This article investigates John Maynard Keynes’s understanding and use of the concept of ‘animal spirits’ by tracing how he conceived of related ideas such as human nature, instinct, and intuition, and how they connect to the rational economic agent usually assumed by mainstream economic theory. It also considers the notion of Money-of-Account as proposed in A Treatise on Money in relation to the concept of reciprocal altruism as developed in the field of evolutionary biology, and documents Keynes’s knowledge of Charles Darwin on natural selection and sexual selection. It then uses these threads of analysis to evaluate how Keynes conceived of mental reasoning processes more widely, and deduces his own answer to the question of whether the human mind is formed as a ‘blank slate.’ It concludes by suggesting that Keynes should be regarded as one of the first contributors to the field of evolutionary economic psychology.

According to the folklore of economics, H. L. Moore (1869–1958) in Economic Cycles: Their Law and Cause (1914) mistakenly called his estimates of the supply of pig iron the demand for pig iron. The reviews of Economic Cycles by R. A. Lehfeldt (1915) and P. G. Wright (1915) initiated the folklore, which G. J. Stigler (1962) repeated in his obituary of Moore. Recently the folklore reappeared in histories of economics by M. Blaug (1986), K. Kim (1988), R. J. Epstein (1989), and M. S. Morgan (1990). Morgan, who was particularly critical of Moore, wrote that his empirical work “produced a relationship which he interpreted as a positive demand curve for pig-iron. This, of course, contradicted the negative relationship between the price and quantity stipulated by standard economic theory…. Moore's approach was a mixture. At its worst, it involved both the unthinking application of theory to data and the adoption of empirically derived relationships without reference to theory” (Morgan 1990, pp. 28, 141).

Arthur Pigou introduced the iconic two-road model in the first edition of The Economics of Welfare (1920), and it has been thought that this model was intended to demonstrate the need for Pigouvian taxes to mitigate traffic congestion. However, Pigou’s intention was to show that efficient output for industries subject to decreasing returns required a tax on output. Pigou was incorrect, but the two-road model (correctly considered) became the starting point for the analysis of traffic congestion in the 1950s. This paper recounts the doctrinal history of decreasing returns industries and the two-road model.

Richard Posner’s “What Do Judges and Justices Maximize?” (1993b) is not, as usually believed, the first analysis of judges’ behaviors made by using the assumption that judges are rational and maximize a utility function. That analysis arrived at the end of a rather long process. This paper recounts the history of this process, from the “birth” of law and economics in the 1960s to 1993. We show that economic analyses of judges’ behavior were introduced in the early 1970s under the pen of Posner. At that time, rationality was not modeled in terms of utility maximization. Utility maximization came later. We also show that rationality and incentives were introduced to explain the efficiency of common law. Around this theme, a controversy took place that led Posner and other economists to postpone their analysis of judicial behavior until the 1990s. By then, the situation had changed. New and conclusive evidence of judges’ utility maximizing behavior demanded a general theory to be expressed. In addition, the context was favorable to Chicago economists. It was time for Posner to publish his article.

My work as a historian of economic thought and methodologist has had several dimensions. One comprises a heavy research program. Another involves some major editing projects, several long term. Still another involves a synergistic relationship between my work on the history of economic thought and methodology and on the economic role of government. Another involves my participation in the founding and operation of both History of Political Economy and the History of Economics Society. If all this sounds like a lot of activity, it must be understood that my research and professional activities have been both my vocation and principal avocation. I use the word “work” in the title reluctantly and where others might say “career.” I have never thought of my professional activities as either toil or a career; indeed, I have both engaged in and seen them as a joyful adventure—so much for the theory of the marginal disutility of labor! Especially important has been the continued support of my wife, Sylvia. She has not only understood and supported, albeit sometimes with difficulty, my time-consuming involvement with intellectual work, she has nurtured a wonderful family life.

