Economics 207
History of Economic Theory
Spring 1998
Instructor: J. Ostroy
Office Hours: Wed 5-6, Thurs 2:30-3:30 and by
appt.
email: ostroy@jevons.sscnet.ucla.edu
The purpose of this course is to trace
the developments of themes in economic theory back through the past 125
years. These themes will include (1) the
neoclassical theory of value and distribution, (2) the neoclassical critique of
laissez-faire, called welfare economics and (3) the Austrian School's defense
of laissez-faire. Under (1), we shall
look at the contributions of the major figures in the marginalist revolution;
under (2), we shall look at the development of the concepts of external
effects, public goods, increasing returns, and monopolistic competition; and
under (3) we shall look at the Socialist Controversy.
READING LIST
(A * next to the
citation indicates required reading.)
I. Founders of the Marginalist Revolution
1.A. JEVONS
*Jevons, William S.,
The Theory of Political Economy (including preface to the second ed. and
reprint of article read before the British Association in 1862).
Marshall, Alfred M.,
``Mr. Jevons' Theory of Political Economy,'' in Memorials of Alfred Marshall,
pp. 93-100, A.C. Pigou (ed.)
Marshall, Alfred M.,
Appendix I, in Principles of Economics, 8th ed.
Keynes, .J M., ``William Stanley Jevons,'' Journal
of the Royal Statistical Society, 1936, pp. 516-48. Reprinted in Keynes, Essays
in Biography (1951), and in The Development of Economic Thought,
H.W. Spiegel (ed.)
Schumpeter, Joseph A., History of Economic
Analysis, pp. 909-20.
Schabas, M., A World Ruled by Number:
William Stanley Jevons and the Rise of Mathematical Economics, Princeton
University Press, 1990.
Mitchell, Wesley C., Types of Economic
Theory, Vol. II. pp. 1-85.
Blaug, Mark, Economic Theory in
Retrospect, 4th ed., Ch. 8.
Ekelund, Robert B., and R. F. Herbert, A
History of Economic Theory and Method,
Ch. 10.
Roll, Eric, History of Economic Thought, pp.
404-25.
I.B. MENGER
*Menger, Carl, Principles of Economics, trans.
by Dingwall and Hoselitz, including Introduction by Hayek.
Ekelund and Herbert, Ch. 1l.
Stigler,
G.J., ``The Economics of Carl Menger,'' Journal of Political Economy,
Spring 1937. Reprinted as Ch. 6 in Stigler's Production and Distribution
Theories and in Essays in Economic Thought, J. Spengler and W. Allen
(eds.)
Schumpeter, J. A., ``Carl Menger,'' in Ten
Great Economists, pp. 80-90.
Streissler, Erich, ``To What Extent was the
Austrian School Marginalist?,'' in The Marginal Revolution in Economics, R.D.
Collison Black, et al. (eds.)
I.C. WALRAS
*Walras, Leon, Elements of Pure Economics,
trans. by William Jaffe.
Blaug, Mark, Ch. 13, pp. 521-35.
Ekelund and Herbert, Ch. 12, pp. 307-30.
Hicks, J.R., ``Leon Walras'', Econometrica,
Vol. 2, pp. 338-48.
Schumpeter, J.A., History, pp.
998-1026.
Kolm, Serge-Christophe, ``Leon Walras'
Correspondence ...,'' American Economic Review, Dec. 1968, pp.
1330-41.
Walker, Donald A., ``Leon Walras in Light of
...,'' Journal of Political Economy, July-Aug. 1970.
Jaffe, W., ``Leon Walras' Role ...,'' in The
Marginal Revolution in Economics.
Jaffe, W., ``Menger, Jevons and Walras
De-Homogenized,'' Economic Inquiry, Dec. 1976.
Jaffe, W., ``Walras' Economics as Others See
It,'' Journal of Economic Literature, June 1980, pp. 528-49.
Ingrao, B. and G. Israel, The Invisible
Hand: Economic Equilibrium in the History of Science, MIT Press, 1990.
(Jaffe's writings on Walras are found in
William Jaffe's Essays on Walras, edited by Donald A. Walker, Cambridge
1983.)
I.D. THE MARGINALIST PERIOD
Hutchinson, T.W.,
``The Marginal Revolution and the Decline and Falls of English Classical
Political Economy,'' History of Political Economy, 4.2 (1972),
pp. 442-68.
Stigler, G.J., ``The
Adoption of Marginal Utility Theory,'' History of Political Economy, same
issue as above.
Howey, R. S., The
Rise of the Marginal Utility School, Columbia University Press 1960.
(Reissued in paperback, 1989.)
II. Comparisons with Classical Economics
O'Brien, D.P., The
Classical Economists, Chs. 1-5 and 8.
St. Clair, Oswald, A
Key to Ricardo.
Knight, Frank, ``The
Ricardian Theory of Production and Distribution,'' Canadian Journal of
Economics and Political Science, Feb. and May 1935. Reprinted in Knight's On
the History and Method of Economics.
