Some of the renowned economist of the world are as follows: 1. Bastiat, Frederic 2. Hazlitt, Henry 3. Samuelson, Paul Anthony 4. Hess, Moses 5. Bismarck, Otto Eduard Leopold 6. Kuznets, Simon 7. Lerner, Abba P. 8. Bodin, Jean 9. Taylor, Frederick Winslow 10. Walras, Auguste and Others.
Successful Economist # 1. Bastiat, Frederic (1801 – 50):
Born in a wealthy merchant family in France and having a commendable university education, Bastiat began his career as a merchant in the family tradition but shifted to farming, and became, in course of time, a Justice of the Peace, a Councilor, and, lastly, a Deputy in the Constituent Assembly in 1848.
Overwork and defeat of his ’cause’ in the ‘Revolution of 1848’ impaired his health and caused his premature death.
Politics and economics interested him most, and his ideas and views in these areas, expressed through witty writings, brought him national prominence. He was a campaigner for free trade, which made him a leader of the French Free Trade Group.
He belonged to the Optimistic School of Economists in France and held that economic and social welfare rested in individual liberty for which, as advocated by the classical economists, the laissez-faire doctrine should be allowed to prevail without state intervention except in the case of maintaining peace.
He preached the ‘gospel of optimism’ backed by an ‘ideology of liberalism’, and he believed in ‘pre-established harmony’ on which his analysis of economic principles seemed to have been based. Although belonging to the classical school, he was critical of Ricardo and Malthus both, but much less of Say who, he felt, was an optimist.
As against Say and Ricardo and while admitting wants, effort and satisfaction through exchange, Bastiat held that “value is the relation of two services exchanged” in justification of which lie said, “The effort saved, or service, is the product of one man; the want and its satisfaction are felt by another; the service then commands a compensation in the shape of some counter-service,” and has explained that ” value is based not so much upon the amount of labour which a thing has cost the person who made it, as upon the amount of labour it saves the persons who obtain it. Hence, I have adopted the term ‘service’ which implies both ideas.”
His criticism of Malthus was based on his view that an increase in population would make more effective exchanges, resulting in the use of a larger share of gifts of nature and a rise in the wage-earners’ standard of living, which would, in course of time, cause a sensible fall in population growth.
The sum and substance of political economy, Bastiat held, culminated in the study of wants, exchange and satisfaction in an atmosphere of individual liberty, laissez-faire and free competition without official intervention, which, he felt, were the essential pre-requisites of maximum welfare — economic as well as social.
A summary characterization of Bastiat made by Gide and Rist (A History of Economic Doctrines) and appearing to be most befitting reads: “His wit is a little coarse, his irony somewhat blunt and his discourses are perhaps too superficial but his moderation, his good sense, his lucidity leave an indelible impression on the mind.”
His Works Include:
Les Harmonies Economiques (1849 – 50), Articles in Economic Journal (1844), Petits Pamphlets and Sophigmes (relating to his argument against Protection etc.).
Successful Economist # 2. Hazlitt, Henry:
Hazlitt was a prolific writer and associated with a number of journals either as editor or otherwise on matters pertaining to economics, business and finance in particular. He was a stern critic of Keynes, and in this regard ‘The Critics of Keynesian Economics’, a work edited by him, and his own contribution ‘The Failure of the New Economics’, a ‘great polemic masterpiece’ included therein were self-evident. It was his firm belief that Say’s law itself and Mill’s elaboration thereof, both of which antedated the General Theory, were sufficient enough, if understood correctly, to contradict Keynes’s theory convincingly.
Hazlitt said, “… Say’s Law the doctrine that every supply creates its own demand … as elaborated by the classical economists… stated merely … an ultimate truth, true only under … conditions of equilibrium. It was designed to point out chiefly that a general overproduction of all commodities is not possible. It was never … a contention that money is never hoarded or that depressions are impossible…” He accused Keynes of having deplored or ridiculed saving since he (Keynes) wrote ‘The Economic Consequences of the Peace’ in 1920, always overlooking that “Economic growth, higher real wages and living standards are possible only through new capital formation. And production and saving are both indispensable to the formation of capital … He persistently regarded saving as something merely negative, a mere non-spending, forgetting that it was the inescapable first half of the ‘completed positive act of investment…,” and he quoted Bohm- Bawerk having pointed out a generation earlier that “To complete the act of forming capital it is of course necessary to complement the negative factor of saving with the positive factor of devoting the thing saved to productive service … saving is an indispensable condition to the formation of capital,” and that the rate of ‘true economic growth’ was in effect the rate of capital formation.
Hazlitt referred to Keynes’s preface to his ‘General Theory’, for example, “…a long struggle of escape … from habitual modes of thought and expression … those who are strongly wedded to what I call the ‘classical theory’ will fluctuate between a belief that I am quite wrong and a belief that I am saying nothing new …,” which, Hazlitt held, “…undoubtedly intimidated many economists, whose greatest dread was to be regarded as ‘orthodox’ and ‘wedded’ to old ideas…,” and which made Hazlitt say “What is original in the book (Keynes’ General Theory) is not true; and what is true is not original.”
Hazlitt’s reference to Frank H. Knight’s remark about Keynes and the remark itself would prove amusing to the readers: “Our civilization today, being essentially romantic, loves and extols heretics quite as much as its direct antecedent a few centuries back hated and feared them. The demand for heresy is always in excess of the supply and its production is always a prosperous business.” Hazlitt’s only compliment was: “Keynes’ reputation as a great economist rested from the beginning on the purely literary brilliance …”
His works include:
Economics in One Lesson (1942), Will Dollar Save the World, 1947; The Future of the New Economics, 1959; The Critics of Keynesian Economics, 1960; and What You Should Know About Inflation, 1960.
Successful Economist # 3. Samuelson, Paul Anthony (1915- ):
Samuelson was Professor of Economics at the Massachusetts Institute of Technology, and was awarded the Nobel Prize in 1970 for his erudite and original contributions to the science of economics. He also served the U.S. Treasury Department during the post-World War II period.
Since, according to him, none of the earlier definitions of economics was precise, he gave his own definition of economics as the “study of how men and society choose, with or without the use of money, to employ scarce productive resources to produce various commodities over time and distribute them for consumption, now or in the future, among various people and groups in society,” which, although constituting the elements of earlier definitions, was nevertheless more informative.
He developed the ‘Heckscher-Ohlin’ theory of ‘factor equalization’, also referred as ‘factor endowment theory’, which meant, in brief, that free trade in goods resulting from abundant ‘production factor’ resources would tend to equalize factor prices across national borders, provided, however, that the countries had different ‘demand patterns’, supporting the view that international trade substituted “movement of goods and services for the movement of factors of production.”
His ‘Factor Equalization Theorem,’ — which, incidentally, brought together the key conclusions of economic theory — was based on certain fundamental, hypothetical or even arbitrary assumptions (Foundation of Economic Analysis).
His ‘Revealed Preference’ theory, an “analysis of consumer behaviour based only on the information of choices actually made by the consumer in various price-income situations” in preference to the ‘Indifference Curve’ in the area of ‘General Equilibrium Theory of Consumer Behaviour’, and free from the traditional ‘Utility Concept’ was another unique contribution, in respect of which his basis was ‘Preference Hypothesis.’
He held that choice revealed the preference and his conclusions rested exclusively on the ‘observed market behaviour’ of the consumer instead of relying on ‘unrealistic assumption’ of the indifference curve concept and the neoclassical cardinal utility analysis, since he believed that a “cardinal measure of utility is in any case unnecessary; that only an ordinal preference, involving ‘more’ or ‘less’ but not ‘how much’, is required for the analysis of consumer’s behaviour.”
Samuelson favoured the technique of mathematical analysis which was generated by Walras and later developed by Leontief, Tinbergen, Frisch and himself, in formalizing and extending the traditional theories of ‘conceptual abstractions’ into new areas of ‘dynamics’ after ‘quantitative empirical’ testing. He viewed that technological change could not be a hindrance to the study of economics, as conventionally held, since economists could ‘branch out’ and use such techniques as would conform to the requirement.
