Top 18 Famous American Economists of 18th and 19th Century

Some of the famous American Economist of 18th and 19th Century are :- 1. Moore, Henry (1869 – ) 2. Mitchell, Wesley C. (1874 – 1948) 3. Knies, Karl Gustav Adolf (1821 – 98) 4. Clark, John Maurice (1884- ) 5. Clark, John Bates (1847 – 1938) 6. Fisher, Irving (1867 – 1947) 7. Commons, John R. (1862 – 1945) and others.

Famous American Economist # 1. Moore, Henry (1869 – ):

Henry Moore was an American econo­mist, and occupationally, Professor at the Co­lumbia University.

He was a recognized author on business cycles, having presented a modified version of Jevons ‘sun spot’ theory, seeking to “account for the periodicity of business cycles by establishing the existence of a similar periodicity in agricultural output,” and claiming the causa­tion to run from “cosmic influences to weather conditions, from weather conditions to harvests, and from harvests to general business.” (Sys­tematic Analysis of the Theories of the Busi­ness Cycle: Haberler).

His principal works are:

Economic Cycles: the Law and the Cause, 1914; and Generating Economic Cycles, 1923.

Famous American Economist # 2. Mitchell, Wesley C. (1874 – 1948):

A noted American economist belonging to the institutional Group,’ Mitchell was born in Rushville, Illinois and educated at the Chi­cago University, where he began his career. He was also at the universities of Columbia and California and at the New School for Re­search, becoming later Professor of Econom­ics at the University of California.

He was the founder of the National Bureau of Economic Research and its Director for long. Mitchell concluded his career as a consultant in Wash­ington.

A student and admirer of Veblen, he was naturally influenced by his (Veblen’s) ‘institutionalism,’ although not ‘blindly and uncritically.’ His concept, quantitative analy­sis, use of statistical method, inductive reasoning and institutional approach created an immense influence upon the American econo­mists of the younger generation.

Although ‘baptized’ in the classical tradi­tion, it could not attract his interest in as much as it was mostly based upon ‘unrealistic pre­sumptions’ and ‘unscientific deductive reason­ing.’

He preferred an ‘integrated approach’ to the study of economics, taking into account all related disciplines, for example, history, anthro­pology, and, more important, statistics, for a pragmatic, realistic and comprehensive view in order that its problems could be traced, iden­tified and studied analytically before formula­tion and adoption of remedial policies and mea­sures.

In other words, his understanding of eco­nomics as a science emphasizing human behaviour convinced him of a thorough check­up of all economic and social problems by sci­entific investigation of the social behaviour through proper research.

He changed the interpretation of statis­tics from a ‘crude to a sophisticated art’, and his belief in, and use of, statistics enabled him to provide an explanation of business cycles, in which he identified four phases, namely, prosperity, recession, depression and revival, the terms boom, crisis, panic etc. being indica­tive of the intensity of the phases.

As against the orthodox theories of equilibrium, his contention was “…. in the real world of business, affairs are undergoing a cumulative change, always passing through some phase of business cycles into some other phase … In fact, if not in theory, a state of change in business conditions is the only nor­mal state.”

Depression, according to Mitchell, was not a ‘disease’ of capitalism, but a result of the economic movement caused by ‘money-making’ and ‘money-spending’ transactions, and, since, during depression, capital goods “wear out,” it “acts eventually as a stimulant to investment in new machines.”

He believed in research work as being inevitably necessary for understanding the so­cial problems, and his ‘National Research Bu­reau,’ established in 1920, was intended to un­fold the “future of economics” and to “materialize” the prospects of further economic development.

Mitchell’s chief works are:

The Backward Art of Spending Money and Other Essays, 1912, & 1950; Business Cycles and Their Causes, 1913; Business Cycles : The Problem and Its Setting, 1927; Economic Resources in Economic Theory, 1941; and What Happens During Business Cycles, 1951.

