History of Economic Analysis part 87 docx

for this refusal is that the case of his analytic apparatus (his ‘objective’ theory of price) is beyond remedy or, rather, because there is only one remedy for its defects, namely, training in theory. But he was not devoid of insight and threw out many good ideas. Among other things, he saw the use of the concept, and coined the word, Comparative Statics (see below, ch. 7, sec. 3). 21 Professor Othmar Spann, 22 whose teaching at the University of Vienna (from 1916 on) was a great success and who formed a genuine school in our sense, has been mentioned already on previous occasions. Neither his social philosophy nor his epistemology nor his sociology is in question here. We are concerned with his theory only. And this was completely barren of results. It is only the use of certain phrases that distinguishes the works on public finance or cycles or any others that profess to apply that theory. 23 5. ITALY The most benevolent observer could not have paid any compliments to Italian economics in the early 1870’s; the most malevolent observer could not have denied that it was second to none by 1914. The most conspicuous component in this truly astounding achievement was no doubt the work of Pareto and his school. But once more it must be emphasized that dominant schools do not dominate. The Pareto school with its allies and sympathizers never dominated Italian economics any more than the Ricardo school dominated English, or the Schmoller school German, economics. The really remarkable thing is on the contrary that, even independently of Pareto, Italian economics attained a high level in a variety of lines and in all applied fields. Some of the excellent work done especially in money and banking, public finance, socialism, and agricultural economics will be noticed later, but it cannot be made to stand out as it should. Not even the various currents in general economics can get their due, least of all those that originated in historical or other factual work which in Italy really fertilized general economics and did not, as in Germany, conflict with ‘theory’—the kind of general economics that may be represented by the work of Luigi Einaudi, although it was only after 1914 21 Of Oppenheimer’s many works we need, for our purposes, notice only: Theorie der reinen und politischen Ökonomie (vol. III of his comprehensive System der Soziologie; 5th rev. ed., 1924) and Wert und Kapitalprofit (2nd ed., 1922). Professor Alfred Amonn’s elaborate critical analysis of Oppenheimer’s theoretical structure may prove helpful (Zeitschrift für Volkswirtschaft und Sozialpolitik, 1924). There is quite an Oppenheimer literature, of which I mention only E.Heimann’s ‘Franz Oppenheimer’s Economic Ideas’ in Social Research, February 1944. If the reader refers to this article, he will find that, although Professor Heimann extols Oppenheimer as a social philosopher and political thinker and makes the most—as is proper in a memorial article—of the strong points of Oppenheimer’s teaching, the implied appraisal of his purely analytic work does not differ substantially from that above. 22 See, e.g., his Fundament der Volkswirtschaftslehre (3rd ed., 1923). 23 The doctrine, or the influence, of Gottl, Oppenheimer, and Spann did not mature until the 1920’s. But I wished to use this opportunity in order to relieve Part V. At least the formative stage of the thought of these authors comes within the period under survey. History of economic analysis 822 that he rose to a leading position. We shall divide our sketch into three parts, which we respectively inscribe to the elder statesmen, Pantaleoni, and Pareto. An interesting figure that falls out of our inevitably oversimplified picture, Achille Loria, is noticed in the note below. 1 (a) The Elder Statesmen. As already mentioned, the vigorous renaissance of Italian economics is often associated with the teaching of Ferrara, Messedaglia, 2 and Cossa. 3 Sociological conscience compels us to emphasize the facts that Italy was sure to revive her brilliant tradition in the field as soon as circumstances became more favorable; that national unity brought about such circumstances and produced in addition new national problems and opportunities; and that, though the worldly means at the disposal of Italian economics were modest, there was a large number of ill-paid professorships. These facts do not, however, detract from the merit of these great teachers and those who were to follow them. The personal element looms large in the explanation of the achievement: an unusual number of unusually able men certainly made the most of these objective opportunities. It was the particular merit of Cossa 1 Achille Loria’s (1857–1943) work is a curious cross product of genius and bad training in analysis. But this bad training was itself of a curious kind that, however, occurs not infrequently in economics. He was not ignorant but on the contrary even unusually learned. The English ‘classics’ he knew almost by heart and Marx only slightly less completely. Also he was well read in history and philosophy. But he either had not learned the art of economic analysis or else he had no bent for it. Moreover, he lacked