His analysis of the interaction between the ‘accelerator’ and the ‘multiplier’ concepts in the domain of macroeconomic theory, and further, his contribution to the ‘New Welfare Economics’, would bring him credit. Samuelson’s assessment of Keynes’s ‘General Theory’ was that his emphasis on the effectiveness of the demand function, providing its analysis, function and movement, was adequate enough for a complete understanding, and he said that whatever might be the contrary view, Keynes was “neither anti-individualistic nor against the laissez-faire doctrine”, and that he was in fact completely in favour of a ‘capitalistic philosophy.’
His chief works are:
Economics, 1948; Foundations of Economic Analysis, 1947; Readings in Economics, 1955; Linear Programming and Economic Analysis, 1958.
Successful Economist # 4. Hess, Moses (1812 – 75):
Son of a Jewish sugar manufacturer, Hess began working in his father’s business but felt uneasy in the atmosphere of “trade and commercial” gain. His attention turned to ‘socialism’, and although not a systematic thinker in developing a self-contained ‘socialist system’ of society, he held nevertheless a remarkable place in the history of early German socialism.
He was influenced by French socialism and German philosophy, and concerned himself with ‘economically-founded ‘justification of socialism. He belonged to the hostile group of the Rhineland bourgeois intellectuals, who were after a radical and rapid socio-economic change, ensuring political emancipation of the working class. He acted as a ‘trail-blazer’ for the young Marx.
He was opposed to ‘competition’ which, he held, was the ‘root cause’ of evils, breeding egoism and drifting people away from the natural and expected human brotherhood, and was also equally so against ‘private property’ because of its inevitable result in ‘privilege’ of a few at the cost of many, and justified the working class movement in doing away with inequality and bringing about emancipation of humanity. Human solidarity, he held, was a ‘natural force’.
Hess was a “socially committed” critic of his age “lashing out at social inequality,” and his “social romanticism” took shape in a “new Jerusalem” in a “community of goods” at the “original state of history,” since, he held, it “is the most accurate and precise characterization of the concept of equality.” He viewed that “complete equality prevails where communal ownership of all goods, inner as well as outer, and where the abundance of society, are open to everyone and not restricted to a single person as exclusive property.”
His socialism was philosophical and ethical with interest in structural issues within social policy because of the inter-relationship between the individual and the society. He came to realize the necessity of co-operation and joint action between workers and intellectuals, and he viewed that the “concept of socialism has come in from outside as a result of the proletariats’ practical need, and has developed internally because of the theoretical necessity of scholarship.”
Hess gave up the ‘religious approach’ and although he was apprehensive that the proletarian revolution might involve use of violence, he remained himself ‘rooted’ in his ‘ethical socialism’ involving in the main “consciousness-raising education and enlightenment,” and a “revolution of awareness and morality,” and called for ‘nationalization’ which, he believed, would “free man from his constraints,” and provide the pre-conditions for the formation of a socialist society with education fulfilling a vital function.
His works are:
The Holy History of Humanity, 1887; the European Triarchy, 1841: On the Socialist Movement in Germany; On Need in our Society and its Alleviation; Studies in Socialism etc.
His works include:
The Theory of Economic Development, 1911; Business Cycles, 1939; Capitalism, Socialism and Democracy, 1942; Essays, 1950; Ten Great Economists, 1952; Imperialism and Social Classes, 1951; the History of Economic Analysis, 1954; and Economic Doctrine and Method, 1957.
Successful Economist # 5. Bismarck, Otto Eduard Leopold (1815 – 98):
Bismarck came of a highly respectable family in Prussia, and was a top-ranking statesman, an eloquent parliamentarian, an efficient administrator and, none the less, a remarkable executor of social and financial reforms.
He preferred indirect taxation at a progressive rate to direct taxation which, he felt, caused hardship to the low-income group of people, and favoured an increase in income from Customs. His scheme of state monopoly in tobacco, brandy and beer was ‘aimed at providing an additional source of revenue.
Bismarck was inspired by the British politician and economist Richard Cobden’s policy, namely, “All we desire is the prosperity and greatness of England,” and observing that England grew stronger under the system of protection, he introduced a general system of protection against forceful competition from, and protective tariffs of, countries abroad. His reform plans covered all types of commercial enterprise, removal of hindrances to the prosperity of the nation and a sound foundation for German commerce.
He was not indifferent to the cause of the working classes, and was the first statesman who engaged himself in solving their problems. He was opposed to the “liberal doctrine of laissez-faire” and abolition of Guilds.
Since, “much of the distress and discontent arose from the unrestricted influence of capital,” he considered that in order to “protect the poor,” the State would institute a Fund from which relief would be provided to every working man incapacitated by sickness, accident, or old age in the form of pension.
He defended himself from any “charge of socialism” by seeking protection under the Prussian Law Provision, the Code of Frederick (II) the Great, which approved of the State’s duty to provide for sustenance of citizens who could not procure sustenance for themselves, adaptation of work to the strength and capacity of the worker,’ supply of means to those who lacked means and opportunity of earning a livelihood for themselves and those dependent upon them and advancement of the welfare of the workmen in general. He earned public admiration for his patriotism, energy and prompt implementation of his plans.
Successful Economist # 6. Kuznets, Simon (1901 – 85):
Professor Kuznets of Harvard (formerly of Pennsylvania and Johns Hopkins Universities) was a distinguished authority in the subject of National Income, and a Nobel Laureate (1971). His work in national income statistics for the National Bureau of Economic Research gave “empirical life to Keynesian Macroeconomics and provided an independent stimulation to work on aggregative economic problems.”
He brought into view a “statistical model of the economy” giving “quantitative support” to Keynes’s ideas, and was, along with Hansen, an influential proponent of the Keynesian system, his apparatus being “National Accounts.” It was Kuznets who gave the “present form and statistical values to what are now the common-place concepts of Gross National Product, National Income and their components.”
Kuznets defined national income as “the net of, or net return on, the economic activity of individuals, business firms, and the social and political institutions that make up a nation.” As the national income is the net product of economic activity, so it is, at the same time, the net return from economic activity, which, in other words, meant that the amount paid for everything that is produced for sale to final users would be equal to the sum of the income of all the people.
Kuznets — along with other associates of the National Bureau of Economic Research who made use of statistical studies — conducted enquiries into the possibility of “long swings” in the economy as a whole. He had his signal contribution in estimating the “average output per worker in the United States for the decade 1869-78”, which was the “earliest more or less reliable estimate of productivity.”
As regards the self-sustaining elements of the growth process, Kuznets points out that growth might have also certain self-limiting features, for example, apart from the old problem of scarce resources and diminishing returns, there was the reduction of economic incentives as income rose very high or the strengthening of vested interests which resist development in competitive areas of the economy, and, furthermore, it might be that the self-limiting aspects would become increasingly important over time, particularly as economic development became a global phenomenon, (cf. New Science of Economics :’ George Soule; Economic Development — Past and Present : Richard T. Gill; and Evolution of Modern Economics : Richard T. Gill).
The following are his principal works:
Shares of Upper Groups in Income and Saving ; Long-term Changes in the National Income of the United States of America since 1870 — ed. by him; Income and Wealth of the United States; National Income and Capital Formation 1919-35, 1937; National Income, A Summary of Findings, 1946; Lectures on Economic Growth, etc.
Successful Economist # 7. Lerner, Abba P. (1903 – 82):
Basically an academician, thoughtful, inquisitive and also a critic as well, Lerner was Professor of Economics at the School for Social Research. He was appreciative of Keynes’s ‘equilibrium analysis’ as being substantially different from the classical economists’ concept, and, while endorsing Keynes’s viewpoint, he said that the relation between aggregates, such as consumption to income, had to be regarded only in terms of “flow during a period coincident with the flow of income during the same period,” and that, in order to achieve ‘True Equilibrium,’ production to meet the overall demand for goods and services, made up of consumption expenditure, investment and government expenditure (C + I + G), must be such that it exactly occupied the available productive capacity to the point of full employment.
