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An “Examination of Premises”

  • Laurence Shute
Part of the Contemporary Economists book series (CONTECON)

Abstract

During his teaching at Amherst, Clark began “an examination of premises” of the received economic thinking. Hardly indicative of a rebellious attitude on his part, Clark’s search was largely brought on by the criticisms which thinkers like Thorstein Veblen and Herbert J. Davenport had directed against the theories of the elder Clark and the marginal utility school in general. As he much later recalled, “the development of his studies, relative to order of teaching positions held and relative to times when the studies were made”:

Overhead Costs came first, 1905–23. Next in time Fd put the working out of a position relative to Veblen’s & Davenport’s criticisms of J.B.C., centering on “social productivity vs. private acquisition.” This pointed to examination of premises.… All this in the Amherst period. Criticisms of the psychological assumptions of utility theory remained a challenge, & led to the two 1918 articles on psychology, with Wm. James’ Psychology the most obvious source; Cooley’s Human Nature and Social Organization [sic] next, perhaps. Carleton Parker came later, I think, as did Cooley’s Social Process. “Inappropriables” formed a natural key concept, and Ely’s Property and Contract (1914) put content into it, followed by Roscoe Pound and Ernest Freund. Meanwhile Pigou’s Wealth and Welfare (1912) and Hobson’s Work and Wealth (1914) put “Welfare Economics” on the map relative to social productivity vs. private acquisition. Mitchell’s Business Cycles (1913) led to the acceleration article, as you indicate.1

Keywords

Marginal Utility Overhead Cost Social Productivity Economic Thinking Standardize Efficiency 
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Notes and References

