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Original Articles

Whither the history of economic thought? Going nowhere rather slowly?Footnote

Pages 463-488 | Published online: 12 Dec 2006
 

Abstract

The paper argues that economics is not a perfect selection mechanism that preserves each and every economic idea that is valid and useful and jettisons all ideas that are not. The teleological view of the subject cannot be sustained. Therefore the task of the history of economic thought cannot be limited to the study of the past from the present state of economics. Another important task is to study the present state of economics from the standpoint of past authors in order to see what has been gained and what lost in the course of time. The history of the subject is a treasure trove of ideas. The history of economic thought may play a useful role by preserving valuable ideas which otherwise would fall into oblivion. To foster the subject is therefore also in the interest of general economists.

Notes

∗ Presidential address delivered on the occasion of the annual conference of the European Society for the History of Economic Thought (ESHET) in Porto, Portugal, 28 – 30 April 2006. For valuable suggestions in the preparatory phase of this paper I thank Tony Aspromourgos, Stephan Boehm, Giancarlo de Vivo, Gilbert Faccarello, Christian Gehrke, Harald Hagemann, André Lapidus, Axel Leijonhufvud and Bertram Schefold. I am grateful to Tony Aspromourgos, José Luís Cardoso, Volker Caspari, Daniel Diatkine, Gilbert Faccarello, Duncan Foley, Christian Gehrke, Geoff Harcourt, André Lapidus, Antoin Murphy, Nerio Naldi, Manseop Park, Luigi Pasinetti, Neri Salvadori and Ajit Sinha for valuable comments and suggestions on an earlier draft of this paper. The views expressed in this address are entirely my responsibility.

1 ‘Theories are commonly outpourings of an impatient mind that would like to get rid of the phenomena and therefore replaces them by images, notions and often merely words. One senses and even sees that this is only a poor substitute; but does not passion and faction spirit always love substitutes? And rightly so, because they are so much in need of them.’

2 See, for example, the papers collected in Blaug (Citation1991); see also Winch (Citation2000) and Boehm et al. (Citation2002).

3 The SSCI and ISI, the private company that elaborates it, has assumed almost a monopoly position in the field. ‘Monopoly’, Adam Smith was convinced, ‘is a great enemy to good management, which can never be universally established but in consequence of that free and universal competition which forces every body to have recourse to it for the sake of self-defence’ (Smith Citation1976: I.xi.b.5). Some competition, I believe, would have a beneficial effect also in the field under consideration.

4 It goes without saying that I do not dispute in the least the importance of the history of economic thought as the discipline that studies the contributions of economists in their own times and places, of the importance of historical reconstructions, of the study of original sources, archival work, etc. However, there is an intertemporal dimension to the problem at hand that is the focus of the following discussion.

5 Nerio Naldi has drawn my attention to the fact that Pigou had presented his above version of the Marshallian view of what economics is about as early as in his Inaugural Lecture, ‘Economic theory in relation to practice’, in 1908 as successor to Marshall's Chair.

6 The question is of course close at hand whether our fellow economists fare better in this regard. The loss in reputation of economics relative to other disciplines experienced over the past few decades does not appear to point in this direction. I shall come back to this below.

7 See in this context Ilya Prigogine's (Citation2005: 69) statement: ‘In all fields, whether physics, cosmology or economics, we come from a past of conflicting certitudes to a period of questioning, of new openings. This is perhaps one of the characteristics of the period of transition we face at the beginning of this new century.’

8 ‘… the history of a science does not compare to a narrative. It cannot be anything else other than an exposition of the more or less fortunate attempts … to collect and solidly establish the truths of which it consists. What could be gained by collecting absurd opinions, the rejected doctrines that merit to be so? It would at the same time be useless and boring to exhume them. … Errors are not those that deserve to be learned, but to be forgotten.’

9 Cited after Lapidus (Citation1996: 870).

10 For a refutation of the neoclassical interpretation of Smith, see Winch (Citation1997).

11 It is interesting to note that Samuelson in his 1962 paper on ‘Economists and the history of ideas’, commenting on the idea of cumulative knowledge, was explicit only in the following regard: ‘mathematical knowledge has been cumulative’ (Samuelson Citation1962: 5, n. 2).

12 For a recent assessment of Sraffa's contributions from different perspectives, including Samuelson's, see Kurz (Citation2000); for a discussion of Samuelson's views on the classical authors and Sraffa, see the forthcoming exchange between Garegnani and Samuelson in EJHET, 14(1) (2007); for a discussion of Sraffa's interpretation of the classical and marginalist economists in his hitherto unpublished papers, see Garegnani (Citation2005), Kurz (Citation2005a), Kurz and Salvadori (Citation2005) and Gehrke and Kurz (Citation2006).