Since, however, it is not a ‘natural’ equilibrium, the government has to create it by use of two instruments, namely, public expenditure and the tax burden which should be so manipulated as to make national economy display an optimum total expenditure. Lerner used the expression ‘Functional Finance’ to connote this manipulating of public finance. (‘Functional Finance and the Federal Debt’, an article in Social Research, 1943).
Lerner used the term ‘efficiency for productivity’ in place of Keynes’s ‘marginal efficiency of capital’ as a measure comparable to the rate of interest in term of “value rather than quantities,” implying a “shift from considering the stock of capital to considering the flow of investment and its influence on the level of employment.”
In reply to Maurice Dobb’s proposal of a ‘socialist economic planning,’ he raised a number of queries as regards, for example, estimation and assessment of investment, productivity, productivity comparison in the absence of price system, consumers’ freedom and satisfaction, etc.
He improved upon Marshall’s development of ‘elasticity concepts,’ stating that devaluation, unless supported by appropriate elasticity conditions, was not necessarily self-adequate to make up the deficit in the trade balance, meaning that it was only when the price elasticity of exports plus the price elasticity of imports are less than unity, there could be a favourable impact upon the foreign trade balance as a result of devaluation, and not otherwise.
While describing the constructive services rendered by middlemen, he commented that such services could be considered as desirable only in the case of ‘competitive speculation’, whereas, in the case of ‘monopolistic speculation’, their function would consist of ‘creating scarcities and thus causing prices to rise to the speculator’s profit’, which he dis-favoured. (The Myth of the Parasitic Middleman: Selected Readings in Economics, ed. C. Lowell Harriss).
His views on taxation were:
“The rational procedure is to judge all actions only by their effect and not by any vague notion of their propriety or impropriety … The effects of a tax are two-fold. It increases the money in the hands of the government and, by decreasing the money left in the tax-payer’s hands, it makes him spend less…,” and of these two effects, he held the first one as “unimportant …” and said that the “important effect is the second…,” since the government “will tax more generally as a means of cutting down total spending when this is necessary to prevent excessive total demand and inflation.” “Taxation is important,” he held, “not as a means of raising money but as a means of cutting down private spending.” (The Economics of Control).
His notable works include:
Economic Theory of a Socialist Economy (1934) and the Economics of Control (1944).
Successful Economist # 8. Bodin, Jean (1530 – 96):
Bodin was a lawyer in Paris but he gave up his profession and involved himself in scholarly pursuits in the areas of politics, economics, history and religion, which brought him fame. A great thinker of his time, he held that property and family formed the basis of society and suggested a “limited monarchy” as the best form of government, favouring sovereignty against factionalism and emphasizing the need of a national state for more power in order to maintain order and facilitate the creation and accumulation of wealth.
His “summing-up of mercantilism” prompted later economists, despite their exposure against mercantilism, to include in their monetary views, almost akin to Bodin’s, that the welfare of nation depended more upon a strong national trade and monetary policy. His analysis of price changes, highlighting causes — namely, influx of metals (gold and silver) owing to an expansion of export, monopoly control, short domestic supply resulting from such expansion, extravagance of the nobility, debasement of money — was pioneering.
As regards the disquieting rise in prices, he said that it was not “human mint-laws” but the “superhuman market laws” which caused inflation. According to Edward de Barthelemy (‘Stude Sur Jean Bodin’, 1876) “……. his (Bodin’s) ‘response’ expressed for the first time some of the essential ideas of political economy with clearness, with fullness, with a correct feeling of the existence of natural economic laws superior to the arbitrary arrangements and conjectures of authorities.”
His suggested remedies, free trade in particular, showed that he was well in advance of his time since Adam Smith discussed essentially the same issues some two hundred years later (in 1770s), and further, his concept of the quantity and value of money and their relation to prices, supported by historical facts, was the precursor of the later day quantity theory of money.
His views on religion were extraordinarily liberal, and he demonstrated by the hypothetical conversations between persons belonging to different religious faiths that all came to the same conclusion, namely, “better leave off disputing on religion and live together in charity”, and it was Bodin who was regarded as having pioneered the need of studying “philosophy of history.”
His expressions and writings helped understanding the evolution of the science of economics historically, for example, from feudalism to mercantilism, from mercantilism to physiocracy, from physiocracy to capitalism and from capitalism to socialism in the area of exchange economy.
He did, in fact, project a definite programme for a national trade policy revealing the national economy as a unit from which emanated, so to say, the “evolution of political economy,” and he could accordingly, in the circumstance, be regarded as being the “head” of a long line of authors having devoted themselves to the study of economic activities. He held that economics was closely related to Jurisprudence, especially administrative law, which happened to be the central theme of economics to later economists.
‘Six Livres de la Republique’, 1576, a comprehensive political philosophy, is his greatest work.
Successful Economist # 9. Taylor, Frederick Winslow (1856 – 1915):
Taylor was the pioneer of the techniques of ‘scientific management’, a major contribution to applied economics. An engineer and a member of the American Academy of Mechanical Engineers, he considered that ‘output increase’ was a composite result of ‘quantity and quality’ both, and formulated a new policy in the area of management science with a ‘practical framework of execution and observation of the result’ by use of ‘technological and engineering techniques.’ His policy involved ‘revolutionary changes’ in the use of labour, to which, it was alleged, and little attention was paid until the beginning of the twentieth century.
His technique was intended to create a constructive impact on labour output, quantitative as well as qualitative, by ‘translating technocratic modes’ into actual practice with the condition that “status must be based upon superior knowledge rather than nepotism and superior financial power,” and that there should be ‘functional foremanship’ meaning that “influence and leadership should be based on technical competence” rather than on any other criteria.
He was convinced that by setting ‘scientific standards’, based on, for example, the time taken to do a specific job, incentive and bonus systems for exceeding norms, differential rates of pay on job evaluation, standardization of tools and equipment, fitting of men to jobs on physical and mental tests, and substituting all planning and scheduling from the work floor by a new planning and scheduling department, a new superstructure under responsible hands, he could specify the “one best way” or the “natural laws” of work, and so remove the basic source of antagonism between worker and employer — the question of what was “fair” or “unfair.”(The Coming of Post-Industrial Society — A Venture in Social Forecasting: Daniel Bell).
“Taylorism” (Taylor’s “scientific management”) proved a radical change in outlook since “… both sides must recognize as essential the substitution of exact scientific investigation and knowledge for the old individual judgement or opinion, either of the workmen or of the employers, in all matters relating to the work done in the establishment …,” and accordingly “… both sides take their eyes off the question of the ‘surplus’ as the all-important, and together turn their attention toward ‘increasing the size of all surplus’ …”
The prime objective was prosperity and a harmonious industrial relation, and so the ‘profit’ aspect was made subject to certain ‘natural laws’, beneficial to employers and employees, for example, cooperation of the labour force, work standardization for improving efficiency and a system of ‘functional planning’ to ensure success.
Initially, labourers’ opposition, employers’ abuse of the programme and the purpose, and the disturbances caused by the World War I (1914-18) were a set-back to such ‘management’, but Taylor was firm in his attitude and approach asserting that “… to essence, it involves a complete mental revolution on the part of the working man and equally on the part of those on the management side …,” and the ‘technique’ remained and became a ‘basic pattern of management’ and is followed even today because of its ‘scientific approach’ based on the ‘objective assessment’ of the facts and ‘realistic measurement’ instead of ‘guesswork.’ Taylor’s principal work is ‘The Principles of Scientific Management.’
Successful Economist # 10. Walras, Auguste (1801 – 66):
A scholar in Rhetoric, Political Economy and Philosophy, and also a Professor, Auguste Walras was born at Montpellier, France, and was the worthy father of a worthy son, Leon Walras, the distinguished economist, who carried on his tradition.
He held that wealth and property both had a common origin, namely, ‘rarete’ or limitation that gave them value, and that it was “an idea prior to that of property.” It was, however, a “complex idea, implying a comparison with other things, and ultimately their exchange: exchange implies property and property implies limitation: for if all desirable things were unlimited, there would be no property, just as there would be no exchange.”
