Showing papers in "History of Political Economy in 2008"

Adam Smith, the Last of the Former Virtue Ethicists

Abstract: Smith was mainly an ethical philosopher, though he practiced what was considered for a long time after Smith an obsolete sort of ethical philosophy, known nowadays as “virtue ethics.” Since 1790 most ethical theory as practiced in departments of philosophy has derived instead from Kant or Bentham, but virtue ethics has recently come back. From the Seven Primary Virtues, Smith chose five to admire especially. He chose all four of the pagan and stoic virtues of courage, temperance, justice, and prudence. To these he added, as virtue number five, a part of the Christian virtue of love, the part admired by his teacher Francis Hutcheson. Smith was not, as has often been claimed, a Stoic, because he was always a pluralist, and would not reduce the good life to, say, Stoic temperance alone. Smith's choice of the virtues makes sense of his writings and career. And it reveals a flaw, shared with Hume: the banishment of the monkish virtues of hope and faith, necessary for human flourishing.

The Adam Smith Problem in Reverse: Self-Interest in The Wealth of Nations and The Theory of Moral Sentiments

Abstract: Adam Smith wrote two major books - The Theory of Moral Sentiments (TMS) and The Wealth of Nations (WN). Usually WN is described as the book promoting self-interest and TMS as the book promoting benevolence or sympathy, but not self-interest. The two books are generally described as either independent from each other, in contradiction with each other (The Adam Smith Problem), or complementary to each other. Using a close textual analysis of both books, I argue that if there is a tension between the two books, it is because TMS is the book about the beneficial effects of self-interest, while WN is the book that criticizes self-interest.

The Road to Serfdom: Text and Documents; The Definitive Edition

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The Construction of the Canonical History of Financial Economics

Abstract: This article takes place in the revision of the history of financial economics. The major argument is that the history of financial economics nowadays known was built to defend theoretical viewpoints, and therefore, to convince the scientific community to adopt these theories. More precisely, this “history” was built thanks to the creation of the first canon of texts during the 1960s; and therefore it constitutes a canonical reading of the past of financial economics –what I call here a canonical history of a discipline. This revision leads to break with this canonical reading that has been imposed and provides new results. Indeed, breaking with the canonical reading, it is possible to conciliate the history of financial economics with historical data. To demonstrate that, this article examines in particular the link between the introduction of financial economics into the scientific field during the 1960s and the construction of a canonical history of that discipline. This article analyzes, first, the structure, the aim, and the positioning of the discipline during this decade, second, how and why this canonical history was elaborated. Finally, this article shows how the canonical history of financial economics was elaborated to support theoretical viewpoints.

Keynes among the Statisticians

Abstract: This paper considers J. M. Keynes as a statistician and philosopher of statistics and the reaction of English statisticians to his critique of their work. It follows the development of Keynes's thinking through the two versions of his fellowship dissertation The Principles of Probability (1907/8) to his book A Treatise on Probability (1921). It places Keynes's ideas in the context of contemporary English and Continental statistical thought. Of the statisticians considered special attention is paid to the reactions of four: Edgeworth, Bowley, Jeffreys and R. A. Fisher

The Writing Workshop of François Quesnay and the Making of Physiocracy

Abstract: Using archival materials, we investigate the scientific practices of Francois Quesnay and the individuals who worked with him in relation to their social background. Our contention is that, before 1764, the group of authors who shared Quesnay's commitment to an agrarian economic theory are best described as the “writing workshop” of Francois Quesnay rather than as the “physiocratic” school. Quesnay organized and supervised the work of these individuals, who assisted him in a manner clearly reminiscent of that of workshops of artists from late medieval and early modern Europe. On the one hand, Quesnay tightly controlled the work of those (the Marquis de Mirabeau, Pattullo, Du Pont de Nemours) who published economic writings, correcting and even rewriting whole parts of their texts. On the other hand, he commanded other writers/individuals to collect data and execute and verify calculations, most notably for his tableaux economiques. In other words, the production of political and economic writings was structured by a detailed division of labor organized by Quesnay, who acted as the master of a writing workshop. After the death of Madame de Pompadour, Quesnay's prominent patroness, in 1764, the situation changed. Quesnay's aura of power at court disappeared and with it, his writing workshop. The center of gravity of physiocracy moved from Versailles to Paris, and the workshop was gradually replaced by the physiocratic school.

