majority of economists, believing themselves to be concerned with the affairs of nations, used to consider the details of the economic lives of households and firms to be outside of their sphere and also, perhaps, somewhat below it. Actually, this material is basic to the work of the economist so soon as he goes beyond the most jejune assumptions about individual behavior, and co-operation between business and general economics is a primary necessity for both. But during the period under survey, there was so little of it that all we could do would be to list the results of the explorations of business practice undertaken by business economists, which failed to inspire general economists as completely as the advance of economic theory failed to inspire business economists. 1 Let us note, however, that Marshall, by dealing extensively with the behavior of businessmen, gave an important lead toward a merger of large parts of business and general economics; and that Irving Fisher (in Capital and Income) took a first step toward co-ordinating the economist’s and the accountant’s work. 2 (a) International Trade. [This subsection was planned but not written.] (b) Public Finance. From the comments made on this subject in Chapter 2, we recall that the period was eminently one of what I might term comfortable finance—the result of increasing wealth and relatively peaceful conditions, on the one hand, and of bourgeois influence upon public expenditure and taxation, on the other. Pressure on economic activity was accordingly light—so light as to justify exclusion from the general analysis of the determining factors of the economic process. We have also noticed that toward the end of the period a new spirit began to assert itself in political practice, and this new spirit did not fail to show in the writings of economists. It is not only that leading academic authorities, such as Marshall, began to approve of what was then considered high direct taxation—including inheritance taxes—but also that they began to espouse what was a mortal sin against the spirit of Gladstonian finance, namely, a policy that went beyond taxing for revenue and aimed at taxing in order to change (‘correct’) income distribution. Adolf Wagner for Germany and A.C.Pigou for England may serve as examples. The counter-argument that points to possible harmful effects of high and progressive taxation on effort and capital formation—which on the popular level took the shape of the goose that laid the golden eggs—was much in evidence, the more so because practically all economists of standing took a view very favorable to saving. More analytic effort went into two old topics that were bound to benefit from the new theories. The one was ‘justice.’ Ethical postulates changed with the times, of course, and the ‘principle of ability’ to pay and a ‘social theory of taxation’—including, among other things, special taxation of privilege, a 1 Nothing characterizes the situation better than does the fact that certain elementary propositions of economic theory (e.g. about increasing and decreasing average costs) were actually ‘discovered’ by business economists for themselves. 2 An important, though later, response should be mentioned at once, Professor J.B. Canning’s Economics of Accountancy (1929). History of economic analysis 912 term whose coverage tended to widen—began to make converts. 3 But I do not mean these and other canons of justice per se, but genuinely analytic performances that were induced by their advocacy. It may or may not be the economist’s business to posit imperatives; but it certainly is his business to rationalize given imperatives by analyzing their implications. How much there was to be done in this line, we may infer from the fact that many economists were completely muddled about the very meaning of such ideas as equal, proportionate, and minimum sacrifice. Some thought (the error was originally Mill’s, I believe) that equal sacrifice implies minimum sacrifice; others thought that the ‘law’ of decreasing marginal utility of income suffices in itself to deduce progressive taxation from a postulate of equal sacrifice. 4 These and other matters of this type were cleared up by a number of writers, among whom I mention the outstanding contributions of Edgeworth, Barone, and Pigou. 5 The other topic was Shifting and Incidence. [This subsection was not completed.] (c) Labor Economics. In Chapter 2, we surveyed the political conditions of that period which were bound to impart a powerful impulse to the study of labor problems. In Chapter 4, we registered some of the effects produced upon the economic profession by Sozialpolitik and still more by the spirit of Sozialpolitik. In Section 5c of this chapter, we surveyed the contribution that economic theory made to labor economics. It remains to notice briefly the latter’s descriptive or ‘practical’ or institutional part which, owing to the policy- minded economist’s aversion to ‘theory,’ was then no better correlated with analytic economics than, in general, it is now. 6 Broadly speaking, we may 3 E.R.A.Seligman’s Progressive Taxation in Theory and Practice (2nd ed., 1908) must stand for a large body of literature in all countries. But both because of the eminence of the author and because of the originality of his idea of making taxation semi-voluntary, I also mention Wicksell’s doctor’s thesis, Finanztheoretische Untersuchungen (1896), the suggestions of which have been partly developed by E.Lindahl, Gerechtigkeit der Besteuerung (Justice in Taxation), 1919. 