In his analysis of the source and origin of value, he considered two schools of opinion, one holding utility as the basis, and the other tending towards a “labour or cost of production theory.” If existence of utility meant existence of value, then, he argued, “sunshine and rain” available in abundance without anyone being thereby deprived,” stood proofs to the contrary, and could not be regarded as wealth, since it “is a characteristic of all wealth, of all things possessing value, that they should be limited, and this limitation establishes a natural disproportion between the sum total of these goods and the sum total of needs which claim the possession of these goods.” It was what constituted ‘rarete’ or limitation “denoting an insufficient supply to meet the claimants,” to which alone value was due. Utility might be a “necessary condition,” but not the “cause.”
In the “cost of production” concept also, he justified the element of ‘rarete’ in value. If, for example, “values are products,” and the “value of any object represents the time and labour lost in obtaining it,” he explained that the value of labour “comes from rarete,” shifting with utmost ingenuity the weight of the argument to the element of time. “There is no work,” he said, “that can be accomplished but with time and certain conditions … time is not for any of us an unlimited good … Time is for each of us a precious thing because it is rare. And since labour can only be accomplished with time and on conditions more or less onerous, it follows that labour has a value.”
His views on other factors of production, say, land and capital, were not different since both of them were subject to what he called ‘rarete’ (limitation) which was the relation existing between supply (sum or quantity of product) and sum of needs demanding satisfaction, and further, that it was only on the assumption of ‘rarete’ that the market place operation could acquire a meaning.
He defined ‘rarete’ but did not correlate value with varying degrees of ‘rarete’ and discuss how various degrees of ‘rarete’ would react on value. (The Development of Economic Doctrine — An Introductory Survey: Alexander Gray).
The principle of ‘rarete’ being the underlying cause of all values, “one might be tempted to call Political Economy,” Walras hinted, “not so much the science of wealth as the science of poverty.”
‘De la Nature de la Richesse et de 1 ‘Origine de la Valeur’ is his principal work.
Successful Economist # 11. Turgot, Anne Robert Jacques (1727 – 81):
Born in Paris and educated for the Church, Turgot began as an abbe at Sorbonne, Paris, but later joined the Civil Service, first as the district administrator of Limoges (1761 -74), and then as Secretary of State for the Navy. He also held, although for a short period, the post of the Controller of Finance.
During the tenure of his service, France was in financial trouble for which he suggested remedial measures like tax reform, budget adjustment, austerity in administration expenses and a drastic reduction in the Royal favorites’ privileges, but these were resented by the “affected communities,” and he had to give up his official assignment. The rest of his life passed in studies and writings, scientific as well as literary.
Turgot travelled widely in company with Goumay, which made him learn commerce and relevant matters. He came across Voltaire, and was acquainted with Quesnay, Dupont de Nemours and other Physiocrats, and was inclined to Physiocracy, endeavoring to make use of its relevant economic theories in the area of taxation.
He was an ally of Quesnay, Mirabeau, Riviere and Dupont but with a difference since he could not restrict the meaning of “productive labour” to agricultural pursuits alone, and besides, he was a “physiocrat in action” for introducing “reforms” in the areas of commerce, trade in grains, taxation etc.
Turgot differed with Quesnay on, say, value theory (use and not subjectivity), productivity (not sterility) of industry along with agriculture, “divine origin” concept of landed property (occupation and utility being the reason), prominence of movable property and recognition of capital etc.
He held that neither the cultivators nor the artisans gained more than their recompense for their labour, the surplus passing to the proprietors. Although somewhat ‘crude’, he could possibly claim credit for the first complete theory of distribution, and also the distinction of being one of the earliest “scientific” economists.
‘Eloge de Gournay’ and ‘Reflections sur la formation et la distribution de richesses’ are his works, of which the former is an extreme statement of laissez-faire, while the latter is said to be the first ‘scientific treatise on social economics.’
Successful Economist # 12. Walras, Leon (1834 – 1910):
A Frenchman and a distinguished economist — particularly for his application of mathematical principles as a useful method of enquiry, — Leon was the son of Auguste Walras, also a noted figure in the field of economics.
He started his career as an engineer but entered into a number of unsuccessful ventures after which, at the suggestion of his father, his attention was drawn to economics. He became Professor of Economics at the Lausanne University and a “noted exponent of the classical equilibrium theory,” and it was because of him, his successor Pareto and others that the University came to be known as the Lausanne School of Economics. His Elemente d’ ‘Economie Politique Pure’ (Elements of Pure Economics), an outstanding product of the neo-classical period, was published in 1874 (cf. A History of Economics: Galbraith).
Cournot’s (a French economist and a mathematician) ‘Researches into the Mathematical Principles of the Theory of Wealth’ was an earlier publication, but it was Walras who introduced a ‘new approach’ in mathematical economics, with an emphasis that one day “mathematical economics will rank with mathematical sciences of astronomy and mechanics” and that on that day ‘justice will be done to our work.’ Fisher, Wicksell and Schumpeter were all his admirers, and Hicks, his contemporary, was an exponent of ‘Walrasian economics.’
Walras ranked with his English and German counterparts, Jevons, Menger and Gossen, the former two, in particular, having explained in mathematical symbols, the marginal theory of value, exchange and production, and also how prices of commodities, in the background of the economy as a whole, were determined by the relative marginal utilities of the transacting people (buyers and sellers).
His ‘equilibrium theory’ was not partial but ‘general’, picturing the buyers and sellers in their respective markets, each intending to maximize his utility. In his system of ‘general equilibrium’, Walras held that fluctuations in prices, rise or fall, depended upon demand and offer (supply), and that equilibrium prices and exchange rates would take place after a series of operations, which was the consequence of the “answer supplied by the exchange theory as regards consumer goods and services, the production theory answering the query for raw materials and productive services, the capitalization theory yielding prices for capital goods, and lastly, the theory of circulating capital goods.”
His assumption of a competitive market with utility for all led him to establish that “free competition procures the maximum utility” ensuring a state of equilibrium, and his assertion was that the whole national economy was a system of competing individuals aiming at maximizing satisfaction of needs.
“The world may be considered as a vast general market composed of different special markets where special riches are bought and sold, and we wish to recognize the laws according to which this buying and selling tend spontaneously to take place. For this purpose, we suppose always a market perfectly organized with regard to competition, as in pure mechanics machines without friction are supposed” (Elements of Pure Economics).
Walrus’s contribution to economics could be listed into three broad categories — pure, applied and social. Use of mathematics and construction of a mathematical model of general equilibrium as a “system of simultaneous equation,” depicting that ail prices were ‘uniquely determined’ constituted his -main achievement. He was “systematic in his work, informative in details and practical in demonstration in terms of mathematics.”
Walras was more than a mathematician; he was a land reformer and a sort of socialist, although disagreeing with Marx’s theory of value on theoretical grounds. As against the classical doctrines of not treating economics as a social science in its true sense, he was, in point of fact, a proponent of ideas far more radical than his dignified counterparts in the British Isles, and unlike Jevons’s individualistic views, he was not reluctant against state intervention in the areas of, for example, compulsory education, restriction upon working hours, curbs upon monopoly, income control for social improvement, resource allocation etc., until at least the appropriate setting up of the entire mechanism. (A History of Economic Ideas: Robert Lekachman).
His chief works include:
Elements of Pure Economics, 1874-77; Mathematical Theory of Social Wealth; and Studies in Applied Economics.
Successful Economist # 13. Modigliani, Franco (1918- ):
Modigliani was born in Rome and highly educated. He was a Doctorate in Jurisprudence from the University of Rome (1939) and also in Social Science from the New School for Social Research, New York (1944), and besides, being on the Faculty of Bard College of Columbia University, he was a Research Associate and the Chief Statistician of the Institute of World Affairs (1945-48).
He became an Associate Professor and then full Professor of Economics at the Illinois University (1949-52). In 1952 he joined the Carnegie Institute of Technology, Pittsburgh, as Professor of Economics and Industrial Administration. He won the Nobel Prize for Economics in 1985.