self-criticism completely where pet ideas were concerned. Thus, he was led—like many older writers—to attach quite unwarranted importance to the explanatory value of the presence or absence of free land that became the keynote in his economic and sociological thought. He combined this idea with a wholly untenable development of Ricardo’s theory of value and with the Marxist unitary conception of non-wage income—which then, at one remove, splits into interest (profit) and rent—and from these elements he constructed a ‘land-property system of economics’ that, in conception and intent, parallels—Marxists will say, caricatures—the Marxist system in a way that is not unlike Oppenheimer’s. He believed himself to have founded a school. But all that I could undertake to establish from the literature is that he interested and stimulated many of his contemporaries and that, from some of them, he drew the kind of recognition in which it is difficult to distinguish politeness from acknowledgment and acknowledgment from allegiance. 2 On Ferrara and Messedaglia see above, Part III, ch. 4, sec. 6. 3 Luigi Cossa (1831–96), professor in Pavia, was first of all a great teacher, one of those men who do not need the opportunities of the modern American teacher but will, as if by magic, extract from large classes of very mildly interested students the minority that is ready to open its mind to the vivifying influences of the personal interview. Second, he was a very learned man. His Guida allo studio dell’economia politica (1876, English trans., 1880) is indeed a guide, but one that guides by means of introducing the neophyte to the authors of the past. The title of the French translation (the book was translated into several languages and very widely read) is really more characteristic of its content: Histoire des doctrines économiques (1899). Being based on original research, it ranks high as a history of economics. [The French trans. and a new English trans. (1893) were based on the third (revised and enlarged) Italian ed., entitled Introduzione…dell’economia politica (1892).] The general economics of the period 823 and Messedaglia to teach science and to propagate the spirit of scholarship, to lead away from the eternal squabbles about politics—laissez-faire versus Sozialpolitik in particular—and to let the rising generations discover that there was serious work to be done. Though they succeeded only in part—who could have done more?—and though the old controversy went on not only undisguised but also in the guise of apparently scientific squabbles on ‘natural laws,’ they not only instigated research but also helped to create the atmosphere of research. This research, so far as general economics is concerned, no doubt started from foreign examples, notably the examples of the historical and the Austrian schools. But, by way of criticism as well as of original work, it became rapidly ‘nationalized.’ A great many men responded successfully to the stimulus and a great many should be mentioned—such as Supino or Ricca-Salerno, the pupil of Cossa and teacher of Loria, Conigliani, Graziani. But we must refrain. (b) Pantaleoni. 4 The Principi di economia pura (1889) will serve as a landmark. Austrian or ‘Austro- Walrasian’ in fundamentals, enriched by Marshall’s apparatus of foreign and domestic trade (from his privately printed pamphlets of 1879), it gave an important lead away from old and toward new things. In this consists its importance, for though it is brilliantly written—Edgeworth was not wrong when he called it a ‘gem’—and is still worth reading, there is nothing entirely original in it. Pantaleoni’s original ideas are scattered in his papers and addresses. To mention but a few, he was one of the first theorists to try his hand at the subject of price fixing (prezzi politici); he contributed to the theory of industrial combinations (sindacati); he toyed, not without success, with the tricky concept of collective maxima of satisfaction; he wrote suggestively on the problem of evaluation of assets in the absence of prices; above all, as Moore was to recognize, he was the first theorist to adumbrate a theory of endogenous fluctuations. Nothing of this he carried very far. But 4 Maffeo Pantaleoni (1857–1924) was a man of many activities and this remains true even if we discard all the non-scientific ones. His prominence in Italian economics dates from the book mentioned in the text above, but his prominence in the Italian profession dates from 1900, when he was appointed to the chair of Pavia, or rather from 1902, when he succeeded Messedaglia at the University of Rome. Before the Principi (English trans., 1898; this trans. is from the 2nd ed., 1894), he wrote another book of importance on incidence of taxation (Teoria della traslazione dei tributi, his master’s thesis, 1882). But the full extent of his influence and his originality cannot be appreciated from either. His suggestions were thrown out in papers out of number, the most important of which are republished in Scritti vari di economia (1904–10) and in Erotemi di economia (1925). His ‘La crisi del 1905–07,’ published in Annali di economia, 1925, though a report occasioned by a government inquiry, is