Schumpeter, J.A., History,
pp. 575-604, 645-87.
Stigler, G.J.,
``Ricardian Theory of Value and Distribution,'' Journal of Political
Economy, June 1952. Reprinted in Stigler's Essays in History of
Economics.
Cannan, E., A History of the Theories of
Production and Distribution from 1776 to
1848, 3rd ed., 1917. (Kelley Reprint, 1967.)
III. Marginal Productivity Theory
Blaug, ``Marginal Productivity and Factor
Prices,'' Ch. 11 in Economic Theory in Retrospect.
*Stigler, G. J., Production and
Distribution Theories, especially Ch. XII.
*Wicksteed, Philip H., Essay on the
Coordination of the Laws of Distribution.
Wicksteed,
Philip H., The Common Sense of Political Economy, especially Ch. IX, Vol
I and Chs. V and VI in Vol. II. Also, pp. 705-54 and 772-97.
*CIark, J.B.,
``Distribution as Determined by a Law of Rent,'' Quarterly Journal of
Economics, April 1891.
Henry, J. F., ``John Bates Clark and the
Marginal Product: An Historical Inquiry Into the Origins of Value-Free Economic
Theory,'' History of Political Economy, 15.3 (1983). pp 375-89.
*Wicksell,
K., Selected Papers on Economic Theory, E. Lindahl (ed.), pp.
93-130.
Edgeworth, F.Y.,
``Theory of Distribution,'' Quarterly Journal of Economics, Feb. 1904.
Reprinted in Edgeworth's Collected Works, Vol. I.
*Chapman,
S., ``The Remuneration of Employers,'' Economic Journal, Dec. 1906.
Schultz,
H., ``Marginal Productivity and the General Pricing Process,'' Journal of
Political Economy. Oct. 1929.
Robinson,
J., ``Euler's Theorem and the Problem of Distribution,'' Economic Journal, Sept.
1934, pp. 398-414. Reprinted in Readings
in Microeconomics, W. Breit and H. Hochman (eds.)
*Makowski,
L. and J. M. Ostroy, ``The Existence of
Perfectly Competitive Equilibrium a la Wicksteed,'' In Economic Analysis of
Markets and Games, eds. P. Dasgupta, D. Gale, O. Hart, and E. Maskin.
IV. Perfect Competition and Its Absence
*Cournot, A., The Mathematical Principles
of the Theory of Wealth, pp. 65-82.
*Edgeworth, F.Y., Mathematical Physics,
pp. 15-56.
Knight, F., Risk, Uncertainty and
Profit, pp. 3-290.
*Stigler, G.J., ``Perfect Competition,
Historically Contemplated,'' Ch. 8 in Stigler, Essays in the History of
Economics.
McNulty, P., ``A Note on the History of
Perfect Competition,'' Journal of Political Economy, 1967.
Sraffa, P., ``The Laws of Returns Under
Competitive Conditions,'' Economic Journal, Dec. 1926. Reprinted
in AEA Reading in Price Theory.
Robinson, J., ``What is Perfect
Competition?,'' Quarterly Journal of Economics, Nov. 1934. Reprinted in Readings in Microeconomics, W.
Breit and H. Hochman (eds.)
Chamberlin, E. The Theory of Monopolistic Competition,
9th ed., pp. 3-10, Chs. IV-VII, and Appendix H.
Triffin, R., Monopolistic Competition and
General Equilibrium Theory.
Ekelund, R., and R. Herbert, A History of
Economic Theory and Method, Ch. 16.
*Samuelson, P., ``The Monopolistic
Competition Revolution,'' in Monopolistic Competition Theory: Studies in
Impact, R. Kuenne (ed.)
V. The Socialist Controversy
*von Mises, L., ``Economic Calculation in the
Socialist Commonwealth,'' A. Hayek (ed.), Collectivist Economic Planning.
Pierson, N.G., ``The Problem of Value in the
Socialist Society,'' in Collectivist Economic Planning.
Halm, G., ``Further Considerations on the
Possibility of Adequate Planning in a Socialist Community,'' in Collectivist
Economic Planning.
Barone, E., ``The Ministry of Production in
the Collectivist State,'' in Collectivist Economic Planning.
Dickinson, H. D., ``Price Formation in a
Socialist Community,'' Economic Journal, June 1933.
Taylor, F., ``The Guidance of Production in a
Socialist State,'' American Economic Review, Mar. 1929. Reprinted in
B.E. Lippincott (ed.), On the Economic Theory of Socialism.
*Hayek, F., ``The Nature and History of the
Problem,'' and ``The Present State of the Debate,'' Chs. I and V in Collectivist
Economic Planning.
*Lange, O., ``On the Economic Theory of
Socialism,'' Review of Economic Studies, Oct. 1937 and Feb. 1937.
Reprinted in Lippincott (ed.), On the Economic Theory of Socialism.