4 It does so if marginal utility of income decreases at a rate greater than that suggested by Daniel Bernoulli’s hypothesis (see above, Part II, ch. 6, sec. 3b). If it decreases at a lower rate, then the postulate of equal sacrifice of ‘utility’ requires that higher incomes pay a lower percentage than smaller ones (though, of course, higher absolute amounts). 5 F.Y.Edgeworth’s papers on problems of taxation, one of them of fundamental importance, are republished in vol. II of the Papers Relating to Political Economy (1925). As usual, his exposition proceeds by what I beg leave to describe as picking out currants—such propositions as, e.g., that a tax on one of two related goods may induce a fall in the prices of both; or that a tax on both may confer a net benefit on the producer of one of them—so that we have difficulty in visualizing the spacious whole that is in fact the peak performance of its field and period. E.Barone’s ‘Studi di economia finanziaria,’ Giornale degli Economisti, April-May, June, and July-August 1912, is a still more comprehensive treatise, of great power and originality, cast in the form of three separate studies. A.C.Pigou’s various contributions were eventually combined in A Study in Public Finance (1928). 6 This should not be interpreted to mean that the faults were all on one side. Labor economists displayed indeed an unreasonable dislike for anything that looked General economics 913 say that the period under discussion laid, in all essentials, the groundwork of modern labor economics. The subject did not quite attain the status of a recognized special field in the sense of modern American teaching and research practice. But it commanded the services of a rapidly increasing number of specialists. Principally these specialists were out for practical reform of legal institutions and administrative practice, and they had their own ideas about what it means ‘to apply reason to human affairs.’ But this fact- finding and their recommendations did not fail to benefit general economics. As an example, take the minority report of the English Poor Law Commission (1909). This seminal performance, a belated reaction to the severe unemployment that had prevailed in England between 1873 and 1898, taught many an economist who stood in need of such a lesson that unemployment was at times very little influenced by factors under the workman’s control: at all events, it was, or should have been, important raw material on which the general economist could exercise his analytic powers. In addition, monographs and treatises on labor questions began to appear in increasing quantities. Two famous monographs by Beatrice and Sidney Webb and Herkner’s treatise or textbook are familiar samples 7 from a rapidly swelling literature. Statistical research was hampered by the inadequacy of material. But some efforts were nevertheless made in all countries. 8 As every reader of Marshall’s Principles knows, general treatises allowed more and more space to labor economics, also to its purely institutional aspects. Previous textbook practice in this respect was far surpassed by the textbook of von like analytic refinement, and an unreasonable distrust in the mysterious formulae of the theorists’ wage analysis. They did try to make things easier for themselves by putting theoretical arguments out of court a limine. But the theorists did not always enter the problems of the labor economist in a proper spirit of co-operation. They were not always anxious to profit from the latter’s facts and recommendations in order to enrich their analysis. And some were as obnoxious as were most of the labor economists to the charge of putting the other fellow’s argument out of court a limine. There were exceptions. Some conspicuous ones will be mentioned in the text. On the whole, however, co-operation and consequent cross-fertilization were less in evidence than were their opposites. 7 B. and S.Webb, The Public Organization of the Labour Market (1909); and The History of Trade Unionism (rev. ed., 1920). H.Herkner, Die Arbeiterfrage (1894); comparison of the contents and methods of this book with the contents and methods of any modern American textbook on labor economics is strongly recommended. 8 For England, in addition to Booth’s survey of Life and Labour of the People in London (2 vols., 1889–91; 17 vols., 1903) see, e.g., Robert Giffen’s papers read to the Royal Statistical Society in 1883 and 1886 (‘Progress of the Working Classes in the Last Half Century,’ and ‘Further Notes on the Progress of the Working Classes in the Last Half Century’). In 1895 began A.L.Bowley’s unrivaled publications on English wages. The first of many articles, ‘Changes in Average Wages in the United Kingdom between 1880 and 1891,’ appeared in the Journal of the Royal Statistical Society, 1895. For complete list, see bibliography appended to Bowley’s Wages and Income in the United Kingdom since 1860 (1937). Of the many attempts that were made in the United States to overcome formidable difficulties, I mention only: Scott Nearing, Wages in the United States, 1908– 1910 (1911). History of economic analysis 914 Philippovich. We might fitly conclude these remarks by pointing again to the greatest venture in labor economics ever undertaken by a man who was primarily a theorist, Professor Pigou’s Wealth and Welfare 9 (1912). (d) Agriculture. [Planned but not written.] (e) Railroads, Public