GRADUATE FACULTY OF SOCIAL AND POLITICAL SCIENCE

DEPARTMENT OF ECONOMICS

History of Economic Thought II Spring 1997

COURSE SYLLABUS

This course continues the line of inquiry of Economics 120, although it may be taken independently and without prerequisite. The content of the course is the evolution of Classical Political Economy into modern Neoclassical Economics, leaving to one side, as in Economics 120, the independent development of Marxian thought. Unlike its predecessor course, however, relatively little time will be devoted to classroom explication of the readings. These are left for you to pursue, now or at a later date, in whatever depth you like. Instead, the theme will be the gradual formation of a "core" of thought which will become the organizing basis for modern mainstream economics. A continuing topic of discussion will therefore be the concept of a "scientific research program" (which is built on such a core), along the lines originally set forth by Imre Lakatos. To a considerable extent, therefore, this course becomes a preamble to ECO 323S, Seminar in Economic Methodology.

Students who have not taken Economics 120 should obtain a syllabus of that course from the Department Secretary. As in that course, they will be expected to follow the sequence of these lectures in one of the texts or main reference books mentioned there, especially E.K. Hunt, History of Economic Thought or Mark Blaug, Economic Theory in Retrospect. The general procedures for this course, including the written take-home exam and seminar credit, will remain the same. Additional readings specific to the course are set forth below. There are two sources that should be regularly consulted: (1) The New Palgrave: A Dictionary of Economics, useful for individual economists and for many general topics. Two sets of Palgrave are available; one on reserve, one in the stacks; (2) Joseph Schumpeter's History of Economic Analysis (Oxford Press). If you can afford it -- no one can afford Palgrave at $650 the set -- we would suggest buying Schumpeter's History at Barnes and Noble (available in paperback). We will cite Palgrave and Schumpeter in the Readings below only when they seem of special relevance.

LECTURES AND READINGS

1. Positivism, Paradigm Shifts, Scientific Research Programs

Our initial topic will be a discussion of "revolutions" in scientific thought in general and economic thought in particular. This will begin with a brief consideration of changing modes of conceptualizing these shifts. We will review, in particular, the change from positivism, as espoused by Karl Popper, through Thomas Kuhn's paradigm shifts, to the work of Lakatos.

Basic Readings: The Lakatos' work will play a very important role in this course and we expect everyone to become generally familiar with it. The most complete exposition -- worth the effort -- is Lakatos' brilliant, convoluted essay, "Falsification and the Methodology of Scientific Research Programmes" in Musgrave and Lakatos, eds., Criticism and the Growth of Knowledge, Cambridge Univ Press, 1970, 1985, available in paperback and worth every penny. Blaug has an excellent concise summary of the Lakatosian schema. Even better is the discussions in Roy Weintraub, General Equilibrium Analysis, pp. 108-135, which we strongly recommend that everyone read.

2. 3. The Development of Utility Theory

This famous turning point in economic analysis has its roots in the rise of Benthamite utilitarianism. It finds its initial expression in the work of Jevons, Menger, and the obscure Gossen, and reaches its full development with Edgeworth, Walras, and Marshall. We will devote most of our time to a consideration of the conceptual and "ideological" aspects of this change in orientation, and will not attempt a systematic examination of the work of each writer in the new tradition.

Basic Readings: Jevons, The Theory of Political Economy, Chs. I through V and VIII. Students should also begin reading Marshall, Principles of Economics (chapters and sections specified for lectures 5 and 6). In addition, I urge that everyone read Phillip Mirowski, "Physics and the 'Marginalist Revolution', ", Cambridge Econ. J., 1984, 8, pp. 361-379, (xerox copies on reserve).

Supplementary Readings: Vivian Walsh and Harvey Gram, Classical Neoclassical Theories of General Equilibrium, Oxford Univ. Press, 1980, Ch 5 (highly recommended). also Dobb, Theories of Value and Distribution, Ch 7. For the Marginalist revolution itself see Colliston Black, Coats, Goodwin, Eds., The Marginal Revolution in Economics, (Duke Univ. Press, 1972), chapters by Blaug, Coats, Winch, and Shackle. Finally, for an overview of the conceptual change brought about by Marginal utility, see Heilbroner's essay on "Wealth" in The New Palgrave.

4. General Equilibrium

We will study the general concept of general equilibrium, as expounded by Leon Walras, with the usual emphasis on conceptual underpinnings rather than analytical complications. Special attention will be directed at the conditions necessary for the attainment of equilibrium, including the famous process of the auctioneer and "tatonnement", and at the ideological consequences of assuming general equilibrium to be a central tendency of economic systems.

Basic readings: Walsh and Gram, Chs. 6, 7; Frank Hahn, "General Equilibrium", in The Public Interest, Special Issue, 1980; (on reserve). See also Hunt on general equilibrium. (Those who are unfamiliar with the basic ideas of equilibrium analysis might read Hildenbrand and Kirman, Introduction to Equilibrium Analysis, Ch. 1, pp. 1-13.)

Supplementary Readings: Geo. Stigler, Theories of Equilibrium, chapter on Walras and Schumpeter, History, pp. 998-1026. Also, Weintraub, op. cit., Ch. 2.