Famous American Economist # 3. Knies, Karl Gustav Adolf (1821 – 98):

Knies was a leading German economist belonging to the historical school. He was born in Marburg, and, after completion of studies, held teaching assignments at the universities of Marburg, Freiburg and lastly at Heidelberg where he positioned himself as Professor of Political Science until the end of his life. John Bates Clark, the noted American economist, was one of his students.

He made a frontal attack on the classical doctrine, questioning natural laws of human behaviour, and viewed that theory was rela­tive solely to “succession of prevailing circum­stances” and an “expression of opinion,” not a description of nature.

His ‘Political Economy from the Standpoint of Historical Method,’ 1853, renamed as ‘From the Historical Stand­point’ was an ‘exposition of the historical method including a discussion of the theoreti­cal questions involved.’

He firmly believed that political economy of any thought pertaining thereto ought to rest on, and form a part of, the history of the past events and thoughts, and while opposing the “general laws,” he expressed “….we cannot expect to establish identities but analogies, and therefore a comparison of similar historical conditions cannot help in the establishment of laws regarding cause and effect,” and further, in the second edition of his said work, “Taken in the true methodical sense… Though we may strongly desire to refer to history and stand upon it in a well- considered way, yet we must never on that account allow to pass unrecognized the difference between economic history and political economy, nor that between the special tasks of the historian and the econo­mist.”

Gustav Schmoller said of Knies: “He had a deep insight into the spirit of nation which has determined the entire course of history … he was the theoretical founder of historical psychology, and modern German political economy … he more clearly grasped even than did Roscher and Hildebrand, the contrast between this and the political economy of Adam Smith and Ricardo…”

Famous American Economist # 4. Clark, John Maurice (1884- ):

Maurice was the son of John Bates Clark, both distinguished American economists, but whereas the father was relatively static in his views, the son was in favour of dynamism, neighbouring socialism.

He was born in Northampton and was educated at Amherst College and at the Uni­versity of Columbia. Starting his career as an instructor in economics at Colorado College, he later became Professor of Economics at the University of Chicago.

He supplemented Schumpeter’s massive volumes of the history of economic thought by his “Economic Institutions and Human Wel­fare” highlighting historical evolution of econo­mists’ attitude and approach to the study of economics and the goal of economic activities from the medieval period to the present day.

Although, however, an ardent supporter of in­ductive reasoning, he was liberal enough to admit that “… core of the scientific method lies not in induction, not in deduction, but in taking account of analysis of al-l relevant facts and excluding none.”

His contribution to the history of economic thought might not be regarded as original, but his concept of socialism, development of ‘so­cial economics,’ critical views on the then mar­ket mechanism, and none the less his pro-plan­ning ideas could scarcely escape attention.

As against Chamberlin, he pointed out that “much of the apparent seriousness of Pro­fessor Chamberlin’s results derives from what I believe to be the exaggerated steepness of the curves he uses to illustrate them,” and as regards product rivalry, his comment was “it seems that the differences between substitute products, in cost of production and service value, are nowadays often no more serious than similar differences between different variet­ies of what we think of as the ‘same’ prod­uct.”

(A History of Economic Thought: Rob­ert Lekachman). He discussed in his ‘Economic Institu­tions and Human Welfare’ the benefits ex­pected to be derived from competition and also the problems connected with monopoly.

Maurice elaborated the theme of social costs, drawing a “distinction between social and market values and between social and market costs,” and held that the “business concept of cost excluded many important social costs, such as communal health hazards, unemployment, and other costs associated with business fluc­tuations.”

His concern was, it appeared, to bring “commercial efficiency closer to effi­ciency in the matter of making the economic system” accounting for “social values, clean air, scenic beauty etc., as well as market val­ues.”

His works include:

Studies in Economics of Overhead Costs (1923), Social Control of Economics (1926), Strategic Factors in Business Cycles (1934), Preface to Social Economics (1936), Demobilization of Wartime Economic Controls (1940), Alternatives to Serfdom (1943), Economic In­stitutions and Human Welfare (1957), and Competition as a Dynamic Process (1961).