Utilities, ‘Trusts,’ and Cartels. The statements with which I introduced the subsection on Labor Economics might almost be repeated for what was done during that period in the fields of these and cognate topics. Again, the historian of economic thought would have to notice not only new problems but also a new spirit of dealing with them. The historian of economic analysis has little to report beyond a rich crop of historical and ‘descriptive’ work, some of which has retained its interest to this day. For the rest we must confine ourselves to a few bald comments that are necessary in order to round out our sketch. Any decent theory of cost and price ought to be able to make valuable contributions to railroad economics, and railroad economics ought to be able to repay the service by offering to general theory interesting special patterns and problems. As has been pointed out before, there are great possibilities in a co-operation of economists and engineers; and few fields offer such possibilities as obviously as does the railroad business. We find something of this but not much, though more could be unearthed from technological journals. As an example, I mention the work of Wilhelm Launhardt, who not only investigated the influence upon operating costs of gradients and curves but also produced a theory of railroad rates that, among other things, contained the theorem—his argument for government ownership is based upon it—that the social advantage from railroads will be maximized if charges be not higher than—as we should say—marginal cost. It follows from this that the whole overhead would have to be financed from the government’s general revenue—the theorem that has been much discussed in our own day after having been independently discovered by Professor Hotelling. 10 This is very much more interesting than are generalities about the desirability of nationalization or regulation which, of course, were published in shoals. Most of the work of which Launhardt’s is an example was, however, done 9 This work substantially embodies the main points of its author’s previous Principles and Methods of Industrial Peace (1905). In Economics of Welfare, the successor of Wealth and Welfare, Pigou’s labor economics are to be found in Part III and in chs. 1, 5, 7, and 13 of Part IV. 10 W.Launhardt, Die Betriebskosten der Eisenbahnen…(1877). The theorem above occurs on p. 203 of his Mathematische Begründung der Volkswirthschaftslehre (1885), which, for basic theory, adopts the principles of Jevons and of Walras, though we must accept Launhardt’s claim to independent discovery ‘of a similar approach,’ since we have accepted the analogous claim of others. His treatment presents several original points that are all of them to its credit. But his almost ruthless use of particular forms of function—by which he produces results of disconcerting definiteness—should be studied and improved rather than condemned a limine. I add his Kommerzielle Trassierung der Verkehrswege (1872). The author was professor at the General economics 915 Technological Institute in Hanover. Neither Palgrave’s Dictionary nor the Encyclopaedia of the Social Sciences mentions his name. in France. It must suffice to mention the performances of Cheysson, 11 Picard, and Colson. English railway economics of the period is, I believe, represented at its best by the descriptive analyses and the little textbook of Acworth. Professor Pigou’s treatment of railway rates is, however, more fertile in results relevant to general economics, 12 especially as regards the issue: cost of service principle versus value of service principle (‘what the traffic will bear’). The quantity of American railroad publications of the period was, I am afraid, quite out of proportion to its quality. Serious analytical slips may be proved even against works of standing that were in other respects meritorious and most of them are quite forgotten by now. Hadley’s 13 textbook is one of the not too numerous exceptions. All aspects of the subject, historical and institutional, there receive adequate treatment. In addition, however, the book moves on a high level of analytic correctness; and nobody will ever surpass the telling example by which he drove home the truth that discrimination may, and often will, benefit all parties concerned, including the one that is being discriminated against (the case of the two oyster-producing villages that cannot supply a given inland market unless one pays a higher freight rate than the other). It is, however, characteristic of a comparatively backward state of analysis that this case was treated like a curious exception instead of being made to follow from a more general set- up in which absence of discrimination would constitute a special (or limiting) case. Like railroads, public utilities should have proved both an important field of application and an important source of particular patterns for the theorist. Very little was accomplished, however, 14 that will bear comparison with Dupuit’s earlier contributions. 15 The European discussions on nationalization and municipalization present but little interest from our standpoint. Nor is there any benefit to the analytic apparatus of economics to report from the American discussion on rate regulation that dealt with the problem of the 11 Émile Cheysson. The misleading title of an address of his that brimmed over with original ideas is ‘Statistique géométrique,’ 1887. Railroad costs and tariffs are only one of several subjects there dealt with in the true spirit of econometrics. The Encyclopaedia of the Social Sciences says of him that he contributed nothing new to sociology or economics. A.M.Picard, Traité des chemins de fer (1887), and C.Colson, Transports et tarifs (1890; English trans., 1914). 