History of Economic Analysis part 48 pot

Of course, for a history of economic and political thought as contrasted with analysis, both he and Bakunin are of immense importance.. And still more so for a sociology of economic and

claim to being called socialist, and it is amusing to note that with the ignorance of actual conditions that characterizes so many of those prophets, he actually reserved for interest and profits a larger relative share than goes to them, on the long-run average, in capitalist reality

12

The U.S branch of it has been described in L.L and J.Bernard, Origins of American Sociology: The Social Science Movement in the United States (1943)

ciationism of Lassalle—his scheme of productive associations that were to be subsidized

by the state and, by virtue of this advantage, to compete private industry out of existence.13 But there is something else: to Marx and to many of us, associationism may

be nonsense; but it was not nonsense to the Benthamite mind In fact, a glance at the utilitarian views on the human mind and on the nature of social relations suffices to show

that, once these assumptions concerning the quality—and substantive equality—of

individuals are granted, associationist hopes cease to be absurd And this accounts for the cautious associationism of J.S.Mill.14

[(b) Anarchism.]

If we extend the principle of associationism to the political sphere and visualize the dissolution not only of industrial concerns into workmen’s co-operatives but also of national states into voluntary ‘communes,’ we have Anarchism—of which by far the most articulate, but not the most orthodox or most consistent, exponent was P.J.Proudhon.15 Here we are interested neither in his political anarchism nor in his philosophy, which he himself described as Hegelian, though I find it more easy to link it

up with Fichte’s And we are interested in his economics only because it affords an excellent example of a type of reasoning that is distressingly frequent in a science without prestige: the type of reasoning that arrives, through complete inability to analyze, that is,

to handle the tools of economic theory, at results that are no doubt absurd and fully recognized as such by the author But the author, instead of inferring from this that there

is something wrong with his methods, infers that there must be something wrong with the object of his research, so that his mistakes are, with the utmost confidence, promulgated

as results Proudhon’s Système des contradictions économiques ou philosophie de la misère (1846) is the outstanding monument to this frame of mind He was, among other

things, unable to produce a workable theory of market value But he did not infer: ‘I am a

fool,’ but: ‘Value is mad’ (la valeur est folle) Marx’s scathing criticism (Misère de la philosophie, 1847) was fully deserved,

13

Moreover, though the man is to be taken seriously, it is fairly open to question how far his scheme is Nobody can study that life of high endeavor and tragic failure without becoming aware

of the fact that he is studying an important aspect of the German tragedy In other words: Lasalle was a born political leader, conscious of superlative powers, and there is as little point in proffering the all-too-easy objections to his plan as there is in pointing out logical weaknesses in Disraeli’s early thought The real counterargument would have been to appoint him to cabinet office But this

is precisely what Prussia was congenitally unable to do

14

On the extent to which J.S.Mill should be considered a socialist, see below, ch 5, sec 1 Mill may have influenced Lassalle

15

Of the Proudhon literature, I mention only a work of indubitable scholarly quality, though there

are several others that come within this category: Karl Diehl’s P.J.Proudhon, seine Lehre und sein Leben (1888–96) In Joseph Proudhon (1809–65) we behold a phenomenon that is as rare among

socialist thinkers as are horse-drawn vehicles in New York: a real, live proletarian He was self-taught and this lack of training shows on every one of his many pages Some of his ideas had been previously published by English socialists But it is practically certain that he did not know of them though not well aimed in every respect It should be observed, however, that Proudhon’s claim to be called an anarchist in his own sense is questionable For though, repeating an eighteenth-century phrase, he described property as theft in the pamphlet that founded his

fame (Qu’est ce que la propriété?, 1840), his big idea was gratuitous credit rather than

abolition of private property: loans free of interest to be issued in the notes of a public bank so that everyone might have access to means of production and become a proprietor—an idea that was to be revived by some latter-day projects of Social Credit Mikhail Bakunin (1814–76), Marx’s pet aversion, has no place in a history of analysis,

as he himself would have been the first to admit.16 But there was another anarchistic communist or communistic anarchist who did present a piece of analysis: Weitling, the founder of ‘Communia’ in Wisconsin.17 His particular plan does not concern us, but his theory of poverty does because it seems to enjoy a kind of immortality: it always turns up again It is of the type of social criticism that, like Henry George’s or F.Oppenheimer’s, traces poverty to private property in land.18 According to Weitling, there is no objection whatever to private property in other means of production and to private-business management of industry as long as there is free land accessible to everyone—all the