  1. 1.
    Clark to Joseph Dorfman, 12 May 1956; extracts in Dorfman, Economic Mind, V: 440. The title of Cooley’s book was Human Nature and the Social Order (1902; 1922). Cooley’s Social Organization: A Study of the Larger Mind was published in 1909.Google Scholar
  2. 2.
    “Davenport’s Economics,” Political Science Quarterly, 29 (June 1914), 315–323.Google Scholar
  3. 3.
    “The Prospects of Economics,” in The Trend of Economics, edited with an introduction by Rexford Guy Tugwell (New York: F.S. Crofts, 1930), 19; reprinted in The Backward Art of Spending Money, And Other Essays, compiled and edited by Joseph Dorfman (New York: McGraw-Hill, 1937), 342–385. John Bates Clark had written: “If the Ricardians had recognized that their study was only partial, and had followed it with a separate study of dynamic forces, they would have given to their science a realistic character.” See The Distribution of Wealth (New York: Macmillan, 1899), xvi.Google Scholar
  4. 4.
    Angell received his Ph.D. under James at Harvard in 1892. See Edwin G. Boring, A History of Experimental Psychology, 2nd ed. (New York: Appleton-Century-Crofts, 1957), Chapter 22, esp. 552–559. Also Boring’s Sensation and Perception in the History of Experimental Psychology (New York: Appleton-Century-Crofts, 1942), Chapter 1. The behaviorist John B. Watson received his Ph.D. under Angell at Chicago in 1903.Google Scholar
  5. 5.
    Although James “was not by temperament nor in fact an experimentalist,” he nevertheless stimulated the field. Boring, A History, 508.Google Scholar
  6. 6.
    The Principles of Psychology, in two volumes (New York: Dover, 1950 [1890]), II, 550. At another point James wrote: “It is of the essence of all consciousness (or of the neural process which underlies it) to instigate movement of some sort. That with one creature and object it should be of one sort, with others of another sort, is a problem for evolutionary history to explain. However the actual impulsions may have arisen, they must now be described as they exist; and those persons obey a curiously narrow teleological superstition who think themselves bound to interpret them in every instance as effects of the secret solicitancy of pleasure and repugnancy of pain.” Ibid., 551.Google Scholar
  7. 7.
    “Economics and Modern Psychology,” The Journal of Political Economy, 26 (January, February, 1918). Reprinted in Preface to Social Economics, edited with an introduction by Moses Abramovitz and Eli Ginzberg (New York: Farrar & Rinehart, 1936), 92–169. Several of these early articles are found in this collection.Google Scholar
  8. 15.
    Ibid., 101–102, 106. He also pointed out that motives “are sometimes spoken of as commensurable in the sense of being ranked in order of preference. If these scales of values had stability there would be no quarrel with this usage, save that the establishing of the scale is not done by a process of measurement.” Ibid., 102 (emphasis added). See below where Clark refers to Wicksteed in pointing out that preference systems are not transitive.Google Scholar
  9. 16.
    Preface to Social Economics, 98–100 (emphasis added).Google Scholar
  10. 17.
    The English-born Edward Bradford Titchener (1867–1927) took his B.A. degree at Oxford in Philosophy and Psychology and his doctorate at Leipzig under Wilhelm Max Wundt, an early interpreter of Darwin. He came to Cornell University in 1892 where he remained until his death. His extensive writings and criticisms of John Dewey and the Chicago functional psychologists helped establish modern psychology in the United States. See Boring, A History, 410–420 and passim. Among the students of Wundt at Leipzig were Frank Angell and Lincoln Steffens. Wundt’s works also stimulated William James.Google Scholar
  11. 18.
    Preface to Social Economics, 98–100, 103, 104–105.Google Scholar
  12. 19.
    Clark to W.C. Mitchell, 21 April 1927. In W.C. Mitchell Papers, Columbia University Libraries.Google Scholar
  13. 20.
    Ibid., 119, 121. Clark is not referring here to the notion of opportunity costs; his concept of “alternative cost” is considered later in this chapter.Google Scholar
  14. 21.
    Ibid., 123. He noted here that Henry Walgrave Stuart takes a similar position in Creative Intelligence, by John Dewey et al. (New York: Holt, 1917), 282–353.Google Scholar
  15. 22.
    Preface to Social Economics, 108–109.Google Scholar
  16. 23.
    Ibid., 109–111.Google Scholar
  17. 24.
    Ibid., 127. Wicksteed’s treatment of the intransitive nature of wants is in The Common Sense of Political Economy, And Selected Papers and Reviews on Economic Theory, edited with an introduction by Lionel Robbins (2 vols., London: Routledge & Sons, 1946), I, Chapter 1, esp. 33–34. On the related point of Wicksteed’s change of mind on the marginal productivity theory, see Joseph Dorfman, “Wicksteed’s Recantation of the Marginal Productivity Theory,” Economica 31 (New Series), 294–95, and Chapter 3 below.Google Scholar
  18. 25.