12 W.M.Acworth, Railways of England (1889), Railways of Scotland (1890)—still worth reading even from the standpoint of ‘pure’ theory, Elements of Railway Economics (1st ed., 1905). Professor Pigou’s contribution was made within the framework of Wealth and Welfare (Part II, ch. 18 in Economics of Welfare). 13 A.T.Hadley, Railroad Transportation (1885). 14 I may illustrate the kind of thing that I should have expected to find by Marshall’s Pittsburgh gas case. See A.Smithies, ‘Boundaries of the Production Function and Utility Function,’ in Explorations in Economics (1936), p. 328. Marshall’s treatise contains a large number of similar suggestions that have never been appreciated as they should. 15 See especially: De la Mesure de l’utilité des travaux publics (1844) and De l’Influence des péages sur l’utilité des voies de communication (1849), which will be noticed again in ch. 7 below. History of economic analysis 916 ‘reasonable return on the fair value of the property’ which the Supreme Court held public utilities should be permitted to earn. The various ‘theories’ of valuation for indemnity, taxation, and rate-regulation purposes that the legal mind produced offer curious examples of logical muddle. Many economists did useful work in trying to clear it up and seem, for example, after efforts extending over more than half a century, to have convinced lawyers that the attempt to define a ‘reasonable’ rate of return with reference to the value of a property that is itself derived from expected returns, involves circular reasoning. But this suffices in itself to characterize the level of this branch of economic analysis. General economics 917 CHAPTER 7 * Equilibrium Analysis 1. FUNDAMENTAL UNITY OF THE PERIOD’S ECONOMIC THEORY EVEN FOR the preceding period we have been able to discern a considerable amount of agreement as regards the essentials of economic analysis and, in fact, a kind of average or modal system of general economics, deviations from which were the less frequent the greater they were. With much more confidence can we aver for the period under survey that there existed by about 1900, though not a unified science of economics, yet an engine of theoretical analysis whose basic features were the same everywhere. This should be obvious from our survey in the preceding chapter. But it may be helpful, in view of the different impression we get when we behold the troubled surface and in view of the different opinion entertained by many historians, to show this once more. Nobody denies that, numerous differences in detail notwithstanding, Jevons, Menger, and Walras taught essentially the same doctrine. But Jevons’ and Marshall’s analytic structures do not, in essence, differ more than the scaffolding differs from the completed and furnished house, and note XXI in the Appendix to Marshall’s Principles is conclusive proof of the fundamental sameness of his and Walras’ models. Wicksell’s engaging frankness reveals the two pillars of his arch to the most perfunctory glance: the one is Walrasian, the other Böhm-Bawerkian. J.B.Clark’s blueprint, however independently conceived, embodied substantially the same principles as did Marshall’s Book VI; Pareto and Fisher developed Walras. And, so far as professional theory is concerned, these names cover practically all of what we may call the period’s primary work in ‘general theory’; the teaching associated with them, as has been shown in the two preceding chapters, shaped practically all of the secondary or derivative work of the period, except that of the Marxists. * [Editor’s note to Part IV, ch. 7. Although this chapter on Equilibrium Analysis had been carefully planned from the beginning, it did not exist in any final form at the death of J.A.S. It was found in a fairly large number of small segments, some in typescript and some still in manuscript. Occasionally there were alternative versions of the same subject. There is a brief and very early treatment of the whole chapter, which was not used because I believed it to have been superseded by the later, more elaborate version here published. The first four sections had been written long ago but sections 3 and 4 were in the process of revision. The last two sections and the Note on Utility, which appears as an appendix to the chapter, were written in 1948 and 1949. Most of section 7 (The Walrasian Theory of General Equilibrium) was still untyped. Section 8 (The Production Function) and the Note on Utility had been typed, but J.A.S. had hardly read the former and had no opportunity to revise the latter. In a sense, all the sections were unfinished in that J.A.S. indicated by short-hand notes that he would have made changes in the text and added footnote references. I am very much indebted to Richard M.Goodwin, who first put the various parts of this chapter together for me. As both a student and valued colleague, he had worked with my husband on these problems and was probably better fitted than anyone else for this task. I have for the most part followed his suggestions, but I have added one or two things which turned up after Goodwin’s departure for Europe and removed some ‘alternative versions’ and the early