Economic Theory In The Twentieth Century, An Intellectual History - Volume I: 1890-1918. Economics in the Golden Age of Capitalism

313 Pages·2020·2.813 MB·English

by  Roberto Marchionatti

Roberto Marchionatti
Economic Theory in the
Twentieth Century, An
Intellectual History - Volume I
1890–1918. Economics in the
Golden Age of Capitalism
Economic Theory in the Twentieth Century, An
Intellectual History - Volume I
Roberto Marchionatti
Economic Theory in
the Twentieth
Century, An
Intellectual History -
Volume I
1890–1918. Economics
in the Golden Age of Capitalism
Roberto Marchionatti
Department of Economics and Statistics
University of Turin
Turin, Italy
ISBN 978-3-030-40296-9 ISBN 978-3-030-40297-6 (eBook)
https://doi.org/10.1007/978-3-030-40297-6
© The Editor(s) (if applicable) and The Author(s) 2020
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Contents
1 General Introduction: Why Should We Study the History
of Economic Theory? 1
1.1 M ainstream Economics and the History of Economic
Theory 1
1.2 Schumpeter’s Legacy: A Different Perspective on the
Role of the History of Economic Theory 4
1.3 O ur Approach to the History of Economic Theory: A
Historical and Intellectual Reconstruction 6
1.4 Th e Subject of This Book: Economic Theory in the
Twentieth Century 8
References 9
Part I E conomic Theory in the Golden Age of Capitalism:
From the Last Decades of the Nineteenth Century to
the First World War 13
2 Introduction 15
2.1 Th e Historical Scenario: The Belle Époque of Capitalism 15
2.2 E conomic Theory: Background 18
vii
viii Contents
2.3 The Map of Economic Theory from the Last Decade of
the Nineteenth Century to the First World War: Leading
Centers and Peripheries 31
References 35
3 E conomics in Cambridge: Alfred Marshall, the Old
Cambridge School, and Their Opponents in England 37
3.1 Alfred Marshall (1842–1924) 37
3.2 Marshall’s School and Marshallian Economics 57
3.3 Non-Marshallian Marginalist Economics in England:
Philip H. Wicksteed (1844–1927) 68
3.4 An Economic Heretic in the Marshallian Era: John
A. Hobson (1858–1940) 77
References 83
4 Economics in Lausanne: Vilfredo Pareto and the Lausanne
School 89
4.1 Walras’s Legacy at the Beginning of the 1890s and the
Paretian Turn 89
4.2 Vilfredo Pareto (1848–1924) 91
4.3 The Paretian School of Lausanne 116
References 123
5 Economics in Berlin and Vienna: A Mosaic of Theories and
Research Programs 129
5.1 P rologue 129
5.2 Gustav Schmoller and the Historical School in Berlin
and the German-Speaking Area 131
5.3 The Austrian School in Vienna: Friedrich von Wieser
(1851–1926), Eugen von Böhm-Bawerk (1851–1914),
Joseph Schumpeter (1883–1950), and Ludwig von
Mises (1881–1973) 147
5.4 Marxist and Neo-Ricardian Economics in Vienna and
Berlin: Rudolf Hilferding (1877–1941) and Ladislaus
von Bortkiewicz (1868–1931) 179
References 186
Contents ix
6 Economics in the European Peripheries 195
6.1 I ntroduction 195
6.2 E conomics in Sweden: Knut Wicksell (1851–1926) and
Gustav Cassel (1866–1944) 196
6.3 A Glance at Economics in Italy, France, and Russia 210
References 215
7 Economics in the United States: Between Classicism,
Neoclassicism, and Institutionalism 219
7.1 P rologue 219
7.2 E conomics at Columbia: J. B. Clark (1847–1938) 225
7.3 E conomics at Yale: Irving Fisher (1867–1947) 230
7.4 E conomics at Harvard: Frank Taussig (1859–1940) and
the First Harvard School 242
7.5 E conomics in Chicago: James L. Laughlin (1850–1933)
and Thorstein Veblen (1857–1929) 248
References 260
8 Great Controversies 267
8.1 M arginalists and Neoclassicists versus Historicists: From
the Menger Versus Schmoller Methodenstreit to the
Attempt at Reconciliation in J. N. Keynes’s Scope and
Method of Political Economy, 1883–1891 2 67
8.2 O n the Relation Between Economics and Mathematics:
Controversies on the Application of Mathematics to
Political Economy 273
8.3 Th e Debate on Marx’s Das Kapital, 1894–1904 2 88
References 294
9 T he Great War and the End of an Era 299
References 302
Index 303
List of Tables
Table 4.1 Comparison between mechanics and economics
(Cours, §592) 101
Table 7.1 Fisher’s table of comparison between mechanics and
economics 235
xi
1
General Introduction: Why Should
We Study the History of Economic
Theory?
1.1 Mainstream Economics and the History
of Economic Theory
“No history of ideas, please, we’re economists”. In these words, Mark
Blaug (2001) describes the current status of the history of economic
thought among mainstream economists, viz. those whose ideas are domi-
nant in the leading academic institutions and journals in a particular age.
The term mainstream is often used as if it were synonymous with ortho-
doxy, but we prefer to consider mainstream as a broader term, and we
apply orthodoxy to what is considered the dominant school of thought in
a specific period, as opposed to divergent approaches called heterodoxy.
Modern economics is often characterized as neoclassical economics,1
but as Colander (2000) points out, this classification is hardly
appropriate today, if we consider that, strictly speaking, neoclassical
economics is the theory that focuses on the optimizing behavior of
fully rational and well-informed individuals in a static context and the
1 The term neoclassical was coined by Thorstein Veblen (1899–1900): it was a negative description
of Marshall’s economics. Then the term came into general use. Hicks (1932) and Stigler (1941)
extended the meaning of neoclassical to encompass all marginalist writers.
© The Author(s) 2020 1
R. Marchionatti, Economic Theory in the Twentieth Century, An Intellectual
History - Volume I, https://doi.org/10.1007/978-3-030-40297-6_1