    For instance in the familiar form of the Cobb-Douglas production function, Q = ALaK1−a”; “A” is the index of total factor productivity. Here, only labor and capital are measurable contributors to production; all else is lumped under “A”. Cf. Leo Wolman, “The Theory of Production,” American Economic Review, 11 (March 1921), 42, andGoogle Scholar
  19. Evsey D. Domar, “On the Measurement of Technological Change,” The Economic Journal, 71 (December 1961), 709–29, reprinted in Capitalism, Socialism, and Serfdom (New York: Cambridge University Press, 1989), 49–72.CrossRefGoogle Scholar
  20. 26.
    Ibid., 128.Google Scholar
  21. 27.
    Preface to Social Economics, 128–129. Compare Wesley Mitchell’s statement on business cycles: “Since the processes of a nation’s business life never cease or begin afresh, no natural starting point for the descriptive analysis to which we are committed exists. It is necessary to plunge in medias res by breaking into the unceasing processes at some arbitrarily chosen point.” Business Cycles and Their Causes, reprint of Part III of Business Cycles (Berkeley: University of California Press, 1959 [1913]), xii. And, Charles Horton Cooley: “There is no beginning; we know nothing about past beginnings; there is always continuity with the past, and not with any one element only of the past, but with the whole interacting organism of man.” In Social Process, reprint edition (Carbondale, Illinois: Southern Illinois University Press [1918], 1966), 46.Google Scholar
  22. 28.
    Preface to Social Economics, 129–130.Google Scholar
  23. 29.
    “Value,” as Clark used the term in this context, was “used to mean human [or social] value, implying a ‘utility’ sufficiently scarce or expensive to have economic importance.” And he emphasized: “The values immediately in question have no adequate measure in price, though all values take some effect on prices.” Ibid., 133 (emphasis added).Google Scholar
  24. 30.
    Ibid., 131.Google Scholar
  25. 31.
    Compare Alfred Marshall, Principles of Economics, 9th ed. (London: Macmillan, 1961), Book II, Chapter 2.Google Scholar
  26. 32.
    Preface to Social Economics, 132 (earlier emphasis in original).Google Scholar
  27. 33.
    Ibid., 133; see also 132. The notion of the “power to withhold” is used in an identical sense by John R. Commons in Legal Foundations of Capitalism (Madison, The University of Wisconsin Press, 1968 [1924]), 32. Neither author mentions the other in this context.Google Scholar
  28. 34.
    Ibid., 133–134. These notions were to play a large role in Clark’s Social Control of Business (1926). See Chapter 4 below.Google Scholar
  29. 35.
    Preface to Social Economics, 104–105; 139–140; 161–165.Google Scholar
  30. 36.
    Ibid., 140–141 (some emphasis added).Google Scholar
  31. 37.
    In his Social Choice and Individual Values, Cowles Commission Monograph No. 12 (New York: John Wiley & Sons, 1951), Chapter 1, and 89–91.Google Scholar
  32. 38.
    Preface to Social Economics, 142, 143.Google Scholar
  33. 39.
    Ibid., 142 (emphasis supplied). This notion is clearly suggestive of Clark’s later work.Google Scholar
  34. 40.
    Ibid., 142. On the subject of quality, see Lawrence Abbott, Quality and Competition: An Essay in Economic Theory (New York: Columbia University Press, 1955), esp. Chapter 14. This was a revised version of his Columbia Ph.D. dissertation done under Clark’s guidance.Google Scholar
  35. 41.
    Preface to Social Economics, 143.Google Scholar
  36. 42.
    Ibid., 144.Google Scholar
  37. 43.
    Ibid., 146.Google Scholar
  38. 44.
    Ibid., 169.Google Scholar
  39. 45.
    “The Empire of Machines, The Yale Review, New Series, 12 (October 1922), 132–143.Google Scholar
  40. 46.
    See “The inspiration of this sketch.…” in The Yale Review, 12 (October 1922), xxviii, where Clark writes “Some three years ago the chapter on machines in ‘Erewhon’ seized upon my imagination and demanded a sequel.” This published version may be a revision of one submitted to The Yale Review on 6 April 1920. See Clark’s letter to the editors of The Yale Review, 6 April 1920, in the Beinecke Rare Book and Manuscript Library, Yale University. In Clark’s papers are a number of notes on this theme. Among them is a clipping of “The Machine as Slave and Master,” by Herman George Scheffauer in The Freeman (12 May 1920), 208–210. One outline, wrapped in the Boston Globe of 6 August 1921, is entitled “Empire of Machines: Erewhon version” with a projected 8 chapters. Of this Clark wrote: “Est[imate] 115–20 pages.” Another note in Clark’s hand states: “Living things are habits of thought: Butler: Cooley [.] Sci[ence]:Veblen.” Clark experimented with “Rewop” (power) and “Ecneics” (science). J.M. Clark Papers.Google Scholar
  41. 47.
    “The Empire of Machines,” 133. See Butler’s article in The Press, Christchurch, New Zealand (13 June 1863): the original part of Erewhon. Here Butler wrote: “Day by day … the machines are gaining ground upon us; day by day we are becoming more subservient to them. … The upshot is simply a question of time, but that the time will come when the machines will hold the real supremacy over the world.…” Entitled “Darwin among the Machines,” the article is signed “Cellarius” and is reprinted in Arthur O. Lewis, Jr. (ed.), Of Men and Machines (New York: Dutton, 1963), 183–187.Google Scholar
