Juan Noyola is widely credited as an originator of the Latin American “structuralist” theory of inflation. His key contribution is a 1956 article comparing inflation in Mexico and Chile. However there is disagreement about the nature of this contribution, or even what “structuralist” means in this context. I argue that Noyola's innovation was grounding money and credit in a highly institutional political economy of class conflict. This grounding endogenized not only money, but also policymaking and the State.

An early post-WWII debate concerned the most desirable demand and inflationary pressures at which to run the economy. Context was provided by Keynesian theory devoid of a full employment equilibrium and containing its mainly forgotten, but still relevant, microeconomic underpinnings. A major input came with the estimates provided by the original Phillips curve. The debate seemed to be rendered obsolete by the curve’s expectations-augmented version with its natural rate of unemployment, and associated unique equilibrium GDP, as the only values consistent with stable inflation. The current behavior of economies with the successful inflation targeting is inconsistent with this natural-rate view, but is consistent with evolutionary theory in which economies have a wide range of GDP-compatible stable inflation. Now the early post-WWII debates are seen not to be as misguided as they appeared to be when economists came to accept the assumptions implicit in the expectations-augmented Phillips curve.

One of the significant contributions of the The Wealth of Nations was to bring to the consciousness of economists the centrality of the pursuit of self-interest in economic affairs. Following the publication of the The Wealth of Nations, economists increasingly assumed that the pursuit of self-interest was the prime psychological drive of mankind. As economics developed, modifications of the self-interest postulate occurred. Economists began to formally model the pursuit of self-interest and a specific form of the pursuit of self-interest ultimately came to dominate economists' thinking. Specifically, economists have taken a methodologically individualistic approach to this question. With rare exception, economists presume that the individual pursues self-interest more or less in “isolation.” As Frank Knight pointed out, the purely rational action of the economic man requires the complete absence of personal relations, in effect requiring persons to treat each other as vending machines (Knight 1960, p. 73). Robinson Crusoe alone on his island is thus the epitome of the economic man assumed by neoclassical economic theory.

Until around 1950, the German émigré Ernst Friedrich Schumacher (1911–1977) was a relatively conventional economist, believing in progress based on economic growth and developments in science and technology. Then, as he turned forty, he went through a period of prolonged self-examination and spiritual quest, which, amongst other things, led him to become critical of Western modernity. Developing a great interest in Buddhist spirituality and culture, in 1955 he travelled to Burma, where he spent three months as a United Nations consultant. His encounter there with the encroachment of Western development upon a traditional society proved pivotal for him, confirming his skepticism about modernity and stimulating him to write a renegade essay, “Economics in a Buddhist Country.” This experience in Burma shaped his work thereafter, as contributor to debates on development both East and West, as promoter of intermediate technology, and as author of the prophetic, popular book of 1973 Small Is Beautiful: A Study of Economics as if People Mattered.

This article argues that the self-love that motivates exchange in The Wealth of Nations (WN) can be seen as the desire for deserved approval discussed by Adam Smith in The Theory of Moral Sentiments (TMS). This often overlooked desire appears in TMS as the most representative kind of self-love. Exchange motivated by this desire emerges as the way to find confirmation through others’ appraisal of one’s own self-assessment, and thus to find an agreed-upon measure for respective deserved praise. The target in this economic relationship is that equivalence that signals mutual recognition of deserved esteem. Equivalence here is the aim and not the result of exchange, unlike a tug-of-war, where both parties try to give as little and gain as much as possible regardless of the recognition each deserves.