Cambridge as a Place in Economics

Abstract: .Yet Cambridge, as we have already seen, was also able to allow Sraffa to develop a very important part of his own research on a subject some-what remote from what was being discussed in Cambridge (or indeed any -where in the world) in the 1930s and 1940s. In fact, after having presented to Keynes and Pigou, in 1927–28, the basic propositions of the research that was to lead to the 1960 publication of Production of Commodities by Means of Commodities (later at the center of the Cambridge capital con-troversies), Sraffa seems to have discussed the content and the progress of this work in Milan only with his Italian friend Raffaele Mattioli, and in Cambridge only with mathematicians whose help he needed to solve some analytical problems (Kurz and Salvadori 2001, 2005). This, too, may be seen as an instance of the way Cambridge nurtured research for someone who, like Sraffa, came to it as a foreigner, an emigre, and a true outsider. 5. Tentative Conclusions The place Cambridge seems to us important for the formation of these economists’ group identity for a number of reasons, which we list here as tentative and provisional conclusions.Through personal relations and a certain lifestyle (the college-oriented life of the don), the transmission of ideas took on a very particular form—centered on the tutorial system, exchanges in writing, and the debating societies’ style of comparing and contrasting certain positions.The group’s system of values cemented their sense of militancy as econ -omists, which was more important to them than academic and professional success. In a 2 October 1986 interview with Maria Cristina Marcuzzo,

From Religious Revivals to Tariff Rancor: Preaching Free Trade and Protection during the Second American Party System

Abstract: The religious awakening of the early-nineteenth-century United States opened deep rifts in the generation that overlapped and followed it. The rifts emerged from questions of religious doctrine and evangelical method, then widened to encompass worldly politics and ideologies, including the tariff. Two authors and advocates who represent well the religious influence on the U.S. tariff controversy are the Reverend Joshua Leavitt (1794–1873) and the Reverend Calvin Colton (1789–1857). Both were swept up in the religious revivals of the 1820s, and both became, over the following two decades, leading contributors to the second party system's debates over slavery and the tariff. Their contributions to the tariff debate were to conjoin the arguments for free trade and protection, within and on the periphery of the Whig Party, to their religiously inspired views about the abolition of slavery.

The Ascent and Decline of Catholic Economic Thought, 1830–1950s

Abstract: The emergence of Catholic economic thought in the late nineteenth century was preceded by several attempts to deal with some crucial moral issues arising out of economic activity, although economic questions did not rank high in the church's concerns until the second half of the nineteenth century. From the 1830s onward we identify several political economists bearing a Catholic viewpoint and the development of intellectual networks in several continental European Catholic countries in the second half of the nineteenth century. At the end of the century these efforts received a significant stimulus with the first papal documents promoting the social doctrine of the Catholic Church. By the early decades of the twentieth century, Catholic economic thought had flourished. In this article we deal with the evolution of Catholic economic thought in western continental Europe between 1830 and the early 1950s, especially the efforts to develop a Catholic school of economic thought, with a specific agenda of research and of social and economic transformation.

The Changing Theological Context of Economic Analysis since the Eighteenth Century

Abstract: Economic analysis (as we understand the term today) first appeared in France at the end of the seventeenth century as a consequence of Jansenist theodicy. Throughout the eighteenth century, political economy (the study of wealth, and not to be confused with economic analysis) was supposed to be compatible with Christian belief and of service to Newtonian natural theology. This changed suddenly in 1798. Thomas Robert Malthus's first Essay inaugurated “economics” (the study of scarcity), seemingly incompatible with the Christian religion. Richard Whately's distinction between “scientific” and “religious” knowledge protected each from the other for a while. But Charles Darwin's evolutionary theory seemed to destroy that distinction, and so to discredit religion and theology. A variety of strategies for relating economics to theology has been adopted since that time by those economists who wish to remain religious believers.

