Public concern over the so called “trust problem” in the United States between the end of the nineteenth century and 1914, the year of the passage of the Clayton and Federal Trade Commission (FTC) Acts, was reflected in the considerable contemporary literature on the subject. Not surprisingly, professional economists actively participated in this debate. Their thinking directly and indirectly influenced the legislation of 1914 in a way that cannot be said of the Sherman Act of 1890 (Mayhew 1998). A survey of the most important of these professional writings shows that, among the several voices animating the discussion, John Bates Clark's was perhaps the most influential. In this connection, Joseph Dorfman argues that John Bates Clark's second edition of his Control of Trusts (1912), co-authored with his son John Maurice, “played a formative historical role in policy making, for it provided the most systematic exposition of the view on trusts, that was embodied in 1914, at President Woodrow Wilson's urging, in the Clayton Act and the FTC Acts.” “From this standpoint,” continues Dorfman quite emphatically, “The Control of Trusts caught the dominant reform interest and in turn became a contributing force in shaping the trend of the socio-economic development of the nation” (1971, p. 17). Apart from the 1912 monograph, John Bates Clark devoted considerable attention to the problems of trusts and industrial combinations during much of his career, both in his professional writings and in his frequent contributions to newspapers and popular reviews.

In the eighteenth-century Scottish and British cultural context, idleness was a central issue for religion, literature, art, and philosophy. This paper analyzes the reflections of David Hume and Adam Smith on idleness and commercial society. Hume advanced his most provocative view on the subject in his Dialogues Concerning Natural Religion (1779), where idleness is represented as the endowment made by the “very sparing hand” of the “author of nature” to humanity. My argument is that Smith’s view on idleness that was advanced in the Wealth of Nations (1776) is connected to Hume’s Dialogues, as Smith’s invisible hand defeats idleness through a combination of self-interest, the propensity to exchange, and the division of labor. The broader aim of this study is to add to the philosophical relationship between the Scottish philosophers.

Benjamin Graham’s amateur proposal for a commodity reserve currency (1937, 1944) has attracted the attention of professional economists and policy makers, but usually for their own prior purposes and designs. This paper places the proposal in the context of Graham’s own time and the intellectual resources available to him, with a view to elucidating both Graham’s own sense of the proposal and the reasons the proposal earned the reception it did.

François Quesnay and the Physiocrats are probably best remembered for three things: the Tableau Economique, their view that only agriculture was productive, and for advocating a single tax on landowners. Over the years, attention has focused on the first two doctrines. Numerous studies of the Tableau have attempted to explain how it operates (Eagly 1974; Eltis 1975; Meek 1963; Pressman 1994; Woog 1950). Adam Smith's (1937, p. 638 f.) critique of the assumption that manufacturing is sterile is well-known. In contrast, there have been few analyses of the single tax proposal. Previous studies have either reported the views of Quesnay and the Physiocrats on taxation (Einaudi 1967) or compared the tax policies of Quesnay to other economists (Buurman 1991).

In this paper we examine the criticism that Knut Wicksell advanced against Léon Walras’s treatment of capital and interest at the end of the nineteenth century, as well as the views of two distinguished followers of Walras concerning the points raised by the Swedish economist. As regards the first aspect, it should be noted that the criticism put forward by Wicksell at that time refers to the earlier editions of the Éléments, in which circulating capital is excluded from the analysis. We thus endeavor to clarify Wicksell’s remarks on the consequences of that exclusion for both the representation of the social production process and the determination of the interest rate. As to the second aspect, our discussion indicates that the appropriate way of treating the capitalistic element of production was an unsettled issue within the small circle of Walras’s followers at the end of the nineteenth century.

Liberal economists’ attitudes towards the welfare state are examined to see how clearly neoliberalism can be distinguished from other forms of liberalism. Three questions are asked. First, how could Friedrich Hayek believe he could accommodate elements of the welfare state agenda set by William Beveridge and John Maynard Keynes into his thinking? Second, why did Hayek become increasingly critical of the welfare state? Third, how far did Lionel Robbins, John Jewkes, and Alan Peacock agree with him? All three might be regarded as neoliberals according to the litmus test set by Philip Mirowski and Dieter Plehwe: that is, membership of the Mont Pèlerin Society or a think tank associated with the Atlas Economic Research Foundation. Yet, Robbins, Jewkes, and Peacock are on a spectrum between Mirowski’s definition of neoliberalism as a belief that freedom is to be found in the unfettered market, and classical and democratic liberals’ belief that people have to be nurtured to become effective citizens and have to be protected from the market’s disruptive effects. It is suggested that a nuanced approach is required in explaining why liberal economists came to believe the welfare state should make more use of markets and pricing systems for registering preferences and apportioning resources.

