In 1564, Leonhard Fronsperger, a military expert and citizen of the Free Imperial City of Ulm in Upper Germany, publishes the booklet “On the Praise of Self-Interest” (“Von dem Lob deß Eigen Nutzen”). Using the form of a satirical poem, he demonstrates how the individual pursuit of self-interest can lead to the common good. Writing long before Bernard Mandeville and Adam Smith, Fronsperger presents a thorough analysis of all kinds of self-interested social, political, and economic relations. His praise of self-interest demonstrates how, over the sixteenth century, the interplay of economic success (in particular in major trading cities), a more realistic conception of human behavior, and some aspects of humanism and the Reformation led to a new understanding of the origins of economic dynamics. This becomes the basis for what Max Weber ([1904–05] 2009) would later term “the spirit of capitalism.”

With the coming of marginal utility theory, the economists of the late nineteenth century were left with a theory of exchange values, but not with a theory of value. For example, William Stanley Jevons suggested that the concept of value be dropped from economics, leaving behind only vectors of exchange ratios (Jevons 1879). Not a few general equilibrium economists today hold much the same view. However, then, as today, there were seemingly fundamental economic questions that required a more general concept of value. Whenever economists turned to describing the movements in the economy over time or comparing the economies of different countries, they inevitably wanted to make statements about changes or differences in the real value of goods.

The historian of economics encounters special difficulties in dealing with a heterodox economist. When one considers someone who is orthodox, basic notions can be taken for granted, and this enables the historian to zero in on meaningful issues without first having to provide an extensive introduction dealing with fundamental notions which have to be understood if the significance of what is being said is to be grasped. On the other hand, if one omits this step when dealing with the heterodox the analysis is not likely to be very meaningful. This special difficulty is much compounded where the heterodoxy is methodological, as it is with Wesley Clair Mitchell. What Mitchell tried to do was to reconstruct economics, to convince economists to adopt a different approach to the very way they conduct their inquiries. John Stuart Mill had laid down the law that extensive observation of specific experience was of no help in the attempt to derive economic theory, and mainstream economists generally went along with him on this. Mitchell disagreed and attempted to show that by building on different foundations a more “scientific” and useful economics could be derived. The interesting question for the historian of economics is: What can we learn from Mitchell's experience? It is here that we run into the problem that I noted at the outset.

Luigi Einaudi was an authoritative Italian economist and a leading representative of economic and political liberalism in Europe. After the Second World War, he became governor of the Bank of Italy and president of the Italian Republic. This paper analyzes his role as opinion maker from the end of the nineteenth century until the 1920s, when he was a leading columnist at La Stampa and the Corriere della Sera, the most influential newspapers in Italy at that time. It focuses on the scope and limits of Einaudi’s efforts to broaden consensus in Italian public opinion on the principles of economic liberalism and free competition. To this end, it investigates Einaudi’s journalistic style, his views on the role of the newspapers, and his large following among the public. Further sections analyze the main issues tackled by Einaudi in his articles in the Corriere and the systematic work of propaganda he enacted during World War I to convince the Italian households to reduce consumption and to finance the military expenditure. A final section deals with the “reconstruction program” devised by Einaudi in the early 1920s with the aim of restoring price stability and fiscal restraint, his efforts in the Corriere to propagate this program, and his forced retreat from journalism after the beginning of the fascist regime in 1924–25.

This paper aims to show how the 100% money proposal, which Irving Fisher came to support in 1935, connects to the rest of his work on monetary instability—in particular, to his credit cycle analysis of 1911 and his debt-deflation theory of 1932–33. Behind these respective analyses, we identify a common explanatory pattern of monetary fluctuations, the “debt–money–prices” triangle, which we use to show how Fisher’s explanations evolved over time, and how his advocacy of 100% money came as a logical conclusion.

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”

WN I.ii.2

Following World War II, the director of the social sciences division at the Rockefeller Foundation, the industrial economist Joseph H. Willits, thought it important to extend its activities to Europe, especially France. His agenda was to strengthen institutional economics and to create modern research centers with a view to stabilizing the political situation. In the postwar decade, almost all economic research centers in France were funded by the Foundation, which helped provide greater autonomy to French economists within academia but failed to reshape French economic training and research.

Knut Wicksell’s formulation of monetary economics as the study of the relation between aggregate supply and aggregate demand played an important role in the development of macroeconomics. Wicksell’s contributions are better understood if we consider the Walrasian roots of his approach. Wicksell pointed to two shortcomings of Léon Walras’s theory: incomplete treatment of the demand for money, and lack of a concept of capital stressing the time element. Wicksell was influenced by Walras’s notions of the tâtonnement by which markets solve the equations and of the zero-profit entrepreneur. Nevertheless, Wicksell’s interpretation of the dynamics of the credit market, with a price (interest rate) distinct from its equilibrium (“natural”) level and the implicit recognition that the latter could assume negative values, did not fit into the Walrasian tâtonnement mold. As the first to produce textbooks on both theories of value and money, Wicksell was confronted with the problem of how to establish connections between them.

