Abstract
The time has come to say farewell to the labour theory of value. It is about to be cast out and will soon become an object of derision, its acceptance a mark of perversity or subversion. By one of those curious coincidences in the development of ideas, Marx was engaged in installing it as the centre-piece of his economic doctrine while Jevons, Menger and Walras were exorcising it in favour of something that would be as unlike Marx’s doctrine as unlike could be.1 While Marx taught the inevitability of revolution and called in a voice of thunder for the expropriation of the expropriators, Jevons, Menger and Walras laid bare the mechanism by which economic molecules placidly pursued their maximising course through tiny increments of economic change.
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Notes
Labour Defended against the Claims of Capital; or the Unproductiveness of Capital proved with reference to the Present Combinations amongst Journeymen. By a Labourer (1825). Graham Wallas, in his Life of Francis Place (London: Longmans, 1898) records that Hodgskin read Ricardo’s Principles in 1820 and may claim to have originated ‘Ricardian Socialism’.
See, e.g., Report to the County of Lanark (1821) (Harmondsworth: Penguin Books, 1970) p. 207.
An Inquiry Into the Principles of the Distribution of Wealth Most Conducive to Human Happiness (London: Longman, Hurst etc, 1824).
For an enthralling account of the lives and ideas of these people see Edmund Wilson, To the Finland Station (London: Fontana Library, 1960).
‘On some neglected British economists I’, Economic Journal, vol. XIII, Sep 1903, p. 335 et seq.
Ibid. p. 359.
Natural Elements of Political Economy (London: Longman, Brown, Green, and Longmans, 1855). The contributions of Gossen and Jennings are reviewed in W. Stark, The Ideal Foundations of Economic Thought (Kegan Paul, 1943).
Ibid. p. 46.
Ibid. pp. 98–9.
The Theory of Political Economy (Harmondsworth: Penguin Books, 1970) p. 62.
Letters and Journal ed. by his wife (London: Macmillan, 1886) p. 323. Another hostile review was by Marshall, in the Academy, 1 Apr 1872. This is reprinted in A. C. Pigou (ed.) Memorials of Alfred Marshall (London: Macmillan, 1925).
Elements of Pure Economics, translated by William Jaffé (London: Allen & Unwin, 1954) p. 44.
The General Theory of Employment Interest and Money (London: Macmillan, 1936) p. 32.
Capital (Moscow, Foreign Languages Publishing House, 1961) pp. 14–16.
See Alfred Cobban, A History of Modern France (Harmondsworth: Penguin Books, 1961) vol. II, p. 141.
See F. B. Smith, The Making of the Second Reforn Bill (Cambridge University Press, 1966) pp. 151–3.
Ibid. p. 168.
Ibid. pp. 232–3.
R. D. Collison Black and Rosamond Könekamp, Papers and Correspondence of William Stanley Jevons (London: Macmillan, 1972), vol. I, p. 208.
John Stuart Mill, ‘Utilitarianism’, Max Lerner (ed.), The Essential Works of John Stuart Mill (New York: Bantam Books, 1961) p. 194.
See Leslie Stephen, The English Utilitarians (London School of Economics Series of Reprints of Scarce Works on Political Economy no. 9, 1961) p. 194.
Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (1789). Mary Warnock (ed.), Utilitarianism (London: Fontana, 1962) p. 33.
Ibid. pp. 33–5.
In Jeremy Bentham’s Economic Writings (London: Allen & Unwin for The Royal Economic Society, 1954), vol. III.
Ibid. p. 434.
Ibid. pp. 421–2.
Ibid. p. 442.
Ibid. p. 443.
Introductory Lectures on Political Economy (London: B. Fellowes, 1831). Quesnay, too, observed ‘this magic’ and attributed it to God. See above, p. 75.
Non-mathematicians might like to consult the brilliantly lucid explanation of calculus in Chapters viii and x to xii of W. W. Sawyer, Mathematician’s Delight (Harmondsworth: Penguin Books, 1943). The Encyclopaedia Britannica also gives a clear introduction, as does P. J. Hilton, Differential Calculus (London: Routledge & Kegan Paul, 1958).