13 The relative loss in reputation of economics is perhaps best seen in terms of how other scientists assess the achievements of some of the so-called ‘Nobel Prize’ winners; see in this regard Henderson (Citation2005). (While Alfred Nobel funded the prizes named after him, which are awarded by the Royal Swedish Academy of Science, the economics prize is given by the Swedish Central Bank.)

14 I am grateful to Manseop Park who brought this statement to my attention while I was a visiting professor at Korea University in October 2005.

15 A malevolent person might contend that those who advocate getting rid of the history of economic thought are motivated by an interest to constrain competition of ideas only to contemporaries and cut out past economists.

16 This has been argued by several historians of economic thought, e.g. Lapidus (Citation1996). Even if there happens to be advancement in some sense, it is not necessarily linear. Cesarano (Citation1983) has put forward compelling evidence that in monetary theory evolution follows a cyclical pattern, with certain ideas disappearing and reappearing again over time.

17 On Schumpeter's contributions to economic analysis and its history, see, for example, Kurz (Citation2005b).

18 Think, for example, of Ricardo's discussion of the case in which improved machinery can be introduced only after money wages have risen due to rising food prices because of diminishing returns in agriculture (Ricardo, Works, vol. I, 395).

19 Paul Samuelson wrote with regard to economic controversies of the past: ‘The fact that contemporaries quarrel must be understood against the background of an age in which writers imperfectly understood their own theories’ (Samuelson Citation1987: 56). I fear that there is no reason to presume that this age is or ever will be over in economics.

20 For a summary account of this tradition, see Blaug (Citation1997: ch. 14).

21 As Gilbert Faccarello stressed in private correspondence with me, there is another striking example where ideas we have known for a long time, but wich had been lost sight of, all of a sudden reappear in new garb and context. Thus, ‘new Keynesian economics’, championed by Stiglitz, Greenwald, Weiss and others, puts forward an analysis of banking and financial activities in which moral hazard and adverse selection play a crucial role. Much of what is being said now was anticipated by Adam Smith (Citation1976: II.ii).

22 See in this context Samuelson's anti-Whiggish statement: ‘One must never make the fatal mistake in the history of ideas of requiring a notion that it be “true”. For that discipline, the slogan must be, “The customer is always right.” Its objects are what men have believed; and if truth has been left out, so much the worse for truth, except for the curiously-undifficult task of explaining why truth does not sell more successfully than anything else’ (Samuelson Citation1962: 14 – 15).

23 Other examples are close at hand and include Say's law and the quantity theory of money. As Lapidus (Citation1996) stressed, there is a tendency to preserve bits of theory that are simple to teach to the detriment of others that are more difficult. Pedagogical preoccupations may involve some sort of Gresham's law in the selection process.

24 Interestingly, Lucas (Citation2002: 56) admitted that if the heterogeneity of capital ‘was the issue in the famous “two Cambridges” controversy, then it has long since been resolved in favor of the English side of the Atlantic’. Paradoxically, he went on: ‘Physical capital, too, is best viewed as a force [sic], not directly observable, that we can postulate [sic] in order to account in a unified way for certain things we can observe’ (ibid.).

25 For a criticism of instrumentalism in its different forms, see Lawson (Citation1997).

26 See in this regard Hayek's (Citation1937: 49) discussion of the division of knowledge which, in his view, ‘is quite analogous to, and at least as important as, the problem of the division of labour’.

27 One is reminded of Keynes's bon mot: ‘I do not know which makes a man more conservative – to know nothing but the present, or nothing but the past’ (Keynes Citation1970: 277).

28 The following summarizes briefly what in the original version of the paper was laid out in some detail. The reader interested in the full argument is asked to consult the web page of ESHET (www.eshet.net/).

29 In a recent contribution Mark Blaug (Citation2001: 156) maintained: ‘There is nothing predetermined about our current theories and if years ago, economics had taken another turn at a critical nodal point, we would today be advocating a different theory.’ This can hardly be disputed. One such ‘nodal point’, and arguably a most important one, is discussed in the above. Had the classical authors not failed to provide a coherent version of their approach to the theory of value and distribution, the history of economics might have taken a radically different path. ‘Economic knowledge’, Blaug insisted, ‘is path-dependent’ (ibid.).

30 For details, see the long version of the paper; see also Park (Citation2006), who argues that in all currently available horizontal innovation models homogeneity masquerades as variety.

31 If knowledge is not cardinally measurable, nothing can be said about returns to scale, marginal and average products, growth rates etc. (see Steedman Citation2003).

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