Frank Knight was a “grand theorist.” Like other grand theorists from Adam Smith to Friedrich A. Hayek, his interests extended beyond economics. In economics, his major writings focused on the most general problems of the discipline, his goal being to show the merits and limitations of the free enterprise system. He took a special interest in intersubjective uncertainty and the accompanying problem of agency. To benefit from an economic transaction an individual must rely on others (agents, broadly speaking) to perform actions even though he or she cannot be certain that the others will decide to perform the actions. Agency, in the broadest sense, is present in all relationships that are properly defined as economic. Knight apparently recognized that both the classical liberal's trust in free enterprise and the interventionist's distrust stem from their different views of the agency problem and of how best to solve it. Accordingly, he made the problem a centerpiece of his investigation of free enterprise in his celebrated Risk, Uncertainty and Profit (1921). The agency problem also plays an important role in the modern, or new institutionalist, theory of the firm. The new institutionalists aim to show that some observable economic relationship, rule or procedure in an organization, most notably a Coasean firm, is a result of the efforts of individuals to deal with the agency problem.

This topic is more in contemporary economics than in the history of economics, but in this case an historical perspective does help us to understand the present day. Roger Backhouse and Sheila Dow have approached the progress of heterodox economics mainly through the philosophy and methodology of the discipline. I take a more sociological approach. I see the issue as external to the discipline at least as much as internal.

The history of economics provides many examples of economists, such as A. A. Cournot, and J. H. Von Thunen, whose work became influential only long after it was written. Others, like Francis A. Walker, loomed large during their careers, only to fade in the discipline's memory. Irving Fisher's reputation has followed a much less common trajectory. Once the most cited monetary economist, the subject of major review articles and the center of controversies over theory and policy, Fisher lost the profession's attention, vanished from citation lists in macroeconomics, and was regarded as an embarrassment by colleagues in his university and his discipline. Then, after his death, his contributions to macroeconomics became increasingly cited and influential, as macroeconomics developed in ways that brought it closer to Fisher's approach. New approaches have been found prefigured in Fisher's work, as when a 1926 article of his was reprinted in the Journal of Political Economy in 1973 as “I Discovered the Phillips Curve” (Fisher, 1997, 8). Fisher was once caricatured in introductory textbooks as the supposed exponent of a constant-velocity version of the quantity theory of money, the exemplar of simplistic pre- Keynesian economics swept away in the Keynesian Revolution, but recently there has been attention to Fisher as, in Keynes's phrase, “the great grandparent” of The General Theory, “who first influenced me strongly towards regarding money as a ‘real’ factor” (Keynes, 1971-89, 14, pp. 203 n.; Dimand, 1995; Kregel, 1988).

This paper proposes a genealogy of the concept of homo œconomicus as it emerged from the methodological debate on the economic agent of political economy. If John Stuart Mill gave birth to the economic man in his 1836 essay “On the Definition of Political Economy,” he certainly did not baptize him. The expression was introduced by Francis A. Walker after Mill passed away in the 1870s. Economic man acquired its Latin name of homo œconomicus under the pen of French Catholic economist Claudio Jannet in 1878. Yet, only at the end of the century did Maffeo Pantaleoni (1889) proudly reclaim homo œconomicus as a building block of pure economics. In reaction to the evolutionary hedonism of Pantaleoni, Vilfredo Pareto then cleansed the concept of homo œconomicus and realized the Millian project of an abstract science based on an economic agent.

James Buchanan and Gordon Tullock took a keen interest in the United States Supreme Court’s reapportionment decisions of the 1960s, which established a “one person, one vote” standard for state legislative apportionment. This paper traces the long arc of Buchanan and Tullock’s opposition to the “one person, one vote” standard. The Calculus of Consent offers a highly qualified efficiency argument against “one person, one vote,” but over time Buchanan and Tullock grew even more vocally critical of the decisions. Buchanan ultimately advocated a constitutional amendment overturning “one person, one vote” in a private set of recommendations to Congressional Republicans. This paper additionally assesses Tullock’s 1987 complaint that scholars and judges neglected The Calculus of Consent’s analysis of reapportionment. A review of the reapportionment literature between 1962 and 1987 demonstrates that while The Calculus of Consent was frequently cited, the literature generally ignored its analysis of the efficiency of apportionment standards.

