In 1912 Guillermo Subercaseaux (1872–1959), a professor of economics at the University of Chile, published El Papel Moneda, translated into French in 1920 as Le Papier-Monnaie. The paper provides a full treatment of Subercaseaux’s interpretation of the working of paper-money economies, including his approach to the determination of the exchange rate of depreciated currencies and his views about the problem posed by the existence of a positive value of inconvertible paper money. We investigate how his framework was related to classic contributions by Adolph Wagner (1868), Carlo Ferraris (1879), and Wesley C. Mitchell (1903, 1908). We also deal with the background formed by the South American debates between ‘papeleros’ and ‘oreros’ (paper-money and gold-standard supporters) at the time. The paper offers an investigation of an aspect of the international transmission of economic ideas, this time from the periphery to the center.

In The General Theory, John Maynard Keynes lumped together the marginalist and neoclassical economics of the late nineteenth and twentieth centuries and the more narrowly defined “classical” economics of Adam Smith, David Ricardo, J. R. McCulloch, James and John Stuart Mill and other mainstream economists of the late eighteenth and early nineteenth into what he called the “classical theory of employment,” which he reduced to two “fundamental postulates”:

(a) The wage is equal to the marginal product of labour…

(b) The utility of the wage when a given volume of labour is employed is equal to the marginal disutility ofthat amount of employment…(Keynes 1936, p. 5).

The early literature on ordinalism and Vilfredo Pareto's incomplete development of ordinal theory, by John R. Hicks and R. G. D. Allen (1934), Oskar Lange (1934), Hicks (1939), George Stigler (1950), Paul A. Samuelson (1974) and others, referred exclusively to Pareto's more mature French language works: the Manuel d'Économie Politique (1909) or the subsequent encyclopaedia entry entitled “Économie Mathématique” (1911). The related discussion considered whether Pareto was an inconsistent ordinalist, a cardinalist, or confused.

Though beauty of diction, harmony of periods, and acuteness and singularity of sentiment, may captivate the reader, yet there are other qualifications essentially necessary…. Fidelity, accuracy and impartiality are also requisite (Joseph Towers, Observations on Mr. Hume's History (1778)).

Classical political economy in Great Britain was broadly supportive of education, but limited government’s role to modest assistance for charitable schools. The early classical economists in the United States, men like Thomas Cooper and Francis Wayland, in addition to supporting free trade, took this classical position with respect to education. But a more aggressive democratic claim was being advanced by the American common school movement and its supporters among Whig protectionists. The early economic tracts of William Jennison, Willard Phillips, Calvin Colton, and Henry Carey envisioned a larger role for government and advocated support for publicly financed common schools. Most notably, the leader of the common school movement, Horace Mann, built a defense for public financing based on a radical theory of property, derived from distinctly Puritan economic doctrine. If his radical positions received little support from post-Civil War mainstream economists, Mann’s practical advocacy of public taxation for public schools very much carried the day.

I found preparing this presidential address a much greater challenge than I had anticipated. After much deliberation, I decided to explore the historical roots of what we are doing now. The History of Economics Society, like other learned societies, holds an annual conference in different cities; members present papers which are discussed; and the Society sponsors a specialist journal—The Journal of the History of Economic Thought. Why? Where did this tradition begin? I turned to several historians of science—I. Bernard Cohen, Thomas S. Kuhn, Richard Yeo, and Ian Hacking—for some background.

In this essay we are going to closely analyze the importance of Allyn A. Young's theory of increasing returns. In truth, we could also discuss his position on economies of scale, in that the analytical definitions suggested by the theory, as we shall shortly see, are not that helpful in understanding exactly what this writer meant by (the principle of) increasing returns: in fact, the latter are always linked to the more general, all-pervasive concept of economic progress, as is evident from the title of his most famous work. Young's contribution to the debate (one only has to think of the cost controversy of the 1920s) over returns and economies (and diseconomies) of scale, was in truth somewhat marginal. His only work that dealt with these questions, besides his 1928 celebrated paper (Young 1928), dates back to 1913, when in an important critical note (Young 1913), which we shall briefly analyze in section 2, he criticized a number of economic policy rules deriving from Arthur C. Pigou's (1912) famous work. To put it more precisely, Young did not have any substantial role to play in the construction and perfection of the neoclassical theoretical paradigm; in fact, as we argue in section 3, there is significant evidence to suggest that he was probably moving increasingly further away from such a position. The essence of Young's work, summarized in the article written in 1928, would seem to consist in the request for a theoretical redirection, in the analysis of the dynamics of capitalist economies, along the lines of some of the classical economists, thus carrying the various suggestions on this matter already present in Alfred Marshall's theoretical contribution to extremes. In sections 4 and 5, dedicated to the discussion of this article and of its appendix respectively, we maintain that the logic of Young's analysis is based on a multi-sectoral model subject to qualitative and quantitative transformations, i.e., to structural change. Such a view enables us to understand: (1) the author's emphasis on the proportionality among different productive branches needed in order to ensure balanced economic expansion; (2) the attempt (made by the author in the appendix to his 1928 article) to explain the dynamics of the economic system in the presence of different intersectoral growth rates. In the concluding section we maintain that it is the alternative nature of his position compared with the “standard theory”—the reference here is particularly to Pigou's transcription of Marshall's economics—that represents the main feature of Young's work.