Famous American Economist # 5. Clark, John Bates (1847 – 1938):

Born in Rhode Island, Clark had his edu­cation at Amherst College, after which he left for Germany and on return took teaching as­signments at various institutions, finally estab­lishing himself as Professor of Economics at Columbia. He prided himself that Veblen was a student of his.

John Maurice Clark, his son and also an economist of distinction, believed that although his father was a Christian Socialist in faith, his views on economics were in part those of Marshall, and further, that parallels could also be drawn between his father and Mill in eco­nomic thinking.

Clark exhibited his originality in the field of pure theory asserting that the Classicists were hardly right in declaring that material self-interest in economic activity was the sole mo­tive of mankind and also in their policy of unre­stricted individual competition. He pleaded for the application of the moral law to economic progress.

He favoured the concept of marginal util­ity and its relation to exchange value, and was an exponent of the marginal productivity theory and used the law of diminishing returns as a base for the theory of distribution. His expla­nation of the law was that as one varied his factors of production on one fixed factor, his output would increase, but after a point, in­crease less than proportionally.

Clark applied the doctrine of marginal util­ity to the price of labour and capital, explaining that as the values of ordinary goods were fixed by the values of the marginal (or final) units of those goods, so the value of labour and capital was fixed by the values of the marginal (or final) units of labour and capital.

The return on capital, he said, was set by the productivity of the marginal unit of capital, and wages were fixed by the productivity of the marginal labour. This was the popular ‘textbook’ marginal productivity theory of distribution which rested upon the premises of the free play of competi­tion.

He hoped to devote himself to what he called “social economic dynamics”, but his project did not materialize. While some econo­mists looked upon his economic system as a ‘work of art’, others gave him credit for hav­ing given an ‘essentially scientific’ explanation of the ‘economic world’ of his time.

It was agreed, however, that his method and results were not unlike Ricardo, and resembled him more closely than other American economists.

His works include:

The Philosophy of Wealth (1885), The Distribution of Wealth (1889), The Problem of Monopoly (1904), and Essentials of Economic Theory (1907).

Famous American Economist # 6. Fisher, Irving (1867 – 1947):

A prominent American economist hav­ing made significant contribution to the main­stream of European economic doctrine, Fisher was Professor of Economics at the Yale University, and was “a mathematician; the in­ventor of Index Numbers and of a card file system…; a pioneer econometrician …; an early practitioner of the measurement of economic phenomena; an eugenist; an ardent advocate of Prohibition, which he saw as a compelling design for enhancing labour productivity …” He was most ‘scientific’, having said that”… the economist should go no further than it is serviceable in explaining economic facts.

It is not his business to build a theory of psychol­ogy. It is not necessary for him to take sides with those who wrangle to prove or disprove that pleasure and pain alone determine conduct … Each individual acts as he desires.”

He justified use of mathematics in eco­nomics by stating that the best way to make economic theories practically understandable was to make them “perfect” and that this could be done by producing a “technical treatise.” Had Mill, he remarked, employed more math­ematics, he could possibly have avoided con­fusing businessmen with his ‘wages-fund’ theory.

Fisher was a mathematical price econo­mist, and further, an economist interested in the area of ‘interest,’ having shown, as he did, how risk and uncertainty had their effects in the determination of interest rates. He high­lighted his ‘logic of choice,’ and his apparatus included “price and income lines, inferior and superior goods, and complementarity and substitutability”.

His concept of ‘substitutability’ was, in fact, ‘indifference curve’ in which a “great deal of modern theory of demand was expressed.”

His concept of the gradual evolution of interest theory from a “simple world” to a “complex world” and finally to the “real world,” or, in other words, from “time preference” to productivity, and, finally, to “risk and uncer­tainty” was exemplary.

He was, however, modest enough to acknowledge his indebted­ness to John Rae and Bohm-Bawerk, “who,” he said, “laid the foundation on which i have endeavored to build.” (A History of Economic Ideas: Lekachman).