On Ricardo's Method: The Scottish Connection Considered

Abstract: Historians of economic thought who try to connect Ricardo's method with a philosophy generally focus on associationism and pay no attention to Dugald Stewart's influence. In point of fact, Ricardo's method can be connected with Stewart's teaching through his connection with James Mill and Francis Horner. Moreover, the difference between practical and scientific knowledge which is, according Stewart, a difference in the use of abstraction, coincides with Ricardo's distinction between questions of facts and of principles. This connection, which appears in Ricardo's work, brings into question the common view of Ricardo's method as a hypothetical one and leads to consider the role of abstraction as a crucial one.

Hayek on Mill

Abstract: It is perhaps an understatement to say that trying to understand F. A. Hayek’s assessment of John Stuart Mill is a complicated matter. Hayek referred to Mill frequently. Sometimes, and particularly in The Constitution of Liberty (1960), he praised him. What may surprise those who associate both Mill and Hayek with the classical liberal tradition is that more often, and this in writings that both preceded and followed publication of The Constitution of Liberty, Hayek criticized Mill. Moreover, the criticisms were not all of a piece, but focused on different aspects of Mill’s work. Part of the problem is that Mill, like Hayek, made so many different contributions: among those mentioned by Hayek were his System of Logic ([1843] 1973), the Principles of Political Economy ([1848] 1965), and of course On Liberty ([1859] 1977). In addition, Mill’s own views evolved, sometimes rather dramatically, over time. Which Mill—the doctrinaire utilitarian, the romantic, the one impressed by Auguste Comte or the one who disavowed him, the Mill of the early or of the later editions of The Principles, the pre– or post–Harriet Taylor Mill—is the one whose ideas Hayek is examining? Furthermore, it was not just Mill’s own thought, but

Religion and Political Economy in Early-Nineteenth-Century France

Abstract: There was in early 19th century France a widespread revival of religious sentiment, following the turmoil of the Revolution and the intellectual onslaught upon religion so central to the French Enlightenment. Simultaneously, political economy became more prominent among publicists and political elites. These two developments influenced those who sought to further a modern society and who in their different ways expressed a new approach known as "industrialisme". These writers put forward several versions of the links that should exist in industrial society between political economy and religion. We first note that a truly a-religious political economy based on self-interested behaviour and utilitarianism, such as the one presented in J.-B. Say's writings, gained acceptance for most people interested in the "new" science. This point of departure is important not only because Say's thought became a major reference for the different conceptions of "industrialisme", but also because it provided a utilitarian evaluation of religious institutions and feelings. Next, we notice that some other conceptions of "industrialisme" can be found in the leading members of two distinct schools of thought: the Groupe de Coppet, with Germaine de Stael and Benjamin Constant; and the less homogeneous group formed by Claude-Henri Saint-Simon, the Saint-Simonians and Auguste Comte. Both approaches presumed that self-interest was incapable of uniting the social body, and placed much emphasis on religious feelings in explaining how societies could function harmoniously. We examine how Stael and Constant dealt with these issues and how, while accepting the principle of competition in economic activity, their conception of the specific nature of liberty in a modern society led them into a critique of utilitarianism and morals based on interest; and also to the idea that the harmonious functioning of the industrial society requires a morality based upon religion. We then study how "industrialisme" was modified to fit the views of modern society held by Saint-Simon, the Saint-Simonians, and Auguste Comte. Political and civil liberty was not a central matter for these writers. Instead, they rather favoured the creation of organisations capable of regulating a chaotic social order; and in this perspective new forms of religion were given a prominent place, specifically formed to suit the industrial social order and based on philanthropy or altruism. In the concluding section we briefly note that, after all such criticism, some leading liberal economists reacted in defence of political economy and developed their own conceptions of the links between economics and religion: they rejected the idea of the necessity of a new religion and insisted instead on traditional Catholic ideas. But then political economy and religion were conceived as two pillars of a conservative order following the rise of socialist ideas.

Linking Strategic Interaction and Bargaining Theory: The Harsanyi-Schelling Debate on the Axiom of Symmetry

Abstract: This paper analyzes the early contributions of John Harsanyi and Thomas C. Schelling to bargaining theory. In the 1950s, Harsanyi draws Nash's solution to two-person cooperative games from the bargaining model proposed by Zeuthen (1930), and Schelling proposes a multifaceted theory of conflict that, without dismissing the assumption of rational behavior, points out some of its paradoxical consequences. Harsanyi's and Schelling's contrasting views on the axiom of symmetry, as postulated by Nash (1950), are then presented. This debate explains why, although in the early 1960s two different approaches to link strategic interaction and bargaining theory were proposed, only Harsanyi's insights were fully developed later.