The piece begins with the proposition that the economic perspective on human activity must reflect the fact that human beings transact in a world defined for the actors by social norms. An analysis of the crisis of 2008 is offered as a demonstration of the value of adopting such a broader perspective. Part II offers an historical model based on Adam Smith’s Moral Philosophy of such a broader analysis. The piece closes with the case that the history of ideas offers alternative perspectives on the questions we explore in economics today, and thus can serve as a valuable resource for constructive skepticism of the current discourse.

HES Presidential addresses often attempt to answer a substantive question (or number of related questions) in the history of economic thought. The answers provided are not “answers” in the sense that one finds an answer to a simple numerical problem; rather they are historical narratives, stories, that bring the listener/reader to a new, and hopefully deeper, understanding of a particular author, piece of economic literature, or episode in the history of economic thought.

During a crucial period of United States history, 1880s–1940s, ideas developed in political economy were the core component of a transformation in the way Americans thought about the social and political order. These decades, the era of the elaboration in the United States and internationally of what historians of liberal reform thought refer to as the New Liberalism, were the site of a general reassessment of the constitutive ideologies, Smithian/Lockean liberalism, and a democratized, commercialized version of classical republicanism hanging over from the agrarian republic. Scary, unexpectedly turbulent conditions in an economy plagued by recurrent cyclical downturns in investment and employment, accompanied by unprecedented levels of social conflict, placed a premium on new knowledge. This need arose just as the academic professionalization of the social sciences, the rise of critical political journalism, and highly mobilized women's and labor movements began providing impressive new analytical talent. Efforts to find answers to pressing issues raised by the “social question” were intended initially by most of those involved as a salvage operation for what remained valid among key tenets of American liberalism regarding individualism, competition, the efficacy of the market, and the role of the state. Instead, they led ultimately to a reconstruction in public philosophy, at least on the scale of the one underway since the 1970s, with the “the return of the market,” the unprecedented sway of neoclassicism, and the multidisciplinary appeal of rational choice theory.

Thus spake Edwin Cannan, professor of economics at the London School of Economics (LSE) and member of the Council of the Royal Economic Society, publisher of The Economic Journal (EJ). From 1911 to 1945, Keynes was editor of the EJ, arguably the most prestigious journal in British economics. At the time of Cannan's remark in February 1934, when the early drafts of The General Theory of Employment, Interest, and Money were taking shape and Keynes had assumed leadership of a movement to reconceptualize economic theory, he not only had ideas of his own but an uncommonly robust sense of their importance. Although Keynes's conception of the ultimate purpose of economic theory remained true to the Marshallian tradition in which he was trained— forging scientific tools to improve the lot of humankind—his immediate objective was less pacific: the destruction of classical economics (Keynes 1935, p. 36). In his metaphor, classicism was a citadel fortified by an invincible superstructure constructed over generations by economists of great theoretical power and ingenuity, from David Ricardo and John Stuart Mill to Alfred Marshall and his own contemporary, Arthur Cecil Pigou. Because the citadel was vulnerable only in its “fundamental groundwork,” an assault would succeed only by undermining this foundation (Keynes 1973a, p. 533).

This paper explores the neglected theory of entrepreneurial profit proposed by Eugen von Böhm-Bawerk. Although historians of thought often dismiss Böhm-Bawerk’s writings on this topic, we argue that he did develop a coherent theory of entrepreneurial decision making and profit distinct from his theory of interest. We first discuss Böhm-Bawerk’s ideas about futurity, uncertainty, and expectations in his theory of goods, which help form the foundation of his theory of entrepreneurship. Further, we connect his notion of uncertainty with his thoughts on money. We then turn to several of Böhm-Bawerk’s ideas about entrepreneurial profit. Entrepreneurs purchase and allocate factors of production; these decisions are speculative because production takes time, and therefore entrepreneurs bear the uncertainty of the market. Their judgment thus yields profits or losses based upon the ability to anticipate the future state of consumer demand. Finally, we discuss the views of several of Böhm-Bawerk’s contemporaries, in order to place his theory in historical context.