The dispute between Hollander and Peart, and Hirsch, turns on the nature and role of verification in Mill's perception of the appropriate method for Political Economy. Professor Hirsch maintains against us that, for Mill, the models constructed by political economists are insulated from verification. His case is based on two counterclaims. First, that when Mill writes of “verification” in Book III of the Logic, he has in mind a procedure differing from that appropriate for Political Economy, which allows only “indirect verification” (outlined in Book VI). Hirsch finds that Hollander and Peart confuse the two. Secondly, since the contexts of our case studies often relate to policy formulation, Hirsch finds our elucidations of an appeal to experience of a more basic order to be unconvincing.

Our paper analyzes and compares two attempts at integrating unemployment in macroeconomics. The first, due to Peter Diamond, consists in a search model exhibiting multiple equilibria and wherein cycles may be produced. The second is due to David Andolfatto and Monika Merz, who, more or less simultaneously, constructed models enabling the integration of the matching function into RBC modeling. In the first sections, we present the methodology upon which our paper is based—Axel Leijonhufvud’s decision-tree insight—and briefly describe these three economists’ motivations and the context in which they were working. We continue with recounting the birth and further development of the search paradigm upon which Diamond’s, Andolfatto’s, and Merz’s attempts were based. These preliminaries settled, we address the heart of the paper, the critical analysis of their respective contributions. Our interest lies specifically in how they made their way in the development of the field. We explain why Diamond’s model, which ambitioned to rival Robert Lucas’s explanation of business fluctuations, did not live up to its author’s expectations. Andolfatto’s and Merz’s project was less ambitious, yet their model became an established component of the RBC program—but at the price of abandoning several constitutive traits of the search approach.

Commitment to the behaviorist approach to utility theory, to the usefulness of mathematics in economic analysis, and to equalization of the marginal utility of income as a principle of just taxation brought Irving Fisher and Ragnar Frisch to attempt to measure the marginal utility of income and led them to collaborate in forming the Econometric Society and sponsoring the establishment of the Cowles Commission, institutions advancing economic theory in connection to mathematics and statistics, and led Frisch to pioneer an axiomatic approach to utility and microeconomic theory.

This essay examines Frank Knight's view of monopolies in a market economy through an exegesis of his writings. A cogent development of Frank Knight's theory of monopolies is conspicuously absent in the economic literature. His prominence in the discipline and the influence his work has had on others establish his views as significant in the intellectural history of the theory of capitalist competition. The study focuses on Knight's characterization of monopolies and his views as to the appropriateness of coercive repressive regulatory policies. Also, capitalistic monopolies are discussed in the context of Knight's critical attitude toward economic and philosophic dogma and his disdain for centralized economic planning. The following section deals with the Knightian view of the nature of monopolies and categorization of types of monopolies. Then, the philosophical basis for Knight's position onmonopolies is presented. Specifically, the concentration of economic power in capitalism is explained in terms of Knight's perceptions of social reformers, static equilibrium analysis, and economic planning.

Jacob Viner’s The Customs Union Issue, published in 1950, is the one undeniable classic in its field. The first part of this paper traces the development of Viner’s thinking on preferential trading arrangements, places his work in context, and clarifies his position on disputed issues. The second part considers the reception of his work, from the enthusiastic early reviewers to the international economists who further developed the theory of customs unions, to contemporary practitioners. While practitioners consistently misread Viner, these misreadings were scientifically fruitful, and there are reasons why fruitful science might flow from poor contextual history. Among contemporary international economists, the book has become a classic, marking off and justifying a field of enquiry.

This paper focuses on the intellectual path through which Raúl Prebisch placed industrialization at the center of his economic thought and policy recommendations. It shows how the changing international context of the 1930s and 1940s made him depart from laissez-faire and adopt countercyclical policies, gradually abandoning the agrarian export-led growth model and finally embracing industrialization as the new growth strategy for Argentina and Latin America.

This paper examines two competing proposals for reforming and reviving confidence in the world monetary system, and the two economists, Robert Triffin and Fritz Machlup, who led the charge, one for centralized reserves, and the other for flexible exchange rates. Triffin would later claim that no one did more to ensure that floating exchange rates emerged the winner in the policy debate than Machlup because of his influence on academic economists and policy makers through the Bellagio Group conferences. The Bellagio Group conferences and Machlup’s leadership role are examined.

In 1971, Joan Robinson entered into a debate with the American neoclassical economist C.E. Ferguson in the Canadian Journal of Economics over the efficacy of the neoclassical theory of capital in light of the Cambridge Controversies raging at the time. Recent archival evidence from the Martin Bronfenbrenner Papers at Duke Archive has uncovered a heretofore lost reply Ferguson wrote to Robinson on or around September 1971, three months before his death. That reply is published for the first time as an Appendix to this article. Uncovering this reply, as well as correspondence between Ferguson, Bronfenbrenner, and Solow, shines a light into the American neoclassical camp of the late 1960s and early 1970s as the early phase in the Cambridge Controversies was drawing to a close.