a substantial contribution to the theory of cyclical fluctuations. This and other factual work—some of which is not without importance for statistical theory—must be taken into account in any appraisal of the man and scholar: he was anything but a ‘pure theorist,’ although he understood ‘pure theory’ as few people ever did. After his death a number of eminent Italian economists wrote tributes to him that are published in the Giornale degli Economisti, 1925 (a bibliography is added). See also G.Pirou, ‘Pantaleoni et la théorie économique,’ Revue d’économie politique, 1926. History of economic analysis 824 he disseminated suggestions and helped to get things going. And he introduced Pareto to the work of Walras. Again, many names ought to be mentioned here. I shall confine myself to three, however. The first is Barone 5 who began to publish in the early 1890’s. He was the man who showed Walras how to dispense with constant coefficients of production; who formulated the limits of the validity of Marshall’s partial analysis; who went in some points beyond Marshall and in others (in the theory of public finance) beyond Edgeworth; and—no doubt on the basis proffered by Pareto—blocked out the theory of a socialist economy in a manner on which the work of our own time has not substantially improved. Only the last performance, and his excellent textbook, have received adequate recognition. But he did better than the second man I am going to name, G.B. Antonelli, whose remarkable performance has received no attention at all. 6 The third name to be mentioned is that of Marco Fanno, 7 whose early work belongs to this period. (c) Pareto. At long last we approach the eminence that was Pareto. If we follow his disciples in speaking of a Paretian epoch, we should date it from about 1900, when he began to define a position and to form a school of his own, as we noted above. Like all genuine schools, this one had a core, allies or sympathizers, and a foreign sphere of influence. Many writers come under each of these headings. But if we sample the Italian economists who, then or later, attained international reputation, we find that followers of strict observance—those who formed the ‘core’—were in a small minority. I think that the names of Amoroso, Bresciani-Turroni, Del Vecchio, Einaudi, Fanno, Gini, de Pietri- Tonelli, Ricci will arise in the mind of everyone who knows the scientific situation of 1910–40. Of these only Amoroso and de Pietri-Tonelli belong to the core of the Paretian school. 8 Einaudi and his pupils stood entirely aloof and on ground of their own. And all the others were at most ‘allies or sympathizers’ in the sense that they recognized Pareto’s eminence, allowed themselves to be influenced by him in individual points though substantially they went their own way—perhaps the word ‘ally’ is altogether too strong. In order to appraise Pareto’s international sphere of influence, the 5 Enrico Barone (1859–1924) was a soldier, politician, and teacher, who had a good mathematical training. Most of his publications appeared in the Giornale degli Economisti. A few will be referred to later on. His Principi di economia politica first appeared in 1908. I have never been able to understand why the services of this brilliant economist were not more recognized in his own country. 6 G.B.Antonelli, Sulla teoria matematica della economia politica (1886). This little treatise seems to me to anticipate later work in some important points. 7 See especially Fanno’s Contributo alla teoria dell’offerta a costi congiunti, supplement to the Giornale degli Economisti, October 1914. 8 The contributions of Luigi Amoroso, professor in Rome, are contained in a large number of papers, but we mention for the moment only his Lezioni di economia matematica (1921). Similarly, the original work of Alfonso de Pietri-Tonelli, professor in Venice, must be looked for in his papers. We mention, however, his treatise, the 3rd ed. of which is available in French: Traité d’économie rationnelle (1927). Note that the French term rationnelle simply means the same thing as pure. The general economics of the period 825 reader must distinguish four different things. First Pareto’s sociology was a success internationally and, for a short time within the 1930’s, created the limited Pareto vogue that we have noticed already in the United States. Second, the famous Pareto Law of the (statistical) distribution of incomes evoked much interest and criticism, mostly hostile, all over the world. 9 Third, Pareto as a ‘pure’ economist became a familiar figure in England and the United States when Allen and Hicks developed his theory of value (indifference- curve approach, see below, Appendix to ch. 7), giving generous credit to him. This was, however, only in the 1930’s. Fourth, the rest of Pareto’s economics remained practically unknown in the Germanic countries, except for some adverse criticism of his theory of monopoly especially in Germany. Things were more favorable to Pareto in France (but not before the late 1920’s), where Bousquet sponsored his doctrines, and Divisia and Pirou noticed them. 10 The Marchese Vilfredo Pareto (1848–1923), the son of a Genoese father and a French mother, was trained (and throughout his prime practiced) as an engineer. This means more than that he had a good training in mathematics. His powerful mind roamed far beyond the precincts of applied science into the realm of the pure concepts that are perfectly general: few people can ever have realized with such intensity as did he that, ultimately, all exact sciences or parts of sciences are fundamentally one. Early interest in economic theory is indicated by an address in 1877 to the Reale Accademia dei Giorgofili 11 on the logic of the ‘new economic schools.’ But still more obvious is an early interest in economic policy. This calls for comment, because Pareto’s legiti- 9 Pareto published his statistical law of the distribution of incomes by size in his Cours (1896–7) and in the Recueil, published by the faculty of law of the University of Lausanne on the occasion of the national Swiss exposition of 1896, under the title: ‘La courbe de la répartition de la richesse.’ The large literature evoked by this publication (which still runs on) testifies conclusively to its importance and to its stimulating influence. The discussion has been unpleasantly warped by the political preconceptions of both critics and sponsors. But two contributions may be recommended to the reader (as introductions) from the long list of the serious and competent ones: D.H.Macgregor, ‘Pareto’s Law,’ Economic Journal, March 1936, and C.Bresciani-Turroni, ‘On Some Methods of Measuring the Inequality of Incomes,’ in the Egyptian periodical Al Quanoun Wal Iqtisad, 1938. E.C.Rhodes’ ‘The Pareto Distribution of Incomes,’ Economica, February 1944, while excellent, presents some difficulties for non-mathematicians. The implications—real or supposed—of the law for our outlook on the income structure of capitalist society were, so far as I know, first seriously discussed in English by Professor Pigou in Wealth and Welfare (1912). Though serious, his discussion displays symptoms of emotional bias. 10 See, especially, G.H.Bousquet, Cours d’économie pure (1928), also the same author’s Essai sur l’évolution de la pensée économique (1927) and Instituts de science économique (1930–36). François Divisia, Économique rationnelle (1928); G.Pirou, Les théories de l’équilibre économique: L.Walras et V.Pareto (1934). 11 To this extent, what has been said about Pantaleoni’s influence must be qualified. The reference is due to Professor de Pietri-Tonelli’s memorial address on Pareto to the Italian Society for the Progress of the Sciences, published in three parts in the Rivista di Politica Economica, 1934–5, which is herewith recommended to the reader. History of economic analysis 826 mate influence has been reduced by the aversion to his politics of so many of his readers: he looked to them (at all events until his general sociology, Trattato di sociologia generale, appeared in 1916) like an uncritical ultra-liberal in the laissez-faire sense. But his liberalism, economic and political, was of a peculiar kind and had a peculiar root. He was a man of strong passions, passions of the kind that effectively preclude a man from seeing more than one side of a political issue or, for that matter, of a civilization. This disposition was reinforced rather than mitigated by his solid classical education that made the ancient world as familiar to him as were his own Italy and France—the rest of the world just existed for him. And, watching with passionate wrath the doings of the politicians in the Italian and French liberal democracies, he was, by indignation and despair, driven into an anti-étatiste attitude which, as events were to show, was not really his own. Add to this the fact that at the same time he was (like Marx) a product of the civilization he hated, and therefore (also like Marx) a positivist and laicist, and you will understand the liberalist surface of his earlier writings. He was 45 when he left Italy and business practice, having accepted the chair of Lausanne vacated by the retirement of Walras. Indifferent health and the acquisition by inheritance of adequate means motivated his own retirement, at a comparatively early age, to Céligny on the Lake of Geneva, where, in the almost twenty years of thought and assiduous writing that were still before him, he was at leisure to fill to the full the measure of his genius and of his intellectual ambitions. There he grew to be the ‘lone thinker of Céligny,’ who was looked upon, with something akin to awe, somewhat as an ancient sage. The interesting fact deserves to be noticed that so great an influence could have been exerted by a man who lived in resolute though hospitable seclusion in a shabby house full of cats (hence Villa Angora) that was then not convenient to visit. 