His “Quantity Theory of Money,” as dem­onstrated by his “Equation of Exchange” (Fisher’s Equation), in the determination of price level is a unique contribution to the sci­ence of economics. Fisher’s Equation:

PT = MV + M’V’ M (currency);

M’ (bank credit);

V (num­ber of times M changes hands)’,

V’ (num­ber of times M’ changes hands);

T (total number of business transactions); and P (price level).

Although the theory caused initially a mixed response from economists, it opened up certain basic issues which are still continuing. Fisher believed in the cause of ‘business cycles’ as being monetary, and suggested con­traction and expansion of M’ (in particular) in cases of boom and slump, respectively. He dis­liked inflation and deflation both, and favoured “salvation” in the form of “price stabilization.”

His principal works are:

Mathematical Investigations into the Theory of Value and Price, 1892; Rate of In­terest, 1907; Theory of Interest, 1930; The Purchasing Power of Money, 1911; Stability of the Dollar, 1920; and 100% Money, 1936.

Famous American Economist # 7. Commons, John R. (1862 – 1945):

An American economist and an institutionalize Commons had a difference from Veblen, his contemporary, in temper and method.

His definition of institutions, unlike Veblen’s, was “collective action in control of individual action,” stressing upon the “mutual dependence of men, their need to cooperate, the conflicts of interest” created by private property, and the “necessity of collective ac­tion” in reconciling such conflicts for the “gen­eral interest.”

He saw economics as a part of sociology and wrote a series of articles (A Sociological View of Sovereignty) holding the view that rights and welfare of the common people were usurped by private property holders. In his work ‘Institutional Economics’ (1934), he stressed upon economic institutions as being solutions to economic problems.

He firmly believed in inductive reasoning, historical events and prac­tical experience, and his insistence on the establishment of institutions was the remedy for problems.

Commons had an eventful life and ca­reer. He drifted from job to job and finally found a place at Wisconsin University with the as­sistance of Prof.’ Ely of whom he was a stu­dent at Johns Hopkins University. His accom­plishments highlighted the difference between “lonely thought and constructive action” and his services were needed in “drafting and ad­ministering a new programme of reform and social legislation.”

He also wrote on civil ser­vice, law, helped extend public-utility regula­tion, promoted a small loan measure, and drafted Wisconsin’s Unemployment Reserve Act. Commons worked with the U.S. Indus­trial Commission where he studied the causes of strikes, employers’ reaction and the neces­sity of labour unions.

He also took a position with the National Civic Federation, an organization for promotion of industrial peace.

His writings and publications were exten­sive, and his work ‘A Documentary History of American Industrial Society’ (1910) fol­lowed by ‘History of Labour in the United States’ (1918) helped eliminate or at least tone down the creativity of abstract theories of wages. He upheld the laborers’ right to organize themselves, justifying collective bargaining through labour unions as a genuine and lawful right for their own interest.

Commons was different from his Ameri­can counterparts of the time, but his ideas and convictions remained “unimpaired.”

His works, apart from those stated above, are:

Distribution of Wealth (branded as ‘so­cialistic’; Social Reform and the Church, 1894; Races and Immigrants in America, 1907; Eco­nomics of Collective Action, 1950; and Legal Foundation of Capitalism, etc.

Famous American Economist # 8. Hotelling, Harold (1895 – ):

A mathematician and economist as well, Hotelling, an American, was first an Associ­ate Professor of Mathematics at the Stanford University and then Professor of Economics, University of California, in which post he con­tinued till 1946, where-after he took his assignment as Professor of Mathematical Statistics at the University of North Carolina.

He was a welfare economist and urged upon an increase in public expenditure for the sake of economic welfare of the society at large, and advocated “marginal cost” pricing by public utility concerns even at a loss, if in­evitable.

Famous American Economist # 9. Knight, Frank H. (1885 – 1973):

Knight, an American economist, began as an ordinary teacher, but became, following further studies at Cornell and Chicago, Pro­fessor of Economics at the Chicago Univer­sity, and also President of the American Eco­nomic Association.