Hayek, F., ``Socialist Calculation III: The
Competitive `Solution','' Economica, May 1940. Reprinted in Hayeks Individualism
and Economic Order.
Lerner, A., The Economics of Control.
Hoff, Trygve, Economic Calculation in the
Socialist Society.
Lavoie, D., ``A Critique of the Standard
Account of the Socialist Calculation Debate,'' Journal of Libertarian
Studies, Winter 1981.
*Stiglitz, J., ``Market Socialism and
Neoclassical Economics,'' in Market Socialism: The Current Debate, Oxford
University Press, 1993.
*Makowski, L. and J. M. Ostroy, ``General
Equilibrium and Market Socialism,'' in Market Socialism: The Current
Debate, P. Bardhan and J.
Roemer eds., Oxford University Press, 1993.
*Caldwell, B., ``Hayek and Socialism,''
unpublished manuscript, 1996
VI. External Economics in Industry
*Marshall, A., Principles of Economics, 9th
ed., pp. 240-90.
Stigler, G.J., Production and Distribution
Theories, pp. 68-83.
Young, A., ``Increasing Returns and Economic
Progress,'' Economic Journal, 1926. Reprinted in AEA Readings in
Welfare Economics, K. Arrow and T. Scitovsky (eds.)
Robertson, D., ``Those Empty Boxes,'' Economic
Journal, 1924. Reprinted in AEA Reading in Price Theory, Stigler
and Boulding (eds.)
Viner, J., ``Cost Curves and Supply Curves,''
Feitschrift fur Nationalokonomie, 1931. Reprinted in AEA Reading in
Price Theory.
Ellis, H., and W. Fellner, ``External
Economies and Diseconomies,'' American Economic Review, 1943. Reprinted
in AEA Readings in Price Theory.
VII. External Effects
*Pigou,A., The
Economics of Welfare (4th ed.), pp. 131-35, 172-212.
*Scitovsky, T., ``Two Concepts of External
Economies,'' Journal of Political Economy, Apr. 1954. Reprinted in AEA
Readings in Welfare Economics.
Meade, J., ``External Economies and
Diseconomies in a Competition Situation,'' Economic Journal, Mar. 1952.
Reprinted in AEA Readings in Welfare Economics.
Coase, R., ``The Problem of Social Cost,'' Journal
of Law and Economics, Oct. 1960. Reprinted in Readings in
Microeconomics, W. Breit and H. Hochman (eds.)
Mishan
E., ``The Postwar Literature on Externalities: An Interpretative Essay,'' Journal
of Economic Literature, Mar.
1971.
Arrow, K., ``The Organization of Economic
Activity: issues Pertinent to the Choice of Market versus Nonmarket
Allocation,'' in Joint Economic Committee Analysis and Evaluation of Public
Expenditures: The PPB & System, Vol. I, 1969.
VIII. Decreasing Costs
*Dupuit, J., ``On the Measurement of the
Utility of Public Works,'' in AEA Readings in Welfare Economics.
Ekelund, R., and R. Herbert, A History of
Economic Theory and Method, pp. 217-20, 236-43. 266-68.
Edgeworth, F., Collected Economic Papers, Vol.
I, pp. 61-90.
Edgeworth, F., ``A Contribution to the Theory of
Railway Rates,'' Economic Journal, 1912.
Pigou, A., Economics of Welfare, Chs.
XI and, XlV-XXII.
Clark, J. M., Studies in the Economics of
Overhead Costs.
Robertson, D., P. Sraffa and G. Shove,
``Increasing Returns and the Representative Firm, A Symposium,'' Economic
Journal, Mar. 1930, pp. 79-116.
Kahn, ``Notes on Ideal Output,'' Economic
Journal, Mar. 1935.
IX. The Marginal Cost Controversy
*Hotelling, H., ``The General Welfare in
Relation to Problems of Taxation...,'' Econometrics, 1938. Reprinted
in AEA Readings in Welfare Economics.
Lerner, A., The Economics of Control, Chs.
15-19.
Meade, J., and J. Fleming, ``Price and Output
Policy of State Enterprise: A Symposium,'' Economic Journal, 1944.
Reprinted in AEA Readings in Welfare Economics.
Coase, R., ``The Marginal Cost Controversy,''
Economica, 1946, pp. 169-82.
Henderson, A., ``The Pricing of Public
Utility Undertakings,'' Manchester School of Economics and Social Studies, 1947.
Reprinted in AEA Readings in Welfare Economics.
Vickrey,
W., ``Some Objections to Marginal Cost Pricing,'' Journal of Political
Economy,
1948, pp. 218-38.
*Ruggles, N., ``The Welfare Basis of the
Marginal Cost Pricing Principle,'' Review of Economic Studies, 1949-50,
pp. 29-46.
*Ruggles, N., ``Recent Developments in the
Theory of Marginal Cost Pricing,'' ibid., pp. 107-26.ae