The Marginal Revolution in Economics: Interpretation and Evaluation

372 Pages·1973·31.397 MB·English

by  R. D. Collison Black, A. W. Coats, Craufurd D. W. Goodwin (eds)

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1973
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© 1972, 1973, Duke University Press
L.C.C. card no. 72-91850
I.S.B.N. 0-8223-0278-0
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Contents
Preface vii
Was There a Marsginal Revolution 1 Mark Blaug 3
The Origins of l\farginalism Richard S. Howey 15
The Economic and .Social Context of the
Marginal Revolution of the 1870's A. W. Coats 37
Marginalism and the Boundaries of
Economic Science Donald 1Vinch 59
Mill and Cairnes and the Emergence of
Marginalism in England N. B.de Marchi 78
W. S. J evons and the Foundation of
Modern Economics R.D.Collison Black 98
Leon W alras' s Role in the "Marginal Revolution"
of the 1870s 1Villiam Jaffe 113
Vilfredo Pareto and Marginalism Vincent J. Tarascio 140
To What Extent Was the Austrian School Marginalist 1
Erich Streissler 160
The ''M arginal Revolution'' and the Decline and Fall
of English Classical Political Economy T. W. Hutchison 176
The Marginal Revolution and Concern with
Economic Growth Joseph J. Spengler 203
Marginalism and Marxism Ronald L. Meek 233
The Spread of Marginalism in Italy, 1871-1890 Piero Barucci 246
Marginalism in Japan Tamotsu, Matsuura 267
Marginalism Moves to the New World Craufurd D. W. Goodwin 285
The Adoption of the Marginal Utility Theory George J. Stigler 305
Marginalism: The Harvest G. L. S. Shackle 321
Retrospect and Prospect A. W. Coats 337
Index 359
Preface
THE
remarkable continuity of the main "orthodox" tradition of
economic analysis, from Adam Smith to John Maynard Keynes and
beyond, has often been cited as evidence for the view that economics
is a science-indeed, that it is the most scientific of all the social
sciences. During the past decade, however, it has been widely held
that the history of science is marked by periodic discontinuities,
''crises,'' or ''revolutions,'' and it is therefore appropriate to re­
consider the question whether the '' marginal revolution'' in economics
can be fitted into this category. As is well known, during the early
years of the 1870 's a handful of brilliant innovators in several different
countries published a series of pathbreaking ideas which, taken col­
lectively, exerted a significant influence on the course of economic
science in the ensuing century. But was this episode really an exception
to the apparent continuity in the development of economics? Were
the pioneer marginalists sufficiently united in purpose and comparable
in performance to justify us in grouping them together? When their
works are compared with the writings of their predecessors and suc­
cessors, do their contributions seem sufficiently novel and significant
to warrant the dramatic designation usually accorded them? In short,
was there in fact a marginal revolution? And if so, is it worth
commemorating?
This symposium was organized in the hope of casting light on
these and related questions. The essays published herein examine the
marginal revolution in a variety of perspectives: in terms of rthe
predecessors, the revolutionaries themselves, the diffusion of ideas by
their disciples and descendants, and their aggregate impact. The
selection of topics and the range of coverage are necessarily in­
complete, partly owing to unfores�eable circumstances and unavoidable
logistical obstacles, but partly because there is already a substantial
literature in the field, e.g., that dealing with the second generation
of marginalists.
The articles in this volume are based on papers that were prepared
for and discussed at a series of meetings held at the Villa Serbelloni,
viii THE MARGINAL REVOLUTION IN ECONOMICS
Bell io, Italy, from August 22 to 28, 1971, and the participants wish
ag
to record their warm appreciation of the direct support and generous
hospitality provided by the Rockefeller Foundation and its staff. Dur­
ing the five days of vigorous, continuous, and stimulating discussion,
many si ificant differences of opinion and interpretation emerged,
gn
with respect to both the specific topics under review and a number of
wider questions of method and purpose in the history of economics.
Some of these matters are examined in the opening and closing essays
by Messrs. Blaug and Coats. Others recur repeatedly throughout
the volume. While some papers were modified in response to the pro­
ceedings at Bellagio, neither the authors nor the editors have de­
liberately sought agreement on controversial matters. Indeed, in some
instances disagreements have been emphasized for the reader's benefit.
In conclusion, it should be noted that the symposiasts left Bellagio
with the heady feeling-no doubt influenced by the beauty and ex­
hilarating qualities of the environment-that the history 0£ economics
is a field of rich intellectual promise. There are so many unanswered
questions, untried methods of approach, and untapped research op­
portunities. Hence this collection should be regarded as a provisional
agenda for future work, not as a final word on the marginal rev­
olution.
R.D.C.B.
A.W.C.
C.D.W.G.
ThMea rgiRneavlo liuntE icoonn omics
Was There a Marginal Revolution�
Mark Blaug
I
THE
TERM '' marginal revolution'' is usually taken to refer to the
nearly simultaneous but completely independent discovery in the early
1870' s by J evons, Menger, and \Valras of the principal of diminishing
marginal utility as the fundamental building block of a new kind of
static microeconomics. It constitutes, so the argument goes, one of
the best examples of multiple discoveries in the history of economic
thought, which simply cries out for some sort of historical explanation:
it is too much to believe tliat three men working at nearly the same
time in such vastly different intellectual climates as those of Man­
chester, Vienna, and Lausanne could have hit by accident on the same
idea; it must be due to some common cause, which it is the job of the
intellectual historian to identify. The only trouble is that none of the
standard explanations are convincing.1 The levels of economic de­
velopment of England, Austria, and France were so different in the