trouble arises and any kind of property becomes a curse only when land becomes scarce,

hence an object of property rights The lessons I want the reader to learn from this are two The first is one in the sociology of economic thought Even so critical a thinker as Locke had no compunctions about the analytic value of the proposition: God gave the earth in common to all men And this idea asserted itself in all ages, though in very different forms, even in writings that purport to present results of strictly empiricist thinking The other lesson is one in faulty analysis In many cases, actual and possible, the institutional structure of the agrarian sector may indeed be responsible for misery of the masses in the sense that their standard of life is lower than it would be with a different structure In order to prove this possibility, we need only imagine a state of things in which land is so plentiful as to be capable of being a free good but is monopolized, in the technical sense of the term, by a single land-holding corporation that sets a monopoly price on its use Cases somewhat more realistic than this then become verifications for the quite different proposition that the mere fact of

16

The best-known communist thinker of the subsequent period, P.A.Kropotkin (1842–1921), is a different case He made non-negligible efforts at analysis and his sociology of law is not without interest, though sufficiently so to warrant his exclusion from our report Of course, for a history of economic and political thought (as contrasted with analysis), both he and Bakunin are of immense importance And still more so for a sociology of economic and political thought How tsarist society came to produce—in its higher and highest circles—revolutionary communism is in itself a fascinating problem: a crack cavalry regiment was not the worst of nurseries for communist

impulses

17 Wilhelm Weitling (1808–71), Die Menschheit wie sie ist und wie sie sein sollte (1838);

Garantien der Harmonie und Freiheit (1842)

18

Not all agrarian socialists do this, of course

private property in land reduces, of necessity, total real wages This general proposition can be refuted by a rather elementary argument, which anyone is bound to encounter if he takes a few minutes to consider the question why private property should have that effect But nobody who has this bee in his bonnet ever takes these few minutes, and if he did he would—like Rousseau in the matter of miracles—go mad rather than give up the idea that feeds his emotional life And some such ‘bee,’ though not necessarily this one, is the most cherished possession of a distressingly large number of the people who write on economic subjects.19

If we leave the national state untouched and organize economic activity not into small free groups that on principle are self-sufficing but into vocational groups that are more like (though not necessarily quite like) the artisans’ and merchants’ guilds of the Middle Ages, we get the idea of the Corporative State Such an idea was developed by Fichte and

by many Catholic writers such as Baader The main point is that these plans do not assume that the state should manage the corporations but rather the other way round:20 they should hence not be identified with modern fascism; unlike the latter, they are

anti-étatiste in conception None of these writers bothered much about economic aspects It is

their cultural vision that is interesting From our standpoint, there is no comment to be made

In this connection, we may notice in passing the work of Karl Marlo,21 an author who has been much commended by nonsocialists such as Roscher and Schäffle Not a thorough-going socialist, he planned to sail between the Scylla of liberalism and the Charybdis of communism, to insure true equality and true liberty and so on by means of a large amount of nationalization of industry and of corporative organization for the part of economic activity that is not to be nationalized A strong sense of responsibility that accounts for the bourgeois praise and is quite surprising in a man who was primarily a planner shows in Marlo’s concern about the productivity of his system, about population, and about insurance But the only point that interests us here is his analysis of competitive capitalism On the one hand, he drew a picture of the condition of the working class that was as gloomy as was Engels’.22 On the other hand, he attributed this condition not to the historically unique conditions that prevail frequently, though not necessarily, in the earlier stages of capitalist evolution but to the inherent logic of the capitalist system that, if allowed to operate, will always and increasingly depress labor’s

lot We observe, first, that the factual picture is biased even ex visu of about 1850 For

even

19

Some readers may wonder why, speaking of communism, I do not mention Cabet But there is nothing to be said about him from our standpoint

20

At least, if certain co-ordinating or supervisory functions are left to government, the corporations are to retain a large measure of autonomy

21

Nom de plume of Karl G.Winkelblech (1810–65): Untersuchungen über die Organisation der Arbeit…(1848–59)

22

This is our opportunity to mention again a book that influenced social thought, in Germany at

least, far beyond the circle of socialist orthodoxy: Friedrich Engels, Die Lage der arbeitenden Klasse in England (1845; English trans 1887)

then statistics were available that any layman could have read to prove that talk about

enslavement and starvation, and still more talk about increasing misery of the masses,

lacked foundation in fact except so far as sporadic instances were concerned We observe, second, that the analytic effort is biased in the same direction For Marlo’s analysis of competitive capitalism entirely failed to consider the obvious alternative to the proposition about enslavement and systematically omits to take account of those mechanisms in the capitalist process that tend to work the other way But this systematic bias is evidently not like the bias of an index number or the bias in a particular source of information It is typically the bias of ideological delusion, the kind of bias that springs from a writer’s extra-analytic convictions and is impervious to either fact or argument Refuting fact and argument would be met by moral indignation