A stern critic of Keynesian economics, he made some alternative suggestions that led to some quite ‘un-Keynesian’ conclusions, which, according to W. H. Hutt, reduced “to the absurd the notion of the coexistence of idle resources and price flexibility.” (cf. The Critics of Keynesian Economics: ed. Henry Hazlitt).
Modigliani examined, in his own way, the various assumptions and inferences of Keynesian analysis which, he said, “clearly departs from the classical lines,” and stated that the situation characterised as the ‘Keynesian case’ “is typical of some or all modern economic systems and is a factual question … It is beyond doubt, however, that the interest is not purely theoretical.”
His works include:
National Incomes and International Trade (Co-author), 1953; and Liquidity Preference and the Theory of Interest and Money (An article in the Econometrica, 1944).
Successful Economist # 14. Slutsky, Eugen (1880 – 1948):
Slutsky was an academician, a professor at Kiev University for almost a decade, and then at the Mathematics Institute of the Academy of Science, the then U.S.S.R., from 1934 until his death. His views on consumer behaviour were published in an Italian journal (‘Giornale degle Economiste’) as early as 1915, but remained unnoticed until rediscovered by Hicks and Allen.
He showed that in the matter of formulating a theory of consumer behaviour, the concept of “ordinal utility could be used more appropriately than, the neo-classical “cardinal utility” concept, without the “underlying assumption of the measurability of utility.”
The “cardinal utility” concept, he said, involved the postulates of a “numerical scale” to measure the psychological content of a consumer’s feeling of satisfaction and his preference for one commodity over another, but this could be hardly possible without encountering serious difficulties which could be overcome by the ‘ordinal’ approach, for example, levels of satisfaction could be ordered or ranked first, second, third and so on without assigning any numerical magnitude.
Hicks and Allen used Slutsky’s ‘ordinal’ approach in preference to the neo-classical ‘cardinal’ approach, in their ‘indifference curve’ analysis as regards consumer behaviour. Slutsky had other contributions as well in the areas of statistics and probability theory in the study of economics and also in the study of social correlation.”
Successful Economist # 15. Wicksteed, Philip Henry (1844 – 1927):
Wicksteed was a mathematician, a theologian, a philosopher and an economist. He was born at Leeds, Yorkshire, and, following the family line, became a Unitary minister at the Little Portland Street Chapel, but his theology was ‘unorthodox,’ and his study of philosophy, ethics and sociology culminated in his attention to economics. He said, “A man can be neither a saint, nor a lover, nor a poet, unless he has comparatively recently something to eat.”
Wicksteed was influenced by Henry George, Jevons, the Austrian School, and none the less by Marshall’s neo-classical concepts of economics.
“Political economy,” he said, ‘would at any rate stand in some relation to truth and its experience, instead of being, as they are at present, a mere armory of consecrated paradoxes that cannot be understood because they are not true, that everyone uses as weapons while no one grasps as principles.” (History of Economic Thought — A Book of Readings: ed. K. William Kapp and Lore L. Kapp).
His statement that “if each factor is rewarded according to its marginal productivity, the sum of the remunerations of the separate factors will exactly exhaust the product,” although not free from criticism as a “sufficient explanation of distribution,” was given a footing by Hicks with minor modifications.
He “managed to deal with general equilibrium, without its mathematics,” and said that “… everything … that changes the terms on which any alternative whatever is offered, may affect the purchase of any single article at a market stall. Primarily it will be affected by its own price, secondarily by the price of the things that are most readily thought of as substitutes for it, and more remotely by the whole range of alternatives open to the individual, or the group, by whom, or for whom, the purchase is to be made.”
Wicksteed combined Wieser’s ‘alternative costs’ with ‘general equilibrium,’ rather convincingly, when he stated that the entrepreneur “… must be able to arrange … the proportions of his factors, and so to combine them, as to make them all worth as much at the margin in his own concern as other people expect them to be in theirs” (Common Sense of Political Economy).
‘Reservation price’ was his novel concept intended “to abandon the favorite diagrammatic method by which prices, whether market or normal, are indicated by the intersection of a curve of demand and a curve of supply, or a curve of demand and a curve of cost of production,” dispatching in a way the supply curve as an independent entity and making the entire analysis of price depend upon demand. He advanced the hypothesis that sellers would became buyers at a certain price, which might be called ‘reservation price’, a price below which they would withhold selling and would rather buy their product themselves. Such cases were not rare in a securities market where brokers might be instructed not to sell below a certain price, and might be instructed, below another price, to purchase additional shares (A History of Economic Ideas : Robert Lekachman).
Lionel Robbins made a good appraisal of Wicksteed’s magnum opus ‘Common Sense of Political Economy’ as a signal contribution to economics, calling him the “savant who made contribution of permanent value to highly technical branches of knowledge,” and so did T. W. Hutchison who said of his ‘work’ “…one of the finest expositions ever written of the social functioning of the individualist market economy … reaches a conclusion … that ‘economics must be the handmaid of sociology’ … welcomes as a good augury the appearance the year before Pigou’s ‘Wealth and Welfare.'” (Essays in Economic Method: ed. R. L. Smyth — Introduction by T. W. Hutchison).
The following are his principal works:
‘Alphabet of Economic Science, 1888; Essay on the Co-ordination of the Laws of Distribution, 1894; Common Sense of Political Economy, 1910; and Exposition of Marginalism.
Successful Economist # 16. Leslie, Thomas Edward Cliffe (1825 – 82):
Leslie and Ingrain, both Irishmen, were ‘apostles of historism in England where ‘classicism’ was the established order in the study of economics. Educated at King William’s College, Isle of Man, and at Trinity College, Dublin, and a follower of Sir Henry Maine’s ‘historical method,’ he was well-acquainted with Comte’s works and the ideas and views of the German Historical School through the ‘works of Roschers and Knies.’
Leslie was critical of the Classical School’s ‘groundwork’ of ‘natural rights’, its ‘beneficent providence’ and its idea of ‘laissez-faire’ derived from the ‘reaction against government interference’, and said that the “classicists gave us a science for wealth, instead of a science of wealth’. He was opposed to ‘abstract, a priori methods’, for example Ricardo’s ‘laws’ of ‘natural wages, profits and prices’, ignoring the “essential difference between stationary and progressive societies.”
He regarded man not as a “mere exchanging animal — a personification of an abstraction,” but as an “actual human being such as history and surrounding circumstances have made him, with all his wants, passions, and infirmities,” and dispelled what he termed the “ancient mist of realism,” that is, the “practice of confusing several ideas in one word.”
He held that Mill’s ‘wages fund’ theory was an ‘imaginary category’ and that there were no funds ‘destined to employment as wages’ because, inter alia, of the changing nature of employment of capital, substitution of labour by capital, lowering wages through combination, unequal distribution of the aggregate available for wages, if any etc., and besides, even if there were such a fund, what might determine its amount.
He disfavored studying economics in an abstract manner and was a vehement critic of Ricardo and his followers’ deductive method as being ‘conjectural’ and of the classicists’ definition of economics as a “science for wealth” instead of a “science of wealth”.
Leslie developed his own ideas and views of the problems of political economy along the historical line, particularly in the areas of prices, wages, distribution of precious metals, and agrarian problems. He approved of Bagehot’s “limitation of political economy’s applicability to contemporary England, and to the male sex exclusively.”
Apart from a number of articles, his other works include:
Land System and Industrial Economy of Ireland, England and Continental Countries, 1870; and Essays on Political and Moral Philosophy, 1829.
Successful Economist # 17. Wieser, Friedrich Von (1851 – 1926):
Wieser held that economics concerned itself with providing means of satisfying wants without any deviation from its goal of utility maximization achievement. Schumpeter complimented him, stating that “… Few men have thought so deeply on the fundamentals of the theory of value or have had so clear a vision of the groundwork of economics…” and the “… fertility and grandeur of his conception of economic life as a whole …”
He belonged to the Austrian School, of which Menger, his father-in-law, and Bohm-Bawerk, his brother-in-law, were the other members along with followers. The Austrian School and the other two Schools, namely, the Lausanne (Walras and Pareto) and the English (Marshall and Pigou) Schools, combined in their intellectual views and exercises, despite differences in expositions, and represented the well-known ‘Marginalist School’ of economic thought.