He highlighted the distinction between “in­surable risk” and “uninsurable uncertainty,” profit being related to the latter. Profit, he believed, would depend upon the extent to which a businessman’s guess-work as regards future demand, selling price and advance payment to production factors would be accurate, keep­ing in view the speedy change in economic activity.

He held that the economic theorist had little or nothing to say about socialism because the bare fact of substituting a collectivism for a competitive individualist, form of organization “does not logically or necessarily imply any par­ticular change whatever, in the empirical course of social economic life.” (Economic Systems: Halm).

He was a stern critic of Keynes’s ‘Gen­eral Theory,’ having expressed himself very adversely against it. (Unemployment and Mr. Keynes’s Revolution in Economic Theory: Canadian Journal of Economics and Political Science, Feb., 1937).

His works:

The Economic Organization, 1933; the Ethics of Competition and Other Essays, 1935; the Economic Order of Religion, 1945; Free­dom and Reform, 1947; Essays on the Demo­cratic Action and Method of Economics, 1956; Intelligence and Democratic Action, 1960, etc.

Famous American Economist # 10. Patten, Simon N. (1852 – 1922):

An American, Simon Patten was Professor of Economics at the University of Pennsylvania. Although a ‘liberal’ in general, he supported a policy of government intervention, as against the free trade theorists, for “protection of home industries,” since he feared that free trade would cause exportation of natural resources at the cost of manufacturing industries in the country.

He was particularly apprehensive of “infant industries”, growth of which would be seriously inconvenienced without appropriate protection.

He was against ‘laissez-faire’ and ‘capitalism’, and preferred, instead, a policy of planning for economic growth in a spirit of nationalism. In his analysis and solution of economic problems, he preferred use of “ethical principles” and interested himself in tracing the cause of “labour exploitation” and “surplus value,” although his solution was not as ‘extreme’ as that of Marx.

He relied on “heavy taxation” on the well-to-do to combat the “evils of modern capitalism,” and suggested giving relief to the low-income group of people to help improve their living standard.

Patten highlighted the “social aspects” of economics, climaxing in ‘humanitarianism’ for which he was known more as a “social reformer” than as an economist. He was an optimist in the “prospects of a society of abundance and pleasure” instead of “scarcity and pain.” ‘The Premises of Political Economy’, 1885, and ‘The Theory of Prosperity’ are his important works.

Famous American Economist # 11. Raymond, Daniel (1786 – 1849):

Raymond was an early American economist and a lawyer. He was critical of Smith’s identification of individual wealth with national wealth and of his free policy in the context of national welfare. He opposed Malthusianism, favoured protective tariff and argued for internal freedom of trade.

Raymond was a follower of Lauderdale in contrasting social with individual wealth, and was opposed to the “external exchange value” concept of wealth, defining it rather as the “facility of acquiring the necessaries and conveniences of life by labour.”

‘Thoughts on Political Economy’, 1820, is his chief work.

Famous American Economist # 12. Rostow, Walt Whitman (1916 – ):

A modern American economist, Rostow is well-known for his famous “stage-wise transformation” thesis of economic growth.

He started with a service career in the Office of Strategic Services during the World War II period (1939-45), becoming the Assistant Chief of the German Austrian Economic Affairs of the U.S. State Department (1945-46) before he entered into academic life as Professor of American History at Cambridge (1949-50) and then at the Massachusetts Institute of Technology (1950- 65).

In 1966, he was appointed as Special Assistant to the President, which earned him an eminent status. Rostow described economic development as a series of “progressive stages” which he distinguished as traditional, the pre-conditions for take-off, actual take-off, trend toward maturity, and maturity.

He said:

“Here then, in an impressionistic rather than analytic way, are the stages-of-growth which can be distinguished once a traditional society begins its modernization: the transitional period when the preconditions for take-off are created generally in response to the intrusion of a foreign power, converging with certain domestic forces making for modernization; the take-off itself ; the sweep into maturity generally taking up the life of about two further generations; and then, finally, if the rise of income has matched the spread of technological virtuosity (which … it need not immediately do) the diversion of the fully mature economy to the provision of durable consumer goods and services (as well as the welfare state) for its increasingly urban – and the suburban – population. Beyond lies the question of whether or not secular spiritual stagnation will arise, and, if it does, how man might fend it off.”