12 If we now discard his sociology and also Pareto’s Law, the indubitable greatness of his performance is as difficult to define as its roots are easy to indicate. Ferrara and others, Cournot among them, may have provided suggestions, but his work, as it shaped in Lausanne where he first put his mind fully to analytic economics, is so completely rooted in Walras’ system that to mention other influences can only mislead. To the non-theorist this shows less than it should, because Pareto’s theory floats in a sociology, philosophy, and methodology that are not merely different but diametrically opposed to Walras’ ideas. But as pure theory, Pareto’s is Walrasian—in groundwork as well as in most details. Nobody will deny this, of course, as regards Pareto’s work until 1900 that centers in the Cours d’économie politique (1896–7). This is simply a brilliant Walrasian treatise. Later on Pareto discarded the Walrasian theory of value and based his own on the indifference-curve apparatus invented by Edgeworth and perfected by Fisher. He also overhauled Walras’ theory of produc- 12 A charming picture of the man and thinker has been drawn by Professor G.H. Bousquet in his Vilfredo Pareto, sa vie et son oeuvre (1928; English trans., same year) I use this opportunity to refer to the same author’s Introduction à l’étude du Manue de Vilfredo Pareto (1927). The general economics of the period 827 tion and capitalization and he departed from the latter’s teaching in matters of money and others, adding various developments of his own. The new system was presented in the Manuale di economia politica (1906), the mathematical appendix of which was greatly improved in the French version (Manuel, 1909). 13 But even the Manuel—always disregarding the sociology—is not more than Walras’ work done over, as can be established by drawing up the exact models of both authors. It was, however, done over with so much force and brilliance as to grow into something that deserves to be called a new creation, though various deductions from the achievement are in order: there are not unimportant points in which Walras’ system remained superior. Recognition of the quality of his creation does not excuse Pareto’s less than generous attitude toward the teaching of Walras from which he put himself at a greater distance than was really necessary. 14 6. THE NETHERLANDS AND THE SCANDINAVIAN COUNTRIES Two facts describe the scientific situation in the Netherlands that prevailed at the beginning of the period: a high level of competence and culture in our field, based upon an old tradition that was being worthily kept up by such men as Mees; and the absence of a domestic impulse toward scientific revolution. Dutch economists were quite above any ‘battle of methods’ and but mildly affected by either historism or any other of the new tendencies of the age. They carried on the usual discussions about socialism, Sozialpolitik, money, free trade, but on the whole things were quiet. Thus they were both able and willing to accept the ‘new theories’—in the Austrian edition rather than in the Walrasian or Marshallian ones simply because Menger’s teaching was available, in a usable form, before the others. The leading Dutch economist of the period, Pierson, inserted this teaching in his own and founded 1 a 13 Having already mentioned the Trattato di sociologia generale (1916), we need, for the purposes of this book, add only the following publications to the Cours and the Manuel: Les Systèmes socialistes (1902–3) and ‘Économie mathématique’ in the French edition of the Encyclopaedia of the Mathematical Sciences, 1911 (the corresponding article in the earlier German edition is insignificant). The articles that appeared in the 1890’s in the Giornale degli Economisti, though not uninteresting—they should be republished—were, from Pareto’s own standpoint, obsolete by 1900; later articles in the field of pure theory were merely chips of the Manuel or the Encyclopaedia article. 14 Personally, the aristocratic Pareto and the middle-class radical Walras did not like one another. 1 Nicolas Gerard Pierson (1839–1909) was primarily a public servant—a director of the Dutch Central Bank at an early age; later on its president, Minister of Finance, Prime Minister, and a parliamentarian to the last. Such a career will not prevent a strong intellect like his, when coupled with a giant’s capacity for work, from achieving eminence as a scientific economist—he was in fact a prolific writer, who published about a hundred books and papers—but it will absorb those sources of energy that produce original creations. His chief work, the Leerboek der Staatshuishoudkunde (1884–90), is available in English (Principles of Economics, 1902–12, from History of economic analysis 828 school that, supported by leaders such as Verrijn Stuart and de Vries, lasted well into the 1920’s, when it assimilated newer tendencies without any violent break. 2 We might repeat all this, with very little change, for the Scandinavian countries, which may for our purposes be taken as a unit. But I shall merely mention the names of Birck (Copenhagen), Davidson (Uppsala), and Cassel 3 (Stockholm), and then hurry on to the Nordic Marshall, Wicksell, whose work was one of the most important factors in the emergence of the economics of our own time, and not only in Sweden. No finer intellect and no higher character have ever graced our field. If the depth and originality of his thought do not stand out more clearly than they do, this is only owing to his lovable modesty, which led him to present novelty—semi-hesitatingly—as little suggestions for the improvement of existing pieces of apparatus, and to his admirable honesty, which pointed incessantly to his predecessors, Walras, Menger, and Böhm- Bawerk, although, with much more justification than did others, he might have presented his system of analysis as substantially his own creation. Knut Wicksell (1851–1926), like Marshall, was a trained mathematician. He was also, for his time, a radical who knew how to get himself into trouble, but the 2nd ed. of the original)—a performance that, in the doctrinal development of that time, filled a function similar to that of Pantaleoni’s work. 2 See, e.g., C.A.Verrijn Stuart’s Grondlagen…[Fundaments…], 1920. 