Mitchell remarked that “Wieser’s Social Economics’ (1914) holds a place in the literature of the Austrian School such as John Stuart Mill’s ‘Political Economy’ holds in the literature of classical theory. It “sums up, systematizes, and extends the doctrines developed by the founder of the School (Menger), the author and his fellow workers.”
Born in an aristocratic family in, and educated in the University of, Vienna, Wieser, after a short period in Civil Service, became Professor of Political Economy at Prague, and thereafter at the University of Vienna, serving meanwhile as Minister of Commerce during the World War I (1914-18).
Following the tradition of his School, deductive method and marginal analysis, he made his contributions to the science of economics by elaborating Menger’s views and analysis, and by developing his own theories, “broader in scope and closer to the completeness in exposition.”
He used the terminology ‘marginal utility’ in substitution of Gossen’s ‘diminishing satisfaction’, Jevons’s ‘final utility’ and Menger’s ‘the least important utility’, and was critical of the Classicists’ ‘cost of production’ concept of value, holding instead that it was ‘scarcity in conjunction with utility’ which caused ‘exchange value’, and referring to Menger’s remark that the fundamental idea of the utility theory of value consisted in basing the theory of value and price on man and his individual psyche, Wieser once said that “Menger sees … in all social formations of economic life nothing more than unintended social resultants of teleological endeavors of individuals” (The History of Economics : W. Stark).
Wieser conceived of utility as being scientific irrespective of moral or ethical implication, or of Marshall’s demand-supply treatment, and asserted that the ‘marginal principle’, if not otherwise hindered, would be applicable in a ‘collectivist economy’ as well, but he added, however, that “individual selfishness, errors, inequalities in wealth possession and distribution, strength of communal feeling might or might not conform to the marginal valuation of a collective economy as inferred.”
The Austrian School’s concept of ‘alternative or opportunity cost’, and of Wieser, in particular, means that a firm must earn from its production, the cost of input/inputs — whether owned by it (implicit cost) and/or purchased or hired (explicit cost), considering the best alternative use; or, in other words, competition for a given quantity of ‘production factors’ for use in production would cause their distribution in such a manner as to enable them to derive the same aggregate return in each alternative employment.
The ‘marginal productivity theory’ was an inference from the alternative or opportunity cost concept. The Austrian School believed that production would vary in quantity, keeping pace with marginal utility until both were equated, and further, that it was marginal utility, not its use value, that determined the price of a commodity, approving thereby the marginal cost concept, which, despite being subject to practical limitations, made Haney remark that “Thus this development of the concept of cost as subjected to utility is one of his (Wieser) chief contributions.”
Wieser’s another contribution was the ‘theory of imputation’ or the ‘theory of attribution’, meaning that “higher order of goods,” an extension of the marginal valuation principle, would have a derived demand, imputed or attributed to them. His explanation of the imputation theory of value was nevertheless based on the “marginal theory” concept and even in some inroads given by Menger, gave a concrete shape in matters pertaining to distribution.
Wieser held that ‘imputation’ would also follow the marginal utility concept even in the case of production factors, and formulated a complete theory to cover value and distribution, stating — unlike Menger’s and Bohm-Bawerk’s ‘piece-meal’ ideas — that interest and rent depended upon the respective imputed values of capital and land.
His cost concept did never override the marginal utility concept as he stated that “… possibly it is the greatest triumph of the theory of marginal utility that it fully explains the obscure conception of costs, with which every other theory had to reckon ,..”, and also that “… where the law of cost obtains, utility remains the source of value. More than that, marginal utility remains the measure of value.”
According to Schumpeter, “Much like Walras and others, he (Wieser) turned … the theory of money, building up slowly and from within … what will always rank with the best performance of our age in this field … He approaches the subject by way of investigating into “historical changes in the purchasing power of money, and aimed at giving the quantity theory the same sort of foundation which his theory of value had given to the law of cost …” and further, “Historical Sociology, or Sociological History had been his first interest, and it was to be his last…”
He was averse to orthodox laissez-faire policy, but could not bring himself to socialism. He favoured nevertheless reforms to solve the uneven income and wealth distribution problems, and also identified a few major areas calling for state intervention, namely, defence and maintenance of law and order, public utility concerns, public enterprises to make up inadequacy of private enterprises, economic planning — particularly in under-developed economies, remedial measures against malpractices of Trusts, Monopolies etc.
His principal works are:
The Origin and Principal Laws of Economic Value (1884), Natural Value (1889), and Social Economics (1914).
Successful Economist # 18. Bohm-Bawerk, Eugen Von (1851 – 1914):
Bohm-Bawerk was one of the ‘trio’ of the Austrian School (also called Psychological School) of economic thought, the other two. being Menger and Wieser.
He obtained his Degree in Law from the University of Vienna and after further study in Germany, took up a lectureship in economics at the Innsbruck University but resigned in 1889 to join Civil Service in the Austro-Hungarian Department of Finance, becoming, in course of time, Minister of Finance a number of times.
He resumed the teaching profession in 1909 as Professor of Economics at the University of Vienna. Being of noble birth, he was a Member of the Upper House of the Austrian Parliament.
He subscribed to the ‘marginal utility’ theory of value, believing value to be determined by the power of the least important want satisfied by the supply of goods available, and also, to the theory that the power of one good to satisfy wants influenced its power to acquire other goods in exchange for itself, which was, in a sense, substitution of “subjective exchange value” for the older “objective use value,” coming closer to Marshall’s neo-classical concept.
His chief contribution was his analysis of capital and interest, making a “synthesis of the time preference and the productivity theories” of interest and claiming credit for a “positive theory of capital,” seemingly independent but more or less like that of Jevons.
In his theory, better known as ‘agio’ (premium or discount) theory, he assumed, not incorrectly, that people tended to prefer present goods to future goods of the like kind and amount and accounted for the ’emergence’ of interest, arguing that owing to the technical superiority of the round-about (also called time-consuming) process of production, there would be a greater increase in production for which interest would flow from the ‘capital using’ production to the ‘capital-providing’ source.
His works are:
History and Critique of Theories of Interest, 1884 (more commonly known as ‘Capital and Interest’); Positive Theory of Capital, 1888; and ‘Karl Marx and the close of his System’, 1896.
Successful Economist # 19. Tinbergen, Jan (1903 – ):
A Dutch economist of international repute, Tinbergen was a Professor at the Netherlands School of Economics, and an adviser to the League of Nations’ Study on Statistical Testing of Business Cycle Theories from 1936to 1938.
His work ‘Econometric’ combines the “mathematical-economic” and “mathematical- statistical” methodologies and is an authoritative study. It explains the relationship of econometrics to economics and statistics, and outlines the process of formulating economic hypotheses mathematically and of subjecting them to statistical test.
He was co-recipient, with Ragnar Frisch, of the First Nobel Prize for Economics (1969). His name is associated with the “cobweb theorem” which was first indicated by Kaldor of Hungary, the name being derived from the “cobweb” pattern of price and output movements. It is a “way of explaining why price may be unstable in those cases in which suppliers must rely on significant periods of time to adjust production levels.”
He found no reason claiming justification of the “acceleration” principle as a “key” factor in business cycle explanations, and held that it was of “little help in explaining details of investment fluctuations,” except as a rough indication as to why “there was a larger amplitude of fluctuation in durable as compared to non-durable commodities. His study (along with Kuznets’) did, in fact, show “no substantial statistical support for the acceleration principle as a generalized theory of investment in fixed capital.” He held that “fluctuation in the rate of profit is a more natural and meaningful explanation of investment fluctuations than is acceleration.”