This is the point that made it worth our while to mention Marlo at all Though individually of no great importance or influence, he was one of the many writers who helped, around the middle of the nineteenth century, to crystallize the ideology of the capitalist process The main traits of this ideology had all emerged by 1776 They gained

in definiteness through the efforts of writers such as the Ricardian socialists, Engels, Marlo, and many others in the next three-quarters of a century or so Then the picture had become fixed That is to say, it had, for considerable sectors of both the economic literature and the public, reached the status of ‘as-everybody-knows’ and was no longer questioned but was taken for granted by an increasing number of people It was, in the thought of these people, substituted for the capitalist reality that increasingly diverged from it It was the picture that Marx analyzed It is the picture on which sophomoric radicalism feeds to this day.23

[(c) Saint-Simonist Socialism.]

We could go on indefinitely but, having learned from three examples all that is to be learned for our purpose from this literature, we should not gain sufficiently by doing so.24 One name, how-

23

There should really be little difficulty in realizing that Crystallization of Ideologies is the only explanation for the existence of honest belief in the misery, helplessness, and frustration of the working class at a time of the political and economic dominance of the labor interest Examination

of the rationalized arguments only serves to strengthen this diagnosis But crystallized ideologies that satisfy deep-seated urges defend themselves with desperate energy

24

A man who might have served us just as well as did Weitling, though less so than the more

serious Marlo, is Charles Hall, The Effects of Civilization [i.e Technological Progress], 1805 The

problem to be discussed with respect to him, similar though it is in all other respects, would display another, though cognate, aspect that is not without importance to the social psychology of the social sciences It may be put by means of the following question: since by all accounts this man was an able physician, how was it possible for him to use, in the field of social criticism, modes of thought that would have prevented him from passing his M.D exams? I do not mean his recommendations, but the formal properties of his reasoning and his handling of facts Another such man is J.F.Bray,

Labour’s Wrongs and Labour’s Remedy (1839; London School Reprint, 1931) All I wish to say

about him is that Marx should not be insulted by its being said that Bray anticipated him in any point:

ever, must be added, that of Saint-Simon.25 In the main, this pathological genius—Émile

Faguet’s fou très intelligent—affords only another example that illustrates the difference

between a man’s importance for a history of economic thought and his importance for a history of economic analysis Saint-Simon’s name stands in the history of economic thought because of a message of a semi-religious character and because disciples turned this message—not without altering it—into the creed of a sect Much has been written about Saint-Simon’s posthumous success: not only in France but also in England, Germany, and especially in the United States and in Latin America, Saint-Simonist groups emerged and even a Saint-Simonist intellectual fashion of much wider range But the groups consisted of small nuclei that quickly repelled serious members and brought discredit upon themselves by freakish developments of the creed Around these nuclei there were more numerous adherents whose allegiance was not very close and was chiefly phraseological As to the question how much importance should be attached to the intellectual fashion, men will, as in all similar cases, differ till doomsday The fashion itself is explained as soon as we visualize the two salient features of the message that combined to produce something that was not to be had from any other creed: on the one hand, its glowing humanitarian optimism; on the other hand, its glorification of ‘science’ (technology) and of industrialism Where other humanitarians were sour and doubtful about what sort of a future capitalist industry

any argument that works with exploitation must bear misleading witness to some affinity with

Marx The work of F.Huet (Le Règne social du Christianisme, 1853), whose proposal of division among the young generation of biens patrimoniaux, land especially, as they are released by death,

suggests that Saint-Simonist ideas found favor also in Catholic centers The ‘Ricardian’ socialists

will be briefly considered later On Engish Christian socialists, see C.E.Raven, Christian Socialism, 1848–54 (1920), and L.Brentano, Die christlichsoziale Bewegung in England (1883) See also, J.O.Hertzler, History of Utopian Thought (1923)

25

Claude-Henri de Rouvroy, Comte de Saint-Simon (1760–1825) was a Rouvroy and therefore of

the—genealogically speaking—best but also most degenerate blood of France; Oeuvres choisies