3 Professor L.V.Birck’s (1871–1933) position may, so far as economic theory is concerned, be compared with Pierson’s. See his Theory of Marginal Value (1922). Professor David Davidson is chiefly known as the author of a history of Sweden’s central bank, for his contributions to the theory of money, and as a friendly critic of Wicksell. But he was also a theorist of note—so I infer from his work on capital formation (owing to my scanty reading knowledge of Swedish, I cannot say, however, that I really know it). See the excellent work by Mr. Brinley Thomas that interprets Swedish doctrine for the English-reading public (Monetary Policy and Crises: a Study of Swedish Experience, 1936). Professor Gustav Cassel’s (1866–1945) international fame rests upon his contributions to, and role in, the discussion on monetary policy during and after the First World War (see below, ch. 8) and upon his textbook, Theoretische Sozialökonomie (1st ed., 1918; English trans., The Theory of Social Economy, 1923). But he started as a theorist with a paper, ‘Grundriss einer elementaren Preislehre’ (Zeitschrift für die gesamte Staatswissenschaft, 1899) that made the attempt, important considering the date, to reformulate the Walrasian equations without using utility concepts. His fresh—fresh in more than one sense—book on The Nature and Necessity of Interest (1903), in spite of some unfounded criticisms and still more unfounded claims to originality, is a considerable performance that deserves perusal as an antidote to the theories of interest that became current in the 1930’s. Cassel, as a theorist, belongs in this context because he too was one of those second-generation writers who rounded off the Jevons-Menger-Walras structure. Only he followed Walras rather than Menger. His textbook, in its fundamental conception, is mainly a version—or popularization—of Walras’ doctrine (minus utility) in spite of the fact that Walras’ name does not occur in it. Cassel was an effective and inspiring lecturer and some of the opinions, in matters of pure theory, of modern Wicksellians may still be traced to his teaching. The general economics of the period 829 who never learned to sacrifice to his emotions what he believed to be scientific truth. In this respect, he was not unlike J.S.Mill, who must be listed among the formative influences that acted upon Wicksell’s work and with whom in particular he shared an almost passionate neo-Malthusianism. 4 Barring this qualification, his life may be described as that of a quiet and retired scholar. He attained a professorial chair (Lund) only late in life and occupied it for a comparatively short span of years. Nevertheless, his influence spread—by virtue of its own momentum—particularly after his retirement, when he took part in current discussions more actively than before. He had many pupils of very high quality. Practically all the well-known Swedish and Norwegian economists of today are, more or less, his pupils. His international reputation, however, was not commensurate with his achievement until, in the late 1920’s and the early 1930’s, it began to dawn upon the professional world that he had anticipated, to a very large extent, all that was most valuable in the modern work on money and interest. This part of his work will be considered later on, as will his work on taxation. In this and the following two chapters we are chiefly concerned with his performance in ‘general theory.’ Attention is drawn to the standard biography, which carefully analyzes Wicksell’s work, by Professor Emil Sommarin, unfortunately not available in English (‘Das Lebenswerk von Knut Wicksell,’ Zeitschrift für Nationalökonomie, October 1930). His first publication on economic theory, Über Wert, Kapital und Rente (1893, London School Reprint, 1933) is the work of a mature man of 42 and contains the skeleton of the first volume of his Lectures (1901; German ed., 1913; English ed., with excellent introduction by Professor Robbins, and two important appendices, 1934). Volume I of the Lectures embodies the bulk of his contributions in that field, though several papers (e.g., his last piece of work, the paper on the theory of interest (‘Zur Zinstheorie’) in Die Wirtschaftstheorie der Gegenwart, ed. H.Mayer, III, 1928) ought to be added. No reader’s guide will be offered: no student of economics has completed his training who has not read the whole of this volume, although the first part is elementary and, for us, valuable mainly for the purpose of dispelling erroneous ideas, old and new, about the utility theory and ‘marginalism’ in general. The main original contributions are pointed out in Professor Robbins’ introduction. 