His works are:
Business Cycles in the U.S.A., 1929-32; An Econometric Approach to Business Cycle Problems, 1937; Statistical Evidence on the Acceleration Principle, 1938; Statistical Testing of Business Cycle Theories, 1939; Some Problems in the Explanation of Interest Rates, 1946-47; and Econometric, 1950.
Successful Economist # 20. Triffin, Robert:
A specialist in international economics, Robert Triffin was a Professor at Yale University, and became known to a wider circle for his suggestion of a new mechanism of balance of payment settlement in replacement of the gold standard, revival whereof was not favoured because of its “inadequate adjustability of exchange rates,” and even though his proposed mechanism, called “Triffin’s Plan”, was not accepted at the Bretton Woods Conference, it left an imprint in the area of international monetary economics.
Triffin’s Plan was one of a series of Plans for International monetary ‘reform’ which seemed to be an alternative to gold exchange standard and very much like Keynes’s ‘Clearing Union.’ His proposal called for every IMF member country to keep a fraction of its reserves (gold and foreign exchange) on deposit with the Fund, enabling it to “create” deposits by making loans to member countries running short of foreign exchange, and further, the Fund should be empowered to engage in open market operations to purchase dollars from the holders in exchange for the newly created Fund deposits.
Triffin aimed at replacement of the existing national balance (gold and foreign exchange) by international currency-deposits at the IMF, subject to a minimum quota, and mobilization, by the Fund, of gold holdings and dollar balances through open market operations with-a view to protecting the ‘reserve currency’ countries from (a) the fear of conversion of their currencies into gold and/or more viable, currencies, and from (b) ‘inter-centre’ transfers, say, from New York to London and vice versa, since with the centralization of national reserves and the member countries’ central banks, functioning as member commercial banks under national central banks, no such “conversions” or “inter-centre” transfers would be possible.
Triffin endeavored to remove the limitations of Keynes’s “clearing union” scheme by requiring the Fund to deny credit facilities to such member countries as would become inattentive to restoration of “payments equilibrium.”
He seemed to have provided a ‘comprehensive scheme,’ close to the establishment of an international ‘Central Bank’ but it did not materialize owing to the member countries’ adverse reaction since, they feared, it would prejudice their independence in pursuing national policies to settle internal problems because of the compulsion to abide by certain policies of the Fund comparable to the gold standard discipline.
Successful Economist # 21. Meade, James Edward (1907- ):
A Cambridge economist, Meade was the author of a standard treatise (The Balance of Payments) with a “simultaneous analysis based on a generalized technique for solving problems.” During the post-World War II (1939 – 45) period and with the establishment of the IMF, Meade’s ‘sliding’ or ‘crawling’ parity was one of a few “hybrid systems” of exchange rates which were suggested as a compromise between the relative merits of fixed and floating rates of exchange.
His scheme was a refined version of what was called a “moving parity,” meaning an autonomous adjustment of the “par rate” following a monthly average of rates. He argued that instead of an abrupt devaluation or revaluation, such a measure would help spread the change in small percentages over a number of months, for instance, a ten per cent devaluation might be achieved by means of a monthly adjustment of one-fifth of one per cent for fifty months with the advantage of prior knowledge and small monthly adjustments, leaving no scope for excessive speculation.
A “liberal socialist,” Meade held, unlike the “orthodox” or “classical liberals,” that if “particular institutional arrangement” causing “artificial disturbances,” could be corrected, “free exchange could be relied upon to produce a social optimum.”
His concept of economic growth (Meade’s Model) showing the “influence of population growth, capital accumulation and technical progress on the growth rate of national income and real income per head” was virtually in line with the classical tradition of a “closed laissez-faire economy” in a state of “perfect competition and constant return to scale” without accounting for the role played by social, political and religious institutions and international forces in the process of economic development.
He was against the monopoly’s power of making a profit merely through restricting output and employment so as to “charge a ‘scarcity price’ and to drive a hard bargain with labour.” (cf. Post-Keynesian Economics: ed. K. Kurihara).
Meade was a critic, like other Keynesians, of the British Labour Government’s post-War economic policies in the matter of “market orientation.” He stated in his ‘Planning and the Price Mechanism’ that there were obvious limits to progressive taxation or the initiative to increase income would be weakened to the “vanishing point, and in such a case leisure must be considered cheap, risk-taking would be discouraged, and even proper division of labour would not be maintained.”
The following are his important works:
The Balance of Payments; Planning and the Price Mechanism, 1948; A Neo-Classical Theory of Economic Growth, 1961.
Successful Economist # 22. Webb, Sidney (1859 – 1947):
The Webb family (Sidney and his wife Beatrice) was opposed to ‘Manchesterism’, a nickname of Ricardian and Mill’s doctrines, and had a deep concern for social and economic reform. They had the active support of stalwart intellectuals like Shaw, Wells, Sydney Oliver and Graham Wallas, and the result was the formation of a Society, known as the Fabian Society, with its concept of, and preference for, a central planning after a proper “study of social institutions with a view to transforming them” into a “judicious blend of social reform and state ownership.”
The Society was established in London in 1884 to “promote socialism by gradual and democratic means” with a symbol, a ‘tortoise,’ the name ‘Fabian’ deriving from Quintus Fabius Maximus, the Roman Consul who earned the nickname of Cunctator (Delayer) in Rome’s struggle against Hannibal. Fabianism — an “evolutionary brand of socialism” — was a “mild programme of distant change” with its faith in the dictum of “inevitability of gradualness,” and evidently poles apart from Marxism.
The Fabians were the founders, pioneers and/or ‘architects’ of a number of educational, social and political reforms, for example, the establishment of the London School of Economics, renovation of the Poor Laws,influencing the London County Council to exercise efficiently in implementing social welfare programmes, and last but not the least, formation of the British Labour Party on their ‘official’ ideology.
Webb stood for social organizations and social relations, pointing out that what mattered was not the ‘cultivation of personality’, but the smoothness with which each consented to become a cog in the ‘great social machine’.
“… the perfect and fitting development of each individual is not necessarily the utmost or highest cultivation of his own personality, but the filling, in the best possible way, of his humble function in the great social machine.”
The Fabians were scornful of the distribution issue and explained their position: “…individuals or classes who possess social power …made use of that power …to leave to the great majority of their fellows practically nothing beyond the means of subsistence … additional product … above the margin of cultivation has gone to those exercising control over… valuable but scarce productive factors. This struggle …to secure surplus … is the key to the confused history of European progress, and an underlying unconscious motive of all revolutions.”
They favoured growing state intervention in a natural evolutionary process for the decline of land-owning and capitalist classes through drastic legislative action and taxation measures, state ownership and operation of industries, strict supervision of employer-employee relationship etc.
The Fabian Socialists’ distribution concept was rooted in their belief that wealth was social property since modern industry made it impossible to distinguish individual factor’s contribution to the final product, and that in such circumstance, the only alternative was to declare wealth as property of all.
In support of their belief in the natural evolutionary process they pointed out the progress of trade union movement in the then England, highlighting that labour union organizations (industrial democracy) were gradually substituting employers’ freedom in the labour market, by institutional procedures of collective bargaining as regards wage determination and control of working conditions. Industrial Democracy, Progress towards Democracy, Soviet Communism, and Fabian Essays are his principal works.
Successful Economist # 23. Mill, John Stuart (1806 – 73):
John Stuart Mill was the last great classical economist and was virtually the ‘bridge’ between Smithian, Malthusian and Ricardian ‘Classicism’ and Marshall’s’ ‘Neo-classicism’. He also helped, in a way, the ‘blending’ of economics and socialism.
Son of James Mill, an economist and a Benthamite, Stuart studied Latin, Greek, history, literature, political economy and also law under the able guidance of his illustrious father, and became a philosopher, historian and an economist.
Young Mill was in the service of the East India Company for more than three decades (1823-58) during which period he made an in- depth study of the subjects of his choice, namely, philosophy, economics and politics in particular, publishing his views in journals, periodicals and books. His admirable work ‘Principles of Political Economy’ (1848) with a touch of “social philosophy” was comprehensive and remained a basic text until the end of the century.