(1859); biography by M.Leroy (1925); many works on the Saint-Simonist ‘system’ of thought and

the Saint-Simonist sects, e.g S.Charléty, Histoire du Saint-Simonisme, 1825 64 (1896) On an

aspect of special importance for us, see E.S.Mason, ‘Saint-Simonism and the Rationalisation of

Industry,’ Quarterly Journal of Economics (August 1931) The question which of his writings I

should recommend to the reader embarrasses me greatly: it must be answered quite differently for

men of different interests and tastes As for myself, I know only those contained in the Oeuvres choisies In a general way, I believe that economists will profit from a perusal of Du Système industriel (1821) more than from a perusal of his last and most famous work, Nouveau

Christianisme (1825), which falls somewhat out of line with the rest and contains chiefly

preachings of an utilitarian character—increase of the welfare of the most numerous and poorest class and so on—that are more Benthamite than Saint-Simonian Perhaps I should also mention

Bazard’s Exposition de la doctrine de St Simon (1830), which is remarkable for clearness Nothing

need be said, for our purposes, of his followers (Enfantin and Bazard were the most important) beyond the general comment on them in the text

would provide for humanity at large, Saint-Simon gave comfort Where other enthusiasts

of industrial progress were harsh and unsympathetic, he preached the golden age for all

It was this combination of features that made Saint-Simonism so popular, for a time, with financiers of the promoter type such as the brothers Pereire of Crédit-Mobilier fame But can the reader be so thoroughly imbued with intellectualist misconceptions as to believe that, without Saint-Simon’s teaching, the Crédit Mobilier would not have been founded and managed exactly as it actually was, and would not have crashed exactly as it actually did?

There is something else, however Saint-Simon’s vision was not implemented by analytic work but nevertheless it is relevant for us in two respects First, there is a conception of social change that may be said to adumbrate an economic interpretation of

history Saint-Simon felt the breakdown of the ancien régime and the advent of a new

epoch with a pungent sense of reality—to use William James’s phrase—that could not have come so naturally to anyone who was not a Rouvroy Simplifying this into a

breakdown of the feudal world and the advent of the epoch of industrialism under pressure from economic (technological) developments, he grasped some essentials of the

eternal flux of social organizations and, within it, of the struggle of economic classes, his idea being that he was to lead humanity out of this struggle by means of the wonderful achievements of ‘science’—rant, partly, but rant interspersed with flashes of profound understanding.26 Second, there is a perception or a glimpse of the true nature of the capitalist process that acquires particular importance from the fact that neither Marx nor his bourgeois peers had it: Saint-Simon saw the pivotal importance of industrial leadership He confused, it is true, the entrepreneur with the ‘scientist’ who devises new technologies And he used his vision in the construction of a new form of social organization and not, as Marx would have done in his place, in any attempt to explain social processes as they are Still, he did introduce a new factor that might have revolutionized ‘classic’ economics and might have put an end to analytic—as disguished from normative—equalitarianism However, nothing resulted from his vision except that his socialism—if indeed his ‘system’ can be called socialist at all—was hierarchic27 and not equalitarian And economists completely failed to exploit this mine

26

I do not think, however, that this impairs materially the case for Marx’s originality as regards the economic interpretation of history For I find it difficult to conceive that anyone who had not had the idea himself could have been inspired to construct it from the suggestions proffered by Saint-Simon’s writings At worst, Saint-Simon was in this respect a forerunner in the same sense as Buffon and Erasmus Darwin were forerunners of Charles Darwin

27

This comes out very nicely in a letter addressed by Enfantin and Bazard to the President of the

Chambre des deputés in 1830, a reprint of which the reader will find in Professor Gray’s Socialist Tradition, p 168 Let me add one more point: Saint-Simon, too, spoke of ‘association’ but this has

nothing to do with the associationism discussed previously

Review of the Troops

ACCORDING TO PLAN, we shall survey the general layout of this period’s analytic

economics in Chapter 5, taking up headquarters in J.S.Mill’s Principles The review of

the more important men and groups in the present chapter is for the benefit of readers who are unfamiliar with any but the greatest figures It will not contain more names than are necessary for a general orientation Others will be introduced as we proceed

1 THE MEN WHO WROTE ABOVE THEIR TIME

We have emphasized the relative maturity that economics gained during the period under survey Its relative immaturity might be measured by the number of important performances, the powerful originality of which was recognized later but which the profession completely, or almost completely, failed to recognize at the time This happened in the cases of Cournot and of the various writers, especially Dupuit, Gossen, and Lloyd, who discovered the marginal utility principle We shall transfer them to Part