5. 6. Marshallian Economics

We read Marshall as the central expositor of pre-Keynesian economics, emphasizing his important formulations of "operation" time, elasticity, quasi-rent, and the theory of the firm, but as before stressing the element of "vision" and "ideology". From this vantage point we are at least as interested in discovering what Marshall missed as what he saw.

Basic Readings: In Marshall's Principles of Economics, Preface v-xvii Book I , Ch. 1, (Secs, 1,2); Chs. 2,3,4, (Secs. 3-4); Book 3, Chs. 3,4,5, (Secs. 1-3); Ch. 6; Book 4, Chs. 1,2, (Secs 3,4); Book 5, Chs. 2,3,4, (Secs 1,2), Ch. 5, (Secs 2,3,4), Ch. 15; Book 6, Ch. 1, (Secs. 7, 10); Ch. 2, (Sec, 6), Ch. 4 (Sec, 2). Ch. 5, (Sec, 2), Ch. 6, (Secs 3,7); Ch. 7 (Secs 1,6), Ch. 8, (Sec 10), Chs. 11, 12, (Secs 11, 12), Chs. 13, (Secs 2, 10, 11-15). These sections constitute a useful overview of Marshall from our point of view. They omit certain technical aspects, such as the Particular Expenses Curve, the famous Appendices, and similar matters of great importance for Marshall's analytic contribution to economics. We must add one more Basic Reading to this lengthy (but not too time-consuming) list -- Talcott Parsons, "Wants and Activities in Marshall", QJE, November 1930, the best "sociological" examination of Marshall that I know. (I have put two Xeroxes on reserve.)

Supplementary readings: Whitaker's entry on Marshall in Palgrave; chapter on Marshall in J.M. Keynes's Essays in Persuasion and in Jacob Viner, The Long View and the Short.

7. Wicksell and Early Business Cycle Theory

Basic Readings: Wicksell, Lectures on Political Economy, Vol. II, pp. 2-27, 190-215; Schumpeter, pp. 1117-1122, A. Medio, "Trade cycles", in Palgrave.

Supplementary Readings: C. Uhr, "Knut Wicksell", Am. Ec. Rev., 1951 (Xerox on reserve); Keynes's Treatise on Money, Ch. 13 (you may want to reread this after reading Keynes, below); V. Zarnowitz, "Recent Work on Business Cycles", J. of Econ. Lit., June 1985, parts 1-3.

8. Veblen

We will assume that everyone will have read at least the initial chapters on Veblen's famous Theory of the Leisure Class, but this will not be the main focus of our discussion. Instead we will consider his views on economics, set forth in the readings.

Readings: "Why Is Economics Not an Evolutionary Science?" and "Preconceptions of the Classical Economists", both reprinted in many Veblen readers of which I suggest The Portable Veblen, ed. Max Lerner (Viking). Even more useful, and central to our classroom discussion will be Mirowski's discussion, "The Philosophic Bases of Institutionalist Economics", Journal of Economic Issues, Sept., 1983. (Xeroxes on reserve.)

9. 10. Keynes

We will trace the evolution of Keynes's thought from the Treatise to The General Theory. A general Knowledge of Keynesian economics is presupposed. Our interest, as always, lies in seeking to establish the conceptual and analytic core of Keynesian thought and in contrasting this core to the neoclassical view that preceded it.

Basic Readings: Keynes, A Treatise on Money, Chs. 10, 11; General Theory, Books 3, 4, Chs. 11,12,14-16,18; Book 4, Chs. 22, 24. Hans Jensen, "J.M. Keynes as a Marshallian", Journal of Economic Issues, March, 1983, is very useful: copies are on reserve.

Supplementary Readings: J.R. Hicks, "Mr. Keynes and the Classics", Econometrica, 1937; L. Tarshis entry on Keynesian economics in Palgrave; Shackle, Years of High Theory, Chs ; and A. Leijonhuvd, "Schools, 'Revolutions' and Research Programmes in Economic Theory" in Spiro Latsis, method and Appraisal in Economics, Camb. Univ. Press, 1976.

11. 12. Schumpeter

Schumpeterian economics will be examined with special reference to the author's theory of history and his "pre-analytic vision".

Basic Readings: Schumpeter, Theory of Economic Development, Chs. 1,2,4,6; Capitalism, Socialism and Democracy, Part II; and three pieces by myself -- "Was Schumpeter Right?" in A. Heertje, ed., also in Social Research (copy on reserve); "Economics and Political Economy: Marx, Keynes, and Schumpeter" in David Bramhall and Suzanne Helburn, eds., Marx, Keynes, Schumpeter (M.E. Sharpe, 1986); and "Schumpeter's Vision", in Behind the Veil of Economics, 1988, on reserve.

13. 14. Keynesianism and After

Readings: Three essays by Heilbroner: review of The New Palgrave, in New York Review of Books, February 1988 (on reserve); "Vision and Ideology" in Behind the Veil of Economics, and "The Limits of Social Analysis", in The Nature and Logic of Capitalism, all on reserve. Also see our recent book The Crisis of Vision in Modern Economic Thought (Cambridge U. Press, 1996), available in paperback.

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