Mill was influenced by Ricardo in economics, by Malthus in ‘utilitarianism,’ and by Comte in the philosophy of ‘positivism.’ The ‘1848 Revolution’, the Trade Union and the Chartist movements did also have immense impact upon his thinking and writings.
He called all useful or agreeable things possessing exchange value as ‘wealth’, and held that while the value of’ labour-intensive’ production was subject to supply and demand, the value of production at an ‘ increasing cost’ depended upon production cost.
He argued that while production followed certain fundamental laws, distribution followed man-made rules, for example the “Distribution of Wealth depends upon the laws and customs of society”, and “necessarily presupposes a particular state of society…”
He was himself the critic of his Wages-Fund theory since, as commented by him, it turned to be contrary to the actual position: “…the price of labour was not determined by the size of a given wages fund, but rather wages themselves determine the size of the fund.”
While agreeing with the Classicists as regards self-interest, free competition, population, wages, rent, international exchange etc., in general, he had different views as regards the scope, methods and laws of economics, international trade, development theories, and government functions for human welfare.
He was not against free competition but not as assumed by Smith, Ricardo and Senior, whose reasoning — for example, ‘existence of free competition as a state of affair and to continue in the long run’—he felt, did not fit in with the actual conditions and should not, therefore, be used as a single guide to political or social behaviour.
He restated the Classicists’ supply-demand process of value by saying that the “demand for a commodity varies on its value, and that the value adjusts itself so that the demand shall be equal to the supply…,” and as regards capital, he endorsed the Ricardian concept of “stored-up” labour.
He supported free trade with justified protection, if and when necessary, and as regards paper money issue, he insisted upon corresponding gold reserve, giving, unwittingly, a hint to the later ‘Quantity Theory of Money’.
Mill held that the psychological explanation of business cycle, for example, “fair trade leading to optimism, optimism to recklessness, recklessness to disaster, disaster bringing in pessimism, and pessimism inhibiting action and fostering stagnation” was not dissociated from economic interpretation.
“Unearned advantage” was to him a synonym for rent, meaning ‘unearned income,” and he pleaded for periodical revaluation of land with a view to levying tax to absorb the increase in land value, in pursuance of a ‘human element’ approach as distinguished from the ‘mechanical element.’
Although a Classicist in general, his position was virtually in-between the classical dogma and the socialist thought, as reflected in the modifications in his writings, giving a socialist turn based upon his concept of utilitarianism and humanitarianism for the cause of the labour class and the poor.
He suggested substitution of the “wage system” by cooperative production, heavy taxation on land, restriction on the right of inheritance, even confiscation of land with a view to reducing excessive inequalities of wealth.
He was emphatic in the formation of a representative government with working class representation since “…in the absence of its natural defenders, the interest of the excluded is always in danger of being overlooked…”, which was regarded as the chief instrument of ‘social peace.’
“His claim to greatness in economics, however,” said Haney, “lies not in his doctrinal contribution, but in his thought concerning the postulates and assumptions of economics, and its relation to the social policy.”
Newman paid him tribute as follows:
“He did for Ricardo what Say did for Adam Smith — a job of systematization and popularization.” No one at all open to serious intellectual impressions has left Oxford without having undergone the influence of Mill’s teaching.
Mill’s works are:
System of Logic etc. 1842-3; Essays on Some Unsettled Questions of Political Economy, 1844; Principles of Political Economy, 1848; On Liberty, 1859; Representative Government, 1861; Utilitarianism, 1863; Comte and Positivism, 1864; Three Essays on Religion, 1864; Examination of Sir William Hamilton’s Philosophy, 1865; Subjection of Women, 1869; The Autobiography, 1875 (containing a precise account of his life and of his conversion to socialistic views); Chapters on Socialism, 1879 (a posthumous publication).
Successful Economist # 24. Cunningham, William (1849 – 1919):
Cunningham was an exception to his English counterparts’ “theoretical analysis” and “deductive generalization.” He preferred investigation into history and inductive reasoning in his approach to the study of economics. Starting as a lecturer in History at Cambridge (1891), he became Professor of Economics, King’s College, London (1894-97).
Since the “present is deeply rooted in the past, and that the anomalies and controversies of the present day become intelligible when we understand their genesis,” he continued, “due appreciation of the importance of the Body Economic is essential to the wise organization of the Body Politic.”
He regarded capitalism as a “passing phase when the possession of capital and the habit of pushing trade have become dominant in all the institutions of society,” and viewed that the “distinguishing feature of capitalist organization of industry is the possession of the materials by the employer who engages the workman and pays his wages; he subsequently makes a profit by the sale of the goods,” adding that “the intrusion of capital may not make much apparent change in the conditions under which the work is done, but it makes a tremendous change in the personal relation of the workman to his fellowmen when he is reduced to a position of dependence.” (The Progress of Capitalism in England.)
Cunningham was critical of Marshall’s “deductive economics” which indulged in excesses presuming “capitalism” as universal, which, he objected, could hardly be applicable to the “pre-capitalist” times or regarded as acceptable to the contemporary society as a “generalization,” and, as a leader of the ‘English Historical School,’ he accused Marshall of “perverting economic history,” and of assuming the “universality of economic laws,” ignoring the relativity of economic conclusion, and of perpetrating “many misunderstandings in the historical sketch.”
Marshall’s reaction was firm but, nevertheless, conciliatory. He said, “Speaking generally, his (Cunningham’s) criticisms proceed from assumptions that I hold opinions which in fact I do not hold,” from which it appeared that the difference between them was a matter of emphasis alone.
Cunningham’s works are:
Growth of English Industry and Commerce during the Early middle Ages, 1882; Progress of Capitalism in England, 1916; and Western Civilisation in its Economic Aspects.
Successful Economist # 25. Wootton, Barbara (1897 – 1988):
An English economist with liberal views and regarded as a socialist, Wootton’s findings are analytical concerning, in particular, the wage theory and structure, consumers’ behaviour, and social equality consistent with the economic situation.
Her observation was that the ‘contemporary’ wage theory was treated as a part of the general ‘value’ theory, and that the concept, namely, “… monetary and other advantages of any occupation will tend to balance one another so that jobs involving disagreeable or dangerous work, inconvenience or long working hours, will be more highly remunerative than those that do not…” was not an adequate justification since, she felt, it took little account of a number of wage and salary structures.
Even admitting that inborn aptitudes or training were contributory to wage differences, she was firm in her belief that social implications and political factors in particular countries were no less contributory to wage difference, for example, ‘pay and prestige’ however unfair, were still prevalent, of which the Classicists took little care while expounding their theory.
“Any wage policy, irrespective of its peculiar bias, is bound to meet with formidable difficulties, some real, some imaginary … If the shape of the present picture is to be altered, the change will benefit some people more than others …No doubt, it is for this reason that all political parties are afraid of it”(Social Foundations of Wage Policy).
She held that “consumers’ sovereignty” was an abstract concept and a ‘creation’ of the economists, since in a complex society consumers were scarcely conscious of their ‘dictating role’ in the market behaviour and were, more often than not, swayed away by persuasive publicity and advertisement, and the result was that instead of being ‘dictators’, they fell victim to the producers’ ‘dictation.’
Wootton did not seem to be satisfied with a ‘piece-meal social policy’, since her concept of ‘social equality’ required a widening of its foundation with a ‘policy objective’ consistent with the economic situation, calling for government’s co-operation with trade unions in a convincingly well-founded and constructive manner to maintain an ‘equalitarian wage policy’ and providing for remedial measures, as and when necessary, due weightage being given to national importance. She favoured a comprehensive, not a capitalist nor a piecemeal, planning headed by an authority commanding confidence and obedience.
Wootton was a socialist, but seemed to be realistic in her views as she remarked in her ‘Socialism and Federation’ that”… the notion that you must get socialism first, after which all things international will be added unto you, is a notion which ignores the lessons of experience.”
Her works are:
Plan or No Plan, Testament for Social Sciences, Freedom under Planning, Britain in the World Economy; The Social Foundations of Wage Policy ; Social Science and Social Pathology, 1959, etc.