Most discussions of how one should write the history of economics are conducted at a very abstract level. They debate the merits of alternative approaches without relating them to specific problem-situations or specific periods. The literature uses terms such as “absolutism,” “relativism,” “Whig history,” “thick history,” “historical reconstructions,” “rational reconstructions,” and “presentism,” frequently arguing that one of these approaches is better than one or more of the others. In warning historians of economics against sin, they typically define sin in absolute terms. This is particularly true of those who argue for “relativism,” “thick history,” “historical reconstructions” and the like. There is a simple reason for this. Terms such as “absolutism,” “Whig history,” and “presentism” all carry negative connotations, with the result that their advocates usually feel impelled to qualify them. On the other hand, supporters of “historical reconstruction,” “thick history” and so on feel much less pressure to offer such qualifications—the words used have the sound of “real” history. The terminology itself is value-laden.

It is noted that Harry G. Johnson was widely admired for his broad knowledge of economics, and particularly for the excellence and synthesizing quality of much of his writing. His discussions of the Phillips curve and related matters are considered. It is found that they are brief, inaccurate, and inconsistent. It is clear that, despite his reputation, they should not be treated as authoritative. It is further suggested that rather than supposing that Johnson’s knowledge and capabilities have been grossly exaggerated, it may be better to conclude that the Phillips curve was not nearly so important in the literature of the 1960s and 1970s as has been supposed.

This paper reconsiders the anteriority of Robert Torrens’s theory of natural wage to that of David Ricardo. Ricardo was influenced by Torrens’s thinking when writing the chapter on “Wages” of the Principles. For many historians of economic thought, this influence is limited to Torrens’s focus on the socio-cultural aspect of necessity goods, which determine the natural price of labor. While this interpretation is consistent with that of Ricardo, we argue that the anteriority of Torrens to Ricardo more generally focuses on the method used by the latter to justify the indexation of money wages on the money price of subsistence goods. Finally, this paper shows that the tribute paid to Torrens by Ricardo paradoxically explains posterity’s misunderstanding of his theory.

Oswald ‘Foxy’ Falk was the enigmatic figure who understood, probably more than any other person, how the mind of Maynard Keynes operated. Regrettably, Falk never wrote a memoir on Keynes or even expanded upon his long professional association with him. Equally, there has been relatively little written of Falk in the economics literature. This article attempts, at least, to address that gap. The character and philosophy of Falk are examined through the prism of a lengthy correspondence he had with another businessman who knew Keynes, William Sydney Robinson. Their letters reveal why Keynes fell out with his former business partner but also, more importantly, how, in talking about the great and the good, lesser mortals are inclined to tell the occasional mistruth.

A principal objective of Malthus, Ricardo, and Marx was to discover the laws that regulate and limit the growth of the wealth of nations and, in particular, the unprecedented growth of capitalism. The central theme of this paper is that their productive and unproductive labor concepts are critical to understanding their analyses of capitalist growth and the tendency for the rate of profit to fall which regulates and limits this growth. The way in which they identify productive and unproductive labor and how they apply this distinction is critical to understanding the common thread that runs through and marks the differences between them.

The scholastic intellectual tradition was the dominant scientific paradigm for nearly five centuries in western Europe. That the economic issues of interest to these scholars were similar throughout the period is undisputable, but were the individual views on these issues also similar? This is a pertinent question, upon which an evaluation of the evolution of this intellectual tradition, which often has been considered as monolithic, can be based.

This paper focuses on the analysis of the so-called “natural law case” against usury, and tracks how the lines of intellectual reasoning subtly evolved between early and late scholastics. While the issues, methods, and purposes of scholastic thought remained the same in this period, there also was a systematic evolution within this tradition that makes the essence of the scholastic doctrines conformable to economic realities.

Contributors to cobweb theory include many leading economists of the twentieth century. From early beginnings in 1930, cobweb theory played a key role in evolving perceptions of market stability arising from recursive linear models with endogenous dynamics. The focal point of this evolution in cobweb theory is the transition from naive to adaptive to rational price expectations. After a review of the prehistory, this paper examines the first wave of linear cobweb theory initiated by Jan Tinbergen, Henry Schultz, and Umberto Ricci and proceeds to consider the evolution of price expectations in the second wave of cobweb models associated with endogenous cycles in commodity markets. The role of modern cobweb theory in discussions about the stability of market equilibrium and the connection to processes with rational expectations is assessed.

The body of enquiry known as economics grew out of the practical needs of economic life and statesmanship, and also out of philosophical speculation on the nature of man and society. Adam Smith reflects both aspects, but I would locate him predominantly in the philosophical wing. When he switched from considering the theory of moral sentiments to dealing with the causes of the wealth of nations, I don't believe that he saw himself as engaging in a fundamentally different mode of enquiry. He was, of course, concerned with practical questions--of ethical behaviour in the one case and of economic policy in the other--but discussion of both was from a broad philosophic viewpoint. Ricardo, on the other hand, seems to me to exemplify, and at a high level, someone who falls predominatly in the other wing. Although his thought was abstract, it was much more an attempt to deal pragmatically with important issues of practice than it was an attempt, in the philosophical tradition, to understand the general nature of men's interaction in society. Indeed, utilitarianism by then offered a strictly philosophic rationale for concern with practice (albeit a piggish one in some eyes) which did much to confound and confuse the dual origins of economics. Mill and Sidgwick, among others, maintained the tradition of a close connection between philosophical and economic enquiry, within the framework of a broadened utilitarianism, and the continuing affinity of the two disciplines has been exemplified more recently in the work of writers such as Rawls and Sen, not to mention the recent upsurge in discussion of economic methodology.

In order that this essay may be clear to the reader, some understandings about terminology must be established. First, if we speak of “theories that were formulated in the past,” ordinarily we mean to leave open the question of whether they are still valid, and if we speak of “past theories,” ordinarily we imply that they have been discarded and that implies that they were defective and were supplanted by current theories. Nevertheless, in this essay the latter term, used for the sake of brevity, will have the same meaning as the former expression. If a past theory is considered to be invalid, that will be staled explicitly.