7. THE UNITED STATES The background of individual performance in the United States from about 1870 to 1914 is adequately described by the following familiar facts. During 4 Wicksell himself would have attached great weight to his work on population problems. But in this Part of the present book we are only peripherically interested in these and cannot therefore do justice to that work. It must suffice to state that Wicksell always considered limitation of the birth rate as an essential factor in the future of the working class and that the tendency of the birth rate to fall that began to assert itself in his time was unconditionally welcomed by him as it would have been by J.S.Mill. History of economic analysis 830 that period the American economic profession established itself both nationally and internationally. It acquired definite standing at the universities and in the country, an organization, and all the paraphernalia of an established department of scientific knowledge; and it came to be increasingly recognized by the other national professions. Also American economics increasingly professorialized itself. But, starting from near zero at 1870, these developments went on at such a rate of acceleration that the growth of fully competent personnel lagged behind the opportunities that were opened up. Many of the men who entered the new profession were practically untrained; and they approached their professional activities with their minds full of preconceived ideas that they were not prepared to put through any analytic mill—even the spirit of the old social-science movement kept on reasserting itself and had much to do with the success of institutionalism. So had sympathies with Populism that many economists entertained. Others, not finding in the country what they wanted, continued to rely on European ideas and methods though no longer exclusively English ones—the pilgrimage to Germany, in particular, became for those who could afford it almost a regular incident of their career, something like the cavalier’s tour of old. When they met, after having found their individual bearings, they had difficulty in understanding one another, and of locating, let alone appreciating, one another’s standpoints. Disagreement was hence largely disagreement owing to misunderstanding. Surprisingly different intellectual levels—not only as regards scientific apparatus—were found side by side, for there was no uniformity either in professional training or in general education. For a considerable stretch of time, there were no recognized professional standards, and competent teaching was not always guaranteed. Most were at their best when working on some factual problem of national interest, which they learned to master thoroughly, and it was in this type of endeavor that the first successes occurred. But from the first, ‘theory’ was unpopular with the majority and likely to evoke opposition quite independently of the reinforcing German influence, and long before this opposition was rationalized and made vocal. All this had its obvious advantages as well as disadvantages. Moreover, it all straightened itself out in time—through a long, arduous, wasteful, but not inglorious struggle. The best way to recall to the reader’s mind a number of figures that, with one or two exceptions, should be familiar to him, will be to adopt a schema similar to the one that has served us before. First (a) we shall glance at a few of those men who helped to prepare the ground for the developments from the 1890’s on. They do not exactly correspond to what we have called the ‘elder statesmen’ before. They were simply good economists and good teachers who, both before and after those developments began, stood for straight thinking and were instrumental in raising standards all round. We shall then (b) form a group of Clark, Fisher, and Taussig. And we shall (c) combine into a final group some representative men whose names, in one way or another, we need for the purpose of general orientation. But we cannot afford to pass by the economist whose individual success with the public was greater than that of all the others on our list, Henry George. 1 The points about him that are relevant for a history of analysis are these. He was a self-taught economist, but he was an economist. In the course of his life, he acquired most of the knowledge and of the ability to handle an economic argument that he could have acquired by academic training as it then was. In this he differed to his advantage from most men who proffered The general economics of the period 831 . constant coefficients of production; who formulated the limits of the validity of Marshall’s partial analysis; who went in some points beyond Marshall and in others (in the theory of public finance). or parts of sciences are fundamentally one. Early interest in economic theory is indicated by an address in 1877 to the Reale Accademia dei Giorgofili 11 on the logic of the ‘new economic. Recueil, published by the faculty of law of the University of Lausanne on the occasion of the national Swiss exposition of 1896, under the title: ‘La courbe de la répartition de la richesse.’ The