This paper explores the history of the first economics film, made by Michael Polanyi. It traces the evolution of the film from the first idea to the latest version. It portrays Polanyi’s motives for making the film, the contexts in which the film was embedded, and its perception by various individuals and communities. The paper demonstrates the novelty of both the content and the presentation of Polanyi’s economic ideas through the eyes of his contemporaries. It discusses why it was important for Polanyi to make a film about the circulation of money and the principle of neutrality, and comments on what historiographers of economic thought might learn if they put a stronger emphasis on visual representations in their pursuits.

Albert Aftalion is certainly one of the best known French economists of the first half of the twentieth century. The influence he exerted during his lifetime over the scientific community of his homeland was considerable, and he was promptly acknowledged abroad to be one of the leading theorists of the business cycle. While he is best known as one of the inventors of the acceleration principle (Haberler 1937), we will focus on Aftalion's endogenous explanation of non-monetary business cycles and, more specifically, on the theoretical framework supporting Les crises périodiques de surproduction. Though this work can be seen as a mere “(desperate) attempt” to reconcile the law of markets with general overproduction (Abraham-Frois 1987), we argue instead that Aftalion's failure to construct an equilibrium theory of aggregate overproduction can be traced back to his inadequate treatment of aggregate demand. According to him, long roundabout processes are what generate cyclical fluctuations within a setting in which commodities produced and brought to the market always find an outlet. In other words, the law of markets implies market clearing where declines in prices instead of involuntary stock-building occur in the event of a crisis. How demand behaves in such a setting requires careful specification, which is precisely what is lacking in Aftalion's model.

I read your “…Historiography…” (Blaug 1990) with interest and profit. You were kind to me—probably too kind. But let me explore a point. Let's accept for the sake of the argument that in some instances a “rational reconstruction” can deviate from a “historical reconstruction.” Query: When I attributed to Smith the “canonical classical model” (Samuelson 1978), did I provide your readers with such an instance of deviation? No, I say. And your text does not adduce otherwise. Nor does Hollander's rhetoric (1980) in reaction to me. Actually, Hollander said: Yes, that model is in Smith but one has to work hard not to overlook it (particularly because its pieces are in scattered and unlikely places).

The subject of this essay is best introduced by two statements written many years apart. One is by J. S. Mill:

[Adam Smith] speaks as if labour were intrinsically the most proper measure of value, on the ground that one day's ordinary muscular exertion of one man, may be looked upon as always, to him, the same amount of effort or sacrifice. But this proposition, whether in itself admissible or not, discards the idea of exchange value altogether, substituting a totally different idea, more analogous to value in use. If a day's labour will purchase in America twice as much of ordinary consumable articles as in England, it seems a vain subtlety to insist on saying that labour is of the same value in both countries, and that it is the value of the other things which is different. Labour, in this case, may be correctly said to be twice as valuable, both in the market and to the labourer himself, in America as in England (Mill, 1909, p. 567).

Ralph G. Hawtrey was not a man of the backwaters. Through the parallel study of Treasury files and Hawtrey’s scholarly publications, this work reveals his direct influence upon the most commanding minds of the Treasury and the Bank of England, the two institutions that, after WWI, shared primary responsibility over the British austerity agenda. After the war, Hawtrey advocated drastic budgetary and monetary rigor in the name of price stabilization. From 1922, Hawtrey admitted the need to decrease the bank rate; yet he remained an adamant supporter of the gold standard, insisting on its maintenance even if it required further monetary revaluation. Hawtrey’s policy prescriptions stemmed directly from his economic model. The “crowding-out argument,” the centrality of credit and of savings, together with the operational priority of technocratic institutions, were essential theoretical underpinnings of Hawtrey’s agenda: implementing the so-called Treasury view.

One of Joan Robinson's favorite sayings was: “As I never learnt mathematics, I have had to think.” A by-product of this characteristic is that her writings abound with striking intuitive propositions, often tossed off as asides from the flow of the main argument. We mention this aspect of Robinson's personality as the introduction to the history of one such aside.

Albeit concerned with the biological element in social evolution, Albert B. Wolfe was among the very few economists of the progressive era who openly expressed their concerns about certain implications of eugenic rhetoric for the social science. Specifically, Wolfe questioned the strong hereditary boundaries that more extreme eugenicists suggested about human beings. A careful examination of Wolfe’s writings reveals that his reaction was rooted in the belief that many of the social problems that eugenicists attributed to hereditary limitations were actually imputable to the influence that the social, economic, and physical environment exercised on the individuals.

