-round leader, free from prejudice, in sympathy with all that was going on, and made by nature for imparting this sympathy to others. He wrote one of the most successful textbooks of the period, and, in collaboration with C.Rist, a still more successful Histoire des doctrines économiques (1st ed., 1909; 7th ed., 1947; English trans., 1915; with additions from 6th and 7th French eds., 1948) that is widely used still. There were several other performances in this field (Perin, Espinas, Denis, Dubois, Rambaud, Gonnard). 7 Adolphe Landry, L’Intérêt du capital (1904). Aftalion and Juglar will be mentioned in ch. 8 in the fields to which their works belong. 8 Professor G.H.Bousquet’s Essai sur l’évolution de la pensée économique (1927), Gaëtan Pirou’s Les Doctrines économiques (1925), and the well-known History by Gide and Rist will usefully complement the sketch above. History of economic analysis 810 of a brief sketch. Simplifying to the utmost, I propose to deal with it as follows: we shall first consider the Austrian school; then we shall glance at a number of representative men who form a group in no sense except that they had laid the foundations of their reputations in the preceding period and exerted considerable influence—as ‘elder statesmen’—in the one under survey; finally, reserving the Marxists for separate treatment at the end of the chapter, we shall add additional representative names that will serve to complete the picture, begun in the preceding chapter, of the ‘life and work’ of German economics so far as impressionist patches of color can be said to complete any picture. In all three subsections this purpose of painting a picture that must not be overcrowded has been kept in view at considerable ‘pain-cost’ of injustice to many individuals. 1 (a) The Austrian or Viennese School. The close cultural relations that existed between the Austro-Hungarian monarchy and Germany did not prevent the emergence in Austria of a scientific situation in our field that differed completely from the German one. This was largely due to two personal facts: to the fact that Carl Menger was a leader of quite unusual force; and to the fact that he found two disciples, Böhm-Bawerk and Wieser, who were his intellectual equals and who completed Menger’s success. They cannot really be called second generation but have title to be considered as co-founders of what, considering all circumstances, was to be a school of surprising importance and durability. There were several other followers of some note (such as Sax and Zuckerkandl), and of course a second generation did rise within the period. But I think it to be both right and conducive to a correct impression to confine this subsection to those two 2 leaders and to two other men who, personally rather than doctrinally, stood somewhat apart and never got all the credit they deserve, Auspitz and Lieben. Eugen von Böhm-Bawerk (1851–1914) was, so far as his career was concerned, primarily a public servant. This must be kept in mind in appraising his scientific work, exactly as Ricardo’s business avocations must be kept in mind if we are to do justice to his. What is before us to read is not the finished work that Böhm-Bawerk had in mind— parts of the published performance were written in a hurry, the consequences of which Böhm-Bawerk never had the opportunity to remedy. In order to show this, let us cull a few relevant facts from the record of a life conspicuous for single-minded devotion to duty, complete disinterestedness, high intellectual endeavor, wide cultural interests, 1 In this respect, I am all the more open to criticism because I cannot plead ignorance of the details of what is for me a very familiar scene. But some of the lacunae of my exposition can be filled from many sources, especially from the two following Festschriften, which shed light on the period under survey although only one appeared in the period: (1) the Schmoller Festschrift of 1908: Die Entwicklung der deutschen Volkswirtschaftslehre im neunzehnten Jahrhundert; (2) the Brentano Festschrift of 1925: Die Wirtschaftswissenschaft nach dem Kriege, especially Professor Amonn’s contribution, ‘Der Stand der reinen Theorie’ (vol. II, part 3). 2 Von Philippovich will be mentioned below. L.von Mises, whose book on money appeared at the end of the period, will be mentioned in our chapter on money. The general economics of the period 811 . the Austrians. But his lack of generosity was somewhat like the lovable ungenerosity of devoted mothers History of economic analysis 806 less important cases of Dupuit and Fleeming Jenkin,. specimen of what the school conceived of as purely analytic work. Neither should Leroy-Beaulieu’s Essai sur la répartition des richesses (1881) go unnoticed. History of economic analysis. chairs in economics in all the law faculties of all the universities of France (1878), it saw to it that the new professors should not all of them be of the political complexion of the Paris