James M. Buchanan is a unique figure in modern economics. A Nobel Prize winner and a pioneer of public choice theory, he is in some ways a respected pillar of the profession. Yet at the same time, he is an outspoken critic of certain fundamental practices of mainstream economics who refuses to confine his work within the conventional boundaries of the discipline. Whether seen as an innovator or an iconoclast, he has consistently been among the most methodologically and philosophically self-aware of the profession's elite.

Friedrich Hayek’s business cycle theory withered throughout the 1930s as he admitted that its underlying model of Böhm-Bawerkian roundaboutness was incomplete and inadequate. In 1934, Hayek started a two-volume book on capital theory, completing only one volume in 1941. Curiously, Hayek ([1941] 2009) cites John Hicks’s (1939) Value and Capital but not the financial measure of roundaboutness that Hicks suggested as a substitute for Böhm-Bawerkian roundaboutness. In 1967, in “The Hayek Story,” Hicks criticized the inexplicable lags. Hayek maintained his view that consumption was sticky and responded to Hicks with a mound-of-honey analogy. Nevertheless, Hayek maintained that his business cycle theory was fundamentally correct and continued to hope that others might someday discover a capital structure theory to undergird it. Toward fulfilling Hayek’s hope, we suggest augmenting the canonical stages of production with a sequestered-capital stage where products are invented, productized, and inventoried prior to launch, uncoordinated by observable prices.

Economists and finance researchers have long recognized the “close relation between the measurement of inequality and the measurement of risk” (Breitmeyer et al., 2004). Economists today agree that a measure of income inequality must respect the Pigou-Dalton transfer principle, that is, inequality cannot increase with a transfer from a richer person to a poorer person. Finance researchers today agree that a measure of risk must respect the diversification principle, that is, risk cannot increase when portfolios are combined. Where did these convictions originate? While both principles were advocated early in their respective fields, they were not viewed as definitive until relatively recently. In both fields major empirical and theoretical efforts were mounted in support of various conceptualizations at odds with these two principles. For example, Robert Gibrat advocated the use of the variance of log income despite the fact it is inconsistent with the Pigou-Dalton principle. In finance, value at risk (VaR), although it can violate the diversification principle, was widely advocated. People supporting research programs at odds with Pigou-Dalton or the diversification principle, based those programs on ambitious empirical and theoretical claims about distributions. Such claims could have been right and are not a priori or logically false. The purpose of this paper is to review these “at odds” conceptualizations, the types of arguments advanced for their legitimacy, and the reasons they have been given up.

In Christian Weber's opinion in the preceding article in this journal, although Vilfredo Pareto never wrote his utility function in the Cobb-Douglas form U = rβbrγc, he did present an early, if incomplete, discussion of a Cobb-Douglas utility function. Weber's sections II and III try to document his opinion.

Weber's section II examines Pareto's “Considerazioni” (1892) on the assumption that the marginal utility πi, of good i depends only on the level ri, of consumption of that good. Section III examines Pareto's Manual (1909) on the assumption of “additive separable” utility functions.

“The stimulation given by the General Theory to the construction and testing of aggregative models may well prove to be Keynes's chief contribution to economics in the longer perspective of historical judgement.”

A standard reading in the history of economic thought sets the classical stream of economists drawing upon the influence of Adam Smith (Jean-Baptiste Say, David Ricardo, etc.) in opposition to a “black box” of social thinkers (Louis Blanc, Fourierism, Saint-Simonianism, Jean de Sismondi, Robert Owen). This article, however, argues that, in the first quarter of the nineteenth century, the Saint-Simonians and the liberal economist Jean-Baptiste Say can be seen to adopt convergent views during the famous controversy about commercial gluts.

First, we show that the Saint-Simonians and Say both see undersupply and lack of industry as causes of gluts. Next, we assert that their intellectual affinities are also visible in their belief that increasing production remains an appropriate solution for gluts. Finally, this convergence is explained by their common belief in industrialism: Saint-Simonianism is embedded in a French industrialist tradition for which Say can be taken as representative. We argue that their common belief in industry explains their convergence.

Since Moses Abramovitz's “classic” paper on “Catching-Up, Forging Ahead, and Falling Behind” (1986) economists have become increasingly aware again of the significance of “social capability” for processes of economic change. During the past twenty years much research has been done on “soft” determinants of development and growth. Especially some of the so-called new institutionalists and evolutionary economists have now returned to the roots of the institutional research program by acknowledging that “ideas matter” in the process of institutional change. However, it is still often overlooked in the literature that the cognition of social reality is deeply intertwined with the general world-view prevailing in a given society. Certainly, such general world-views are partly determined by the level of economic and technological development, but they are also a reflection of deeply rooted cultural traditions. In particular, the highly divergent outcomes of economic and political transition in the formerly socialist countries of Central and Eastern Europe have brought the connection between culture, ideas, and institutions to the fore again (see, for example, Winiecki 2004). Therefore it is all but an accident that it is one of the leading transition experts who has recently called on economists to “seek a better understanding of the role of values and norms in shaping both ideas and institutions” (Roland 2004, p. 128).