Recontextualizing Clarence Ayres’s The Theory of Economic Progress through Archival Evidence

Abstract

Our article seeks to recontextualize Clarence Ayres’s The Theory of Economic Progress through a reconsideration of the criticisms of the book and Ayres’s personal standpoint on it. We believe that the negative reception of the book conveys the mainstream perspective. Additionally, our article stresses some of Ayres’s thoughts on Western society that were not included in The Theory of Economic Progress but were introduced by him through correspondence around the same time his famous book was written and disseminated. We conclude that Ayres was more radical than his writings reveal.

Keywords:

• Clarence Ayres
• The Theory of Economic Progress
• institutional economics

JEL Classification Codes::

• B25

Notes

1 Additionally, a debate between Ayres and Knight took place in the pages of the International Journal of Ethics during the 1930s (Ayres 1935a and 1935b; Knight 1935). However, despite being taken into consideration, this debate is not focused on price theory.

2 This is the main reason why Ayres (1944) proposes a new place for technology in economic analysis. In Ayres’s words: “[s]ubstitute technology for the price system as the genesis of value. Value must be derived from an impersonal mechanism, and technology is. The technological continuum from which by his instrumental logic Dewey has derived his theory of logical validity (truth) is also the genesis of moral validity (value). This, I am convinced at last, is how the positive theory must be derived—from a technological theory of value alternative to the effort of classical political economy to derive value from the pricing process. Thus, the theory of value itself rivets economic analysis to production (rather than exchange and distribution) and so leads to all the rest” (Ayres to Walton Hamilton, April 30, 1940, Clarence Ayres Papers, Box 3F288).

3 Ayres’s reaction to criticism of The Theory of Economic Progress is associated with his perspective on price theory (Ayres 1945). According to Ayres (1945, 937), the “commonest misinterpretation” of his book lies in the meaning of values. For Ayres (1945, 937), “[ . . . ] the values we all seek, individually and collectively, are those of human life and personality, the fuller realization of our potentialities as human beings, a greater measure of the creative achievements of the human spirit which in some sense or other make life worth while. The question is, What do these fine phrases mean?” The answer of the rising mainstream of Ayres’s time lies in price, since it is through the price system that the “efficient use of resources” can be achieved. Such a concept of efficiency, for Ayres (1945, 938), would be related “[ . . . ] to the consciences of all members of the community as registered in their ‘wants’.” However, mainstreamers deal with wants as “primary data”—a concept that, for Ayres (1945), is unsatisfactory both intellectually and practically. Ayres (1945) sees the background of human experience as an amazing achievement, in a historical perspective. Saying that one society wanted caves while another wanted cathedrals is ridiculous; the inescapable truth is that human experience does manifest through a developmental pattern (Ayres 1945). As stated by Ayres (1945), the point of his Addendum to The Theory of Economic Progress is to focus his reader on the developmental pattern. Ayres (1945) introduces his perspective of developmental patterns relying on a technological continuum encompassing the development of science, arts, tools, and skills—which can be understood today as the core of Ayresian institutionalism.

Additional information

Notes on contributors

Felipe Almeida

Felipe Almeida is a professor of economics and Gustavo Goulart is a Ph.D. candidate, both at the Federal University of Paraná (Brazil). This research has been supported by the National Council for Scientific and Technological Development (CNPq) in Brazil.

Gustavo Goulart

Felipe Almeida is a professor of economics and Gustavo Goulart is a Ph.D. candidate, both at the Federal University of Paraná (Brazil). This research has been supported by the National Council for Scientific and Technological Development (CNPq) in Brazil.