IV, merely observing for the moment the melancholy implications of this neglect: it shows a lack of alertness and of purely scientific interest among the economists of the period that goes far toward explaining why economics did not advance more quickly.1

In addition, there were other performances that fared a little better but also proved to be above their time in the sense that they failed to receive the attention and exert the influence which, enlightened by hindsight, we should deem appropriate Of these, the most noteworthy are the writings that developed the marginal productivity principle Since some leaders of the day occasionally did move within its orbit,2 we shall at once make our bow to two early exponents of that principle who are particularly important, Longfield and Thünen And I shall append a notice of still another man who wrote above his time, John Rae

1

We may adduce mitigating circumstances, but substantially the indictment

stands Cournot was not unfavorably placed for getting a hearing If he failed to

get it, this was wholly due to the mathematics in the book But precisely—what

sort of a profession was this that laid aside a work because it was a little difficult

of access? Dupuit elicited at least some criticism Gossen was unfavorably placed

and, if he did nothing to circulate his book among professors, the latter’s sin may

have been venial But W.F.Lloyd was ‘Student of Christ Church and Professor of

Political Economy’ at Oxford His argument on marginal utility was quite

straightforward and there was nothing deterrent about it Several writers brushed

against it, e.g Senior It must have become known to a number of people The

only construction that it is possible to put upon the fact that Lloyd’s argument

exerted no influence is that the economists who read it were blind to the analytic

possibilities enshrined in it

Later on, it will become clear to the reader that it would have been quite

impossible for them not to do so Also, it will be explained later why I do not think that they, Ricardo especially, should be credited with more than is implied by the phrase in the text

Mountifort Longfield (1802–84) was a lawyer by training and the first incumbent of the chair of political economy—a foundation of Archbishop Whately’s—at Trinity College, Dublin He also wrote on the Poor Law and other subjects, but the only publication of his we need notice is

Lectures on Political Economy (delivered 1833, publ 1834, London

School Reprint 1931) Anyone who cares to glance at this book will readily understand why, in spite of its merits of exposition and matter, he failed to make a mark, so that he had to be unearthed, along with others,

by Professor Seligman in the justly famous article ‘On Some Neglected

British Economists,’ Economic Journal, 1903,3 for which all students of the history of economics have every reason to feel lasting gratitude But this neglect is readily understandable only if we realize what it is that will impress professional opinion and what it is historians of economics usually look for, namely, on the one hand, a man’s views on the practical issues of his day and, on the other hand, the way in which he handles the theoretical tools that are common currency in his day New ideas, unless

carefully elaborated, painstakingly defended, and ‘pushed’ simply-will not tell Longfield’s case illustrates so well the important question ‘what takes

effect and how and why,’ because Longfield did not fail to keep contact with Ricardian teaching—he gave Ricardians every opportunity to be led

to a more perfect analysis gently and without any violent break—and because he did find successors: he really founded a local ‘school’ (on this, see R.D.Black, ‘Trinity College, Dublin, and the Theory of Value, 1832–

1863,’ Economica, 1945) His successor in the Whately chair, Isaac Butt (Rent, Profits, and Labour, 1838), was his professed disciple and—

correctly as I believe, if we consider pure theory only—put him on the same level as A.Smith

Longfield’s merits may be summed up by saying that he overhauled the whole of economic theory and produced a system that would have stood up well in 1890 Among other things, his argument against the labor theory of value is one of the best ever penned However, we must confine ourselves to his two original contributions He was one of those who anticipated the essentials of Böhm-Bawerk’s theory (by making the

‘roundabout’ process of production the pivot of his analysis of capital) And he presented a reasonably complete and reasonably correct theory of distribution based upon the marginal productivity principle, not only the marginal cost principle That is to say, he explained both ‘profits’ (return upon physical capital) and wages in terms of the contributions to total 3

Reprinted in E.R.A.Seligman, Essays in Economics (1925), ch 3

product that result from the addition to the productive set-up of the last element of capital (tools) or labor Thus at least it seems fair to interpret him, though in details his argument is open to many criticisms (among other things he failed, as did many writers even after 1900, to distinguish clearly between the last laborer added and the least efficient laborer) The argument is still worth reading because it shows nicely the operations by which economists’ minds paved their way toward the use of the general marginal principle But we cannot stay to work this out

Johann Heinrich von Thünen (1783–1850), the man whom A.Marshall

professed to have ‘loved above all my other masters’ (Memorials of Alfred Marshall, 1925, p 360), meant, of course, much less to his age than did