version of the whole chapter mentioned in the first paragraph of this note. The interested scholar will find this material, along with the rest of the manuscript, deposited in the Houghton Library at Harvard University.] Why, then, do the structures of these leaders look so different? And why is it that many even of those of us who do see the fundamental sameness in them nevertheless deny the underlying unity of that period’s ‘general economics’? The answer to the first question is: because there were plenty of differences in technique, in details, and in views on individual problems, and because in addition leaders and followers alike overemphasized them. The most important differences in technique turned on the use or the refusal to use the calculus and systems of simultaneous equations: the same ‘theory’ looks quite different in this garb and without it—especially to the man who is not familiar with the former. An example for the differences in details and at the same time for the propensity to overemphasize them is afforded by the controversy on ‘real cost’ (see above, ch. 6, sec. 4). And examples of differences in views on individual problems are the differences in the theory of capital and the different attitudes as regards Partial Analysis (see below, sec. 6), which Marshall elaborated and Pareto affected to despise. 1 But differences of this kind—and controversies arising out of them—are part and parcel of the very life of every field of knowledge: if we allowed them to obscure the sameness of fundamentals, we could never speak of the scholastic doctors as a group that was united as regards methods and fundamental results; we might not even be able to speak of a Marxist school. With reference to the second question, it must be remembered that our proposition of fundamental unity does not apply to the first part of the period but only to the Classical Situation that emerged roughly around 1900. Before that there was, of course, not more but less agreement among leading theorists than there had been around 1850. The system that was established by Jevons, Menger, and Walras in the 1870’s and 1880’s and found its classic form in Marshall’s Principles (1890) came to most theorists as something new and unfamiliar. Nothing, in fact, proves so convincingly that, forerunners notwithstanding, it actually was something new, as does the resistance it met with. While the fight was on and individual adherents were being won here and there, Mill’s economics—to choose Mill once more as representative—was in possession, and one more cause for dissension was being added to those that had divided economists at the end of the preceding period. This also accounts 1 Marshall and Pareto—the latter not only with respect to the ‘literary economists’ but also with respect to Walras—are good instances of that overemphasis upon matters of comparative detail that produces, and not in laymen alone, the impression of the presence of fundamentally different ‘systems.’ But the outstanding instance is Cassel: the fundamental lines of his analytic structure are Walrasian. Yet in the later editions of his Theoretische Sozialökonomie (Theory of Social Economy, 1st German ed. 1918; 4th ed. rev., 1927; English trans. 1923 and 1932) he did not even mention Equilibrium analysis 919 Walras’ name. And in his first paper on general theory (‘Grundriss einer elementaren Preislehre,’ Zeitschrift für die gesamte Staatswissenschaft, 1899) he presented a simplified version of Walras’ system for which he claimed fundamental novelty on the ground that it eliminated the marginal utility theory of value though it retained, in a different terminology, all that is essential to it. And the claim was widely accepted! for the fact that the laggards who clung to the old doctrines, even after victory had been substantially won by the new, were both more numerous and more respectable than would have been the case if the changes had been less ‘revolutionary.’ A random sample from the economists—or even theorists—taken from the whole period, therefore, might well seem to refute the proposition here advanced. But in addition there was a large number of ‘outsiders,’ that is, of writers who championed theoretical systems of their own and condemned professional theory without bothering to master it. And, finally, there was something else. Then as always, the majority of economists were absorbed in the task of investigating the facts and practical problems of the various departments of public policy. This majority, which was reinforced by the historical and institutional groups, had little use for ‘theory’ and did not welcome a new type of it. They never accepted it as an instrument of research but looked upon ‘marginalism’ as a sort of speculative philosophy or as a new sectarian ‘ism’ which it was precisely their business to eliminate by what they considered truly scientific and realistic research (see ch. 4 above). Hence they passed, in methodological and programmatic pronouncements, all sorts of sweeping judgments upon it. On the surface, the result was bedlam, especially in Germany and in the United States—a multitude of discordant voices, all of which seemed to testify to the presence of an impasse. The reader must try to understand, on the one hand, how very natural this was and, on the other hand, that it did not mean what it seems to mean. 2 Below the phrase-troubled surface, there was no impasse. 