  42. 48.
    “The Empire of Machines,” 133–134.Google Scholar
  43. 49.
    Preface to Social Economics, 40.Google Scholar
  44. 50.
    “The Empire of Machines,” 135, 136, 140.Google Scholar
  45. 51.
    “Economics and Modern Psychology,” in Preface to Social Economics, 94 (the emphasis is Clark’s).Google Scholar
  46. 52.
    The Relation Between Statics and Dynamics,” in Preface to Social Economics, 196, 199.Google Scholar
  47. 53.
    Note in Clark’s hand, J.M. Clark Papers. No date given: probably around the 1950s.Google Scholar
  48. 54.
    “The Relation Between Statics and Dynamics,” in Preface to Social Economics, 203 (emphasis added).Google Scholar
  49. 55.
    Ibid., 204–206.Google Scholar
  50. 56.
    Clark’s admiration for Cooley is revealed in his review of the third of Cooley’s trilogy, Social Process. In The Journal of Political Economy, 27 (March 1919), 218–221. Clark dedicated a book to the memory of Cooley in 1948: Alternatives to Serfdom: See Chapter 6, below.CrossRefGoogle Scholar
  51. 57.
    Cooley’s major works are: Human Nature and the Social Order (1902, Rev. and enlarged ed., 1922); Social Organization (1909); and Social Process (1918). See also his “Political Economy and Social Process,” (1918) reprinted in Sociological Theory and Social Process, Selected papers of Cooley with an introduction and notes by Robert Cooley Angell (New York: Holt, 1930), 251–159.Google Scholar
  52. On Cooley, see Edward C. Jandy, Charles Morton Cooley: His Life and His Social Theory (New York: Dryden, 1942), and Joseph Dorfman, Economic Mind, III, 401–407; IV, 137–139.Google Scholar
  53. 58.
    Social Process, 48–49; 294–295. Compare Wesley C. Mitchell’s “The Role of Money in Economic History,” Journal of Economic History, Supplement, 4 (December 1944), 61–67, and “The Role of Money in Economic Theory,” (1916) reprinted in his The Backward Art of Spending Money, and other essays (1937), (reprint; New York: Kelley, 1950), 149–176.Google Scholar
  54. 59.
    “The Relation between Statics and Dynamics,” 196–197.Google Scholar
  55. 60.
    A fundamental distinction between induction and deduction is logically untenable. Clark adopts common usage by using these terms in the sense of an emphasis on one or the other approach. For a first-rate discussion of the problem, see E.H. Carr’s What is History? (London: Macmillan, 1961), especially 16–18. Clark wrote that “the core of scientific method lies, not in induction nor in deduction, but in taking account of all relevant facts and excluding none.” In “The Socializing of Theoretical Economics,” 6.Google Scholar
  56. 61.
    “Clark to Mitchell, 13 January 1944. In W.C. Mitchell Papers, Columbia University Libraries.Google Scholar
  57. 62.
    Clark’s rejection of this dichotomy and his insistence on treating ethical matters explicitly are discussed in Chapter 6, below.Google Scholar
  58. 63.
    “The Socializing of Theoretical Economics,” 10–11 (emphasis supplied).Google Scholar
  59. 64.
    Ibid., 6 (Clark’s emphasis). This is, of course, his principle of alternatives.Google Scholar
  60. 65.
    “The Relation between Statics and Dynamics,” 197–198. “The work of J.B. Clark includes examples of both the narrower deductive and the broader qualitative modifications of statics. The former are found in his Essentials of Economic Theory [1907], while the most challenging fragments of the broader type of study are contained in his earlier work: The Philosophy of Wealth [1886].” Ibid., 198.Google Scholar
  61. 66.
    Ibid., 197.Google Scholar
  62. 67.
    “The Socializing of Theoretical Economics,” 4, 5.Google Scholar
  63. 68a.
    “The Socializing of Theoretical Economics,” 11–12.Google Scholar
  64. 68b.
    “A Contribution to the Theory of Competitive Price,” 274. There is the related question, of course, as to why the “simplicity of a well-formed hypothesis” should seem “beautiful” compared to “amorphous facts.” For a penetrating historical insight into the origins of the prominence of the deductive emphasis in economic thought, see Wesley C. Mitchell, Types of Economic Theory, from Mercantilism to Institutionalism, edited with an introduction by Joseph Dorfman, 2 vols. (New York: Kelley, 1967), I: 312–374.Google Scholar
  65. 69.
    “The Socializing of Theoretical Economics,” 3, 5 (the emphasis is Clark’s).Google Scholar
  66. 70.
    “The Changing Basis of Economic Responsibility,” 80.Google Scholar
  67. 71.
    John Maurice Clark and others, Adam Smith, 1776–1926 (Chicago: The University of Chicago Press, 1928), 55.Google Scholar
  68. 72.
    “Economics and Modern Psychology,” 94–95.Google Scholar
  69. 73.
    Clark’s system is sometimes referred to as “Social Economics.” Joseph Dorfman described it as a “constructive synthesis.”Google Scholar

Copyright information

© Laurence Shute 1997

Authors and Affiliations

  • Laurence Shute
    • 1
  1. 1.California State Polytechnic UniversityPomonaUSA

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