Ricardo But this is due to the latter’s brilliant advocacy of policies If we

judge both men exclusively by the amount of ability of the purely theoretical kind that went into their work, then, I think, Thünen should be

placed above Ricardo or indeed above any economist of the period, with the possible exception of Cournot He was a North German Junker and

followed the typical profession of the North German Junkertum (the

correct translation is ‘gentry’): for most of his life (after having completed his education at an agricultural college supplemented by two semesters at the University of Göttingen), he farmed the indifferent soil of his medium-sized estate, just about managing to make both ends meet and, sacrificing everything else, to keep up his intellectual interests in wintertime This practical farmer was a born thinker, however, and quite unable to supervise the teams that ploughed his land without working out the pure theory of the process His thoughts roamed toward wide generalizations from an early age but, first of all, he was an agriculturist, schooled in the ideas of Thaer, and an agricultural economist As such he did enjoy recognition in his own country Later on, he was also recognized more generally but in a peculiar way Roscher, for example, considered Thünen’s work to be one of the most important that had been written in Germany in the field of exact economics Yet he entirely failed

to grasp its true meaning Reviewers were compli-mentary Yet none of them understood the work except the part of it that is listed below under

(III) For the rest Thünen, unlike Cournot, never came into his own For

though he continued to be quoted, the marginal productivity theory of distribution was independently rediscovered later, and his message was fully understood only at a time when all that would strike the reader was

its shortcomings The first volume of his Der isolierte Staat in Beziehung auf Landwirthschaft und Nationalökonomie was published in 1826 (2nd

ed., 1842); the first part of the second volume, in 1850 The rest of the second volume and a third were published, from unfinished but well-advanced manuscripts, by H.Schumacher in 1863 There is a new edition

with an introduction by Heinrich Waentig in Sammlung sozialwissenschaftlicher Meister (vol XIII, 1910) The third volume

contains ‘Principles for the Determination of the Rent of Land, the

Optimal Period of Rotation, and the Value of Timber of Different Ages for Firs’ [This is a literal translation by J.A.S.] The standard biography is also by Schumacher (1868), but the reader finds the relevant data in Professor E.Schneider’s article ‘Johann Heinrich von Thünen’ in

Econometrica, January 1934

Thünen’s contributions may be summed up as follows (I) He was the first to use the calculus as a form of economic reasoning (II) He derived his generalizations, or some of them, from numerical data, spending ten laborious years (1810–20) in carrying out in detail a comprehensive scheme of accounting for his farm in order to let the facts themselves suggest the answers to his questions This unique piece of work, undertaken in the spirit of the theorist, makes him one of the patron saints

of econometrics Nobody, before or after, ever understood so profoundly the true relation between ‘theory’ and ‘facts.’ (III) Nevertheless, this man who was so fact-minded knew at the same time how to frame ingenious and fertile hypothetical schemata His peak achievement in this art is his conception of an isolated domain of circular form and uniform fertility, free from all obstacles to or special facilities for transport, with a ‘town’ (the only source of demand for agricultural products) in the center Given techniques, cost of transportation, and relative prices of products and factors, he deduced from this the optimal locations (which under those assumptions would be ring-shaped zones) for the various kinds of agrarian activities—dairying, forestry, and hunting included A theory of rent, in some points superior to that of Ricardo, results as a by-product Though many people objected to such bold abstraction, this was the part of his work that was understood and recognized in his time For us, it is important to realize its brilliant originality Ricardo or Marx (or whoever

it is among the theorists of that period who holds the place of honor in the reader’s scale) worked on problems that presented themselves from outside by means of analytic tools that had been forged before Thünen alone worked from the unformed clay of facts and visions He did not

rebuild He built—and the economic literature of his and earlier times

might just as well not have existed at all so far as his work is concerned (IV) In quite the same spirit, he was the second (the first was Cournot, by date of publication at least) to visualize the general interdependence of all economic quantities and the necessity of representing this cosmos by a system of equations (V) He introduced explicitly the tool of analysis, actually used of course by Ricardo, that may be termed the ‘steady state’

of the economic process—Marshall’s long-run normal—that was akin to statics rather than to the stationary state of ‘classical’ theory (VI) As fully

as Longfield, and somewhat more correctly, he developed a marginal productivity theory of distribution, at least for the relation between capital and labor, interest and wages But the fundamental idea itself (which he correctly puts, in words, in terms of partial differential coefficients, Waentig edition, p 584) is almost a secondary element in the wealth of problems he grouped around it No idea of these can be conveyed Instead