2. COURNOT AND THE ‘MATHEMATICAL SCHOOL’: ECONOMETRICS It was during the period under survey that the inevitable happened: mathematical methods of reasoning began to play a significant and indeed decisive role in the pure theory of our science. Numerical or algebraic formulations and numerical calculations had occurred of course in the earlier stages of economic analysis: there were the political arithmeticians, the physiocrats, and many isolated instances such as Briscoe, Ceva, H.Lloyd, Condillac, whom we have noticed in their places, or the two authors rescued from oblivion by E.R.A. Seligman. 1 But the use of figures—Ricardo made ample use of numerical illustrations—or of formulae—such as we find in Marx—or even the restatement in algebraic form of some result of non-mathematical reasoning does not con- 2 The truth that economic theory is nothing but an engine of analysis was little understood all along, and the theorists themselves, then as now, obscured it by dilettantic excursions into the realm of practical questions. But it was emphasized by Marshall who, in his inaugural lecture at Cambridge (‘The Present Position of Economics,’ 1885), coined the famous phrase that economic theory is not universal truth but ‘machinery of universal application in the discovery of a certain class of truths.’ History of economic analysis 920 1 Essays in Economics (1925), pp. 82–3. One was an anonymous author, ‘E.R.,’ who in his Essay on Some General Principles of Political Economy (1822) used algebra in his treatment of incidence of taxation; the other was Samuel Gale, who wrote An Essay on the Nature and Principles of Public Credit (1784–6). stitute mathematical economics: a distinctive element enters only when the reasoning itself that produces the result is explicitly mathematical. 2 Of this, however, I know only three clear cases that antedate von Thünen and Cournot: D.Bernoulli, Beccaria, and, if we attach enough importance to even a glimpse of an equilibrium system, Isnard. 3 The non- mathematical reader may welcome an attempt at defining more closely the nature of the service that mathematics rendered to the economic theorists of the period under survey. [(a) The Service Mathematics Rendered to Economic Theory.] We shall presently touch upon the services that mathematics rendered in the treatment of statistical material. Here we are concerned with its use in theoretical analysis that is quantitative but not numerical. Now, the layman when he hears of the application of mathematics to economics thinks primarily of technical operations (‘calculations’) that involve the use of ‘higher’ mathematics, that is, the things that first come into view in the more advanced ranges of the college student’s algebra and analytic geometry and then soar out of the range of the non-mathematical mortal. It is quite true that during (a little more than) the last quarter of a century really advanced methods have increasingly imposed themselves upon economists, methods that would be recognized as either ‘hard’ or else very ‘special’ by professional mathematicians. Prior to 1914, however, this was not so, and very few publications that appeared earlier required of their readers—or even their authors—any proficiency in technical mathematics. What was required, beyond the rudiments of algebra and analytic geometry, was a knowledge of the calculus, and even of this the general ideas or logic rather than the more difficult techniques, for example, of integration. Barone was quite right when he averred in 1908 that though mathematics was becoming indispensable to the theorist, every normal and normally educated person could acquire what was needed of it by the spare-time work of about six months. The logic of the calculus may be expressed in terms of a small number of concepts such as variables, functions, limits, continuity, derivatives and differentials, maxima and minima. Familiarity with these concepts—and with such notions as systems of equations, determinateness, stability, all of which admit of simple explanations—changes one’s whole attitude to the problems that arise from theoretical schemata of quantitative relations between things: prob-lems acquire a new definiteness; the points at which they lose it stand out 2 This is why N.F.Canard (Principes d’économie politique, 1801) and William Whewell (‘Mathematical Exposition of Some Doctrines of Political Economy,’ Cambridge Philosophical Transactions, 1829, 1831, and 1850) do not figure here. Perhaps, however, Whewell should be considered as an intermediate case. He does not quite deserve Jevons’ derogatory comment. 3 On Thünen, see above, Part III, ch. 4, sec. 1; D.Bernoulli, above II, 6, 3; Bec-caria, above II, 3, 4d; and Isnard, above II, 6, 3. The bibliographies drawn up by Jevons (Appendix I to his Theory) and by Irving Fisher (Appendix to the English trans. of Cournot’s Recherches) are not quite complete but, on the other hand, much Equilibrium analysis 921 . Position of Economics,’ 1885), coined the famous phrase that economic theory is not universal truth but ‘machinery of universal application in the discovery of a certain class of truths.’ History of. characterize the level of this branch of economic analysis. General economics 917 CHAPTER 7 * Equilibrium Analysis 1. FUNDAMENTAL UNITY OF THE PERIOD’S ECONOMIC THEORY EVEN FOR the preceding. able to discern a considerable amount of agreement as regards the essentials of economic analysis and, in fact, a kind of average or modal system of general economics, deviations from which were