1860's that all crypto-Marxist explanations in terms of changes in the
structure of production, or in the relationship between social classes,
tend to strain our credulity. Likewise, the utilitarian-empiricist tra­
dition of British philosophy, the neo-Kantian philosophical climate of
Austria, and the Cartesian philosophical climate of France simply had
no elements in common that could have provoked a utility revolution
in economics. In matters of economic policy, there was in fact conti­
nuity with classical thinking, and when Jevons and Walras wrote on
policy questions, as they did, there was little or no connection between
practical recommendations and their views on value theory. As for an
alleged "need" to defend the capitalist system, there was hardly
MARK BLAUG is Professor of Economics of Ediwation at the Institilte of Ed­
ucation of the University of London.
1. I canvassed the various explanations in my Economic Theory in Retro­
spect, 2d ed. (Homewood, Ill., 1968), pp. 303-8. The present note is an attempt
to rethink the issue raised in those pages.
4 THE MARGINAL REVOLUTION IN ECONOMICS
anything more suitable than the old wages-population mechanism of
classical economics or the writings of Bastiat, which owed nothing to
marginal utility. Lastly, there was no ;eal sense of intellectual crisis
in the 1860' s either in England or on the Continent which might have
encouraged a search for alternative economic models ; besides, his­
toricism was such an alternative model which continued to gain new
adherents after 1860, not only in Germany but also in England. In
short, the simultaneous discovery of marginal utility may call for an
explanation, but none of the available explanations is satisfactory.
Perhaps the difficulty is that the idea of a ''m arginal revolution''
is the sort of '' rational reconstruction'' of the history of economic
thought, like the concept of '' mercantilism'' or that of '' classical eco­
nomics'' as defined by Keynes, that is bound to generate spurious
historical puzzles. This is a large part of the problem, I think, but
it is not the whole of it. The debate over the marginal revolution
so-called has in fact confused two quite different things: the explana­
tion of the origins of the revolution (if revolution it was) and the
explanation of its eventual triumph. Some carelessness in the use of
rthe concept of ''explanation'' in intellectual history has further
clouded the debate.
II
A useful way to begin is to ask ourselves whether the discovery
of marginal utility by Je vons, Menger, and W alras was in fact a
"multiple," in Robert Merton's sense of the term. 2 After an intensive
investigation of hundreds of multiple discoveries in the history of
science, Merton concluded that ''a ll scientific discoveries are in prin­
ciple multiples, including those that on the surface appear to be
singletons" (p. 477). Lest this should appear to be "a self-sealing
hypothesis, immune to investigation,'' Merton conceded that it was
only true of certain kinds of science at certain stages of their develop­
ment: ''A great variety of evidence ... testifies then to the hypothesis
that, once science has become institutionalized, and significant num­
bers of men are at work on scientific investigation, the same dis­
coveries will be made independently more than once and that singletons
2. R. K. Merton, '' Singletons and Multiples in Scientific Discovery: A Chap­
ter in the Sociology of Science," Proceedings of the American Philosophical
Society 105, no. 5 (1961).
BLAUG • WAS THERE A MARGINAL REVOLUTION 7 5
can be conceived of as forestalled multiples" (p. 482). Although two­
thirds of his 264 intensively investigated multiples involved an in­
terval of ten years or less, Merton refused to confine the concept of
multiples to nearly simultaneous discoveries: '' Even discoveries far
removed from one another in calendrical time may be instructively
construed as 'simultaneous' or nearly so in social and cultural !time,
depending upon the accumulated state of knowledge in the several
cultures and the structures of the several societies in which they
appear" ( p. 486). Enough has now been said to indicate that the
concept of "multiples" is difficult to interpret, particularly in fields
less professionalized than the natural sciences. The gist of the
argument, however, seems rto be that "mature science" is char­
aeterized by cumulative, continuous progress such as to make the next
leap forward, if not absolutely inevitable, at least highly predictable.3
We may now ask: Was the state of economic science in the 1860 's
such as to make the eventual emergence of the marginal utility prin­
ciple a perfectly predictable phenomenon, in which case it is hardly
surprising that J evons, Menger, and Walras discovered it at just
about the same time 1 The answer to that question must surely be No.
First of all, it is highly doubtful that we can speak of one economic
science in the 1860 's as if it were a heritage shared between economists
all over the world, studying the same treatises, reading the same
journals and employing a common set of tools in the analysis of a
similar range of problems. A glance at Hutchison's terse accounts of
the state of economic thought around 1870 in England, Germany,
Austria, France, and the United States will show that there were at
least two, if not three or four, "models" of economic science extant
at that time.4 Although Jevons struggled against the tyranny of
Mill's influence, German economists had long since rejected '' Smith-
3. Merton guards himself against misinterpretation by denying that his
thesis implies that '' all discoveries are inevitable in the sense that, come what
may, they will be made, at the time and the place, if not by the individual(s)
who in fact made them" (p. 485). For a similar qualification, see his "Re­
sistance to the Systematic Study of Multiple Discoveries in Science,'' European
Journal of Sociology 4, no. 2 (1963): 246.
4. T. W. Hutchison, A Review of Economic Doctrines, 1870-1929 (Oxford,
1953), chaps. 1, 8, 12, and 16; see also the writers cited by Jevons, Menger, and
Walras in their treatises, with hardly a name in common. R. S. Howey, The
Rise of the Marginal Utility School, 1870-1889 (Lawrence, Kans., 1960),
chaps. 1-5.