"losing my religion": sidgwick, theism, and the struggle for utilitarian ethics in economic analysis

Abstract: Henry Sidgwick's loss of religious faith is central to understanding the origins of the Cambridge school of welfare economics. The most prominent “public” manifestation of this loss and its impact on Sidgwick's thought was his Methods of Ethics, which was at once the capstone work of classical utilitarianism, cementing Sidgwick's place as one of the great philosophers of ethics during the Victorian period, and the source of his deep-seated need for the very religion to which he himself could no longer subscribe. Sidgwick's studies in political economy carried this ethical perspective into the economic realm, though the major impact came via his influence on A. C. Pigou, whose welfare analysis was very much a restatement of the Sidgwickian view, but undertaken with Marshallian analytical underpinnings. This article discusses Sidgwick's crisis of faith and his subsequent attempt to devise an ethical basis for social life that was divorced from religious concerns yet consistent with his own more general theistic stance. It also shows how the results of this search affected Sidgwick's work in economics and, ultimately, the Cambridge welfare tradition.

'A hard battle to fight' : natural theology and the dismal science, 1820-1850

Abstract: William Whewell's and Richard Jones's criticism of Jeremy Bentham's and David Ricardo's “dismal” views on the relation of theory and evidence in political economy was motivated by the former's views on the structuring role of natural theology for questions of method and evidence in the sciences, including political economy. In comparison, natural theology was for Richard Whately as structuring on these issues as it was for the Cambridge men. Whately's view on natural theology, however, conformed with the Ricardian predilection for theory over facts. The differences between the Cambridge men and Whately became manifest after (or better: during) the publication of Jones's book on rent in 1831 and led to a somewhat acerbic exchange of views on the role of definitions in science and the use of history for establishing scientific evidence. As far as political economy was concerned, Whately's stance carried the day in Victorian England.

Utilitarianism without Utility: A Missed Opportunity in Alfred Marshall's Theory of Market Choice

Abstract: This article argues that Marshall's theory of market choice was originally elaborated within the classic framework of the use value/exchangeable value dichotomy, with reference to a version of utilitarianism that did not assume measurable utility. The key concepts were those of marginal transaction and consumer surplus or rent, both of which were expressed exclusively in terms of money transfers. Later on, Marshall moved toward an explicitly utilitarian framework by emphasizing the marginal utility of money, possibly because he had stumbled on the problem of the determinateness of marginal demand prices. The article shows that, by moving in this direction, Marshall committed himself to a standpoint that undermined the generality of his approach to consumer behavior and obscured his promising ideas concerning interpersonal comparisons of welfare. It is also argued that this move was actually unnecessary, as the early framework could have enabled Marshall to deal with the problem of determinateness in less restrictive terms.

Keynes on Kalecki's Theory of Taxation: Contents Approved, Method Questioned

Abstract: This paper considers Keynes's comments on two essays by Kalecki addressing the effects of three different taxes on national income and employment. Keynes appreciated the highly compressed, clearly shaped, and convincing character of Kalecki's analysis, but sharply criticized his method, pointing out that Kalecki's theoretical conclusions were based on the tacit assumption that the decisions of consumption and investment are “independent from” the levy. Keynes's criticism is fully coherent with the method of analysis he adopted in the General Theory and with his critique of the “classical” theory of employment.

Keeping Faith, Losing Faith: An Introduction

Abstract: Although some of the early efforts of Western social and political theorists were made in opposition to religious interpretations of the world, religious belief held sway throughout the early modern period as the dominant means to interpret human experience.1 Sometime in the nineteenth century, however, economics and the other social sciences began to develop analytical models that were completely severed from theology and religious belief. For example, in the late eighteenth century, Thomas Robert Malthus’s famous Essay on the Principle of Population (1798) was animated by his religious beliefs, but by the late nineteenth century, Henry Sidgwick and Alfred Marshall were each working to develop an analytical apparatus that, while still focused heavily on social ethics, was completely secular. Viewed from the perspective of the sociology of religion, as it fi rst was being contemporaneously developed by Émile Durkheim and Max Weber, this secularization of economics would appear to be nothing more than