The Theory of Political Economy (Harmondsworth: Penguin Books, 1970) p. 77.
Ibid. p. 82–3.
Ibid. p. 101.
J. M. Keynes, Essays in Biography (London: Mercury Books, 1961) p. 284.
Carl Menger, Principles of Economics (The Free Press, Glencoe, Illinois, 1950) p. 119.
Ibid. p. 56.
Ibid. p. 161.
Ibid. pp. 164–5.
Ibid. p 171.
Ibid. pp. 121–3.
Ibid. p. 132.
Ibid. p. 146.
Ibid. p. 156.
Ibid. pp. 173–4.
Ibid. p. 97.
Professor of political economy first at King’s College, London, then at Oxford. See J. M. Keynes, Essays in Biography, vol. X, The Collected Writings of John Maynard Keynes (London: Macmillan, 1973).
Giornale degli Economisti, vol. LI, 1915. The paper ‘On the Theory of the Budget of the Consumer’, is reprinted in American Economic Association, Readings in Price Theory (London: Allen & Unwin, 1953).
Ibid. p. 27.
Ibid. p. 28.
Philip Henry Wicksteed, The Alphabet of Economic Science (Macmillan, 1888) and An Essay on the Co-ordination of the Laws of Distribution (Macmillan, 1894); Alfred Marshall, Principles of Economics (Macmillan, 1890); John Bates Clark, Capital and its Earnings (American Economic Association, 1888), The Possibility of a Scientific Law of Wages (American Economic Association, 1889) and ‘Distribution as Determined by a Law of Rent’, Quarterly Journal of Economics, vol. V, 1890–91.
Most notably by Nikolai Bukharin (1880–1938), Economic Theory of the Leisure Class (London: Martin Lawrence, 1927).
The Economic Journal vol. XXXVI, 1926. Reprinted in American Economic Association Readings in Price Theory (London: Allen & Unwin, 1953).
Edward Hastings Chamberlin, The Theory of Monopolistic Competition, A Re-orientation of the Theory of Value (Cambridge: Harvard University Press, 1933). Joan Robinson, The Economics of Imperfect Competition (London: Macmillan, 1933).
Chamberlin, op. cit. p. 178; Robinson, op. cit. p. 284. This, in the conventional usage, is known as exploitation, the term here being conveniently gelded of all political content. It was Pigou who so defined it (Economics of Welfare, Macmillan 1924, pp. 527 and 754). but both Chamberlin and Joan Robinson squeeze it even drier of content than had Pigou. According to Chamberlin. in monopolistic competition all factors are necessarily exploited: ‘it would be impossible for employers to avoid the charge of “exploitation” without going into bankruptcy’ (op. cit. p. 183). Joan Robinson explains that, ‘paradoxical as it may seem,… the removal of exploitation is not always beneficial to the workers concerned’ (op. cit. p. 283).
C. H. Herford, Philip Henry Wicksteed, His Life and Work (London: Dent, 1931) p. 201.
L.L. Price, A Short History of Political Economy in England (London: Methuen, 1937) pp. 267–8. The first edition was published in 1891, so Price, who was Reader in Economic History at Oxford, can speak of these events at first hand.
Knut Wicksell, Lectures in Political Economy (1901) (London: Routledge & Kegan Paul, 1934), p. 28.
D. H. Robertson, ‘Wage-Grumbles’ (1931), American Economic Association, Readings in the Theory of Income Distribution (London: Allen & Unwin, 1950), p. 221. Marshall hurt and puzzled his successors by concluding. ‘This doctrine has sometimes been put forward as a theory of wages. But there is no valid ground for any such pretension. The doctrine that the earnings of a worker tend to be equal to the net product of his work, has by itself no real meaning; since in order to estimate net product, we have to take for granted all the expenses of production of the commodity on which he works, other than his own wages.’ Principles of Economics, op. cit. p. 518. In modern parlance, we should say that workers and machines form parts of socio-technical systems. The removal or duplication of particular parts is likely to produce absurd results.
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© 1989 Guy Routh
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Routh, G. (1989). Tiny increments of economic change. In: The Origin of Economic Ideas. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20169-3_5
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