In the late 1960s, new environmental policies emerged that attempted to reach predetermined pollution standards in a cost-effective way: i.e., the “standard-and-tax” approach proposed by William J. Baumol and Wallace E. Oates, and the permits market approach proposed by John Dales. This paper describes the early history of the two approaches, and compares them. Although today they refer to different traditions, namely Pigovian versus Coasean, and are often contrasted in the literature, these cost-effective solutions emerged at the same time and for the same reasons. First, they both tried to promote incentives-based policies against traditional regulations; second, they criticized the optimal Pigovian tax, which raised the contentious issue of measuring pollution damage. More broadly, they emerged as a kind of pragmatic compromise, fed by a common attempt to move toward more practical policies: reaching efficiency without optimality, while relying on standards whose setting is a matter for political decision.

Milton Friedman (1968)—his famous Presidential Address to the American Economic Association—contains an elementary error right at the heart of what is usually supposed to be the paper’s crucial argument. That is the argument to the effect that during an inflation, changing expectations shift the Phillips curve. It is suggested that the fact of this mistake and of its having gone all but unnoticed are points of historical interest. Further reflections, drawing on the arguments of Forder (2014), Macroeconomics and the Phillips Curve Myth, are suggested.

Walter Bagehot is an excellent example of the mid-Victorian polymath. He was a banker, journalist, editor, biographer, literary critic, economist and political analyst. The educated reader of today remembers him as the author of The English Constitution, which, though published in 1867, remains one of the best introductions to the workings of the Westminster political system. Economists, on the other hand, vaguely recall him as the monetary commentator who wrote Lombard Street (1873b) and edited The Economist (1861–1877). Only a few historians of economic thought cite Bagehot for his participation in the English Methodenstreit. He played a significant role in this largely forgotten Victorian debate between the historical and orthodox economists. He was one of the first orthodox economists to respond to the historicist challenge, and, in doing so, he articulated a highly controversial relativist interpretation of the orthodox doctrines. Specifically, in response to the historicist claims that recent evidence gathered from custom-bound societies falsified the orthodox

The paper draws on Stephen Siegel (1984) to argue that, while paving the way for constitutionalizing the free market in Lochner v. New York (1905), the reproduction cost method that the Supreme Court established in Smyth v. Ames (1898) as the preferred technique for assessing the value of a business for regulatory purposes also exposed the conventional character of any valuation exercise, against the claims of objectivity made by classical economists and mainstream jurists. The inconsistency between recognizing that “value is not a fact” and the classical laissez-faire philosophy underlying the Court’s jurisprudence did not escape progressive critics, who concluded that government could legitimately fine-tune regulation in order to affect a business’s value and pursue alternative socio-economic goals.

The aim of this paper is to explain the process of diversification of normative economics by presenting the work of two authors—Tibor Scitovsky (1910–2002) and Amartya Sen (1933–). While these two authors first contributed to traditional welfare analysis from within, they were subsequently involved in the development of two different, and even opposed, programs: the economics of happiness; and the capability approach. They focused on different concepts of well-being: the “joy” of satisfied consumers for Scitovsky; and the “capabilities” of deprived individuals for Sen. In imposing new theoretical frameworks and applications, as well as new concepts of well-being, which are measureable, the capability approach and the economics of happiness represent two major attempts to renew normative economic analysis.

The investigation of aggregate consumption underwent a radical change in the USA during the 1940s and 1950s. Principles deriving from the American Institutionalist tradition attained their greatest popularity in Duesenberry’s formulation just before they were rapidly abandoned. This paper examines this turning point by comparing Duesenberry’s relative income hypothesis and Friedman’s permanent income hypothesis. This also makes it possible to identify a particular feature of Duesenberry’s analysis—its heterogeneity—which must be taken into consideration by those seeking a return to Institutionalist principles in the analysis of aggregate consumption.