Rostow’s characterization of the stages of economic growth may have some similarity with Marx’s concept of evolution of society from feudalism to communism via bourgeois capitalism and socialism, for which possibly his work ‘Stages of Economic Growth’ has been called a ‘Non-Communist Manifesto.’

His “stage differentiation” was accompanied by policy conclusion, calling for aid to economics at the pre-take-off stages to make them adapted to the take-off stage, where-after, he asserted, economies would have their own dynamic momentum.

Famous American Economist # 13. Seligman, E. R. A. (1861 – 1939):

An American economist and Professor at the Columbia University, Seligman, although influenced by J. B. Clark, the noted American economist, was nevertheless selective in his approach.

He made a commendable endeavour in bringing out a synthesis of the various schools of economic thought, namely, classical, Austrian, historical, institutional etc., and further, in analyzing the principles and practice of contemporary taxation with significant suggestions for reform of the tax structure, although not very widely followed in actual practice.

He made a critical analysis of the various theories underlying the “institution of private property,” for example, the theories stressing upon the aspects of ‘occupation,’ ‘natural rights,’ ‘labour’, Taw’ and ‘social utility,’ but none could claim unequivocal justification.

He said, “Private property is an unmistakable index of social progress … it has grown under continual subjection to the social sanction,” and he regarded it as a “natural right only in the broad sense that all social growth is natural.”

Following, presumably, Clark’s comment on the Ricardian doctrine of rent that “If rent does not enter into price … wages and interest are also residual amounts, having no price-making power; and this is an absurdity,” Seligman viewed that the doctrine “is now being abandoned by economics students.”

Seligman supported “instalment credit” which, he said, if “restricted to proper commodities under proper management,… will gradually throw off abuses and will stand forth as one of the most signal contributions of the twentieth century to the potential creation of national wealth and national welfare.” ‘Principles of Economics’ is his principal work.

Famous American Economist # 14. Sidgwick, Henry (1838 – 1900):

Henry Sidgwick, a contemporary of Edgeworth (the noted Marginalist) was the “last major English moral philosopher who made a noteworthy contribution to political economy.” He was Professor of Moral and Political Philosophy at Cambridge from 1883 until death.

He was a disciple of Mill and his work ‘Principles of Political Economy’ founded on Mill’s ideas and modified in the light of Francis Walker’s (a well-known American economist) and Jevons’s theories, and his Paper ‘The Scope and Method of Economic Science’ presented at the British Association for the Advancement of Science, Section F (meant for economists and statisticians) did “much to regain for economics some of the respect it had lost.”

Although a disciple of Mill, he did nevertheless contradict Mill’s Wages Fund Theory and said, “The remuneration may be regarded as the share of produce that remains after paying for the use of capital and land.”

While holding Mill’s theory of value as “sound in the main,” he pointed out that “equation of supply and demand” could not claim to be an adequate explanation of exchange value since both supply and demand varied with price. In his discussion on international values, he gave importance to ‘cost of carriage.” He did also analyze the Ricardian theory of rent in his own way.

It was Sidgwick who said that economics was the study of “what is” rather than “what ought to be done,” but he was nevertheless a leading Utilitarian and was famous for his works on ethics, and, furthermore, he was an advocate of higher education for women, and was one of the founders of the Society for Psychical Research. ‘Principles of Political Economy’, 1883, is his work on economics.

Famous American Economist # 15. Stigler, George J. (1911 – 91):

An American price theorist and an opponent of monopolistic or oligopolistic business enterprises, Stigler was Professor of Economics at the Columbia University, and also a member of the Attorney General’s National Committee to study Anti-Trust Laws, and further, according to Samuelson, forerunner of an important mathematical technique of economics and national defence called ‘linear programming.’

He favoured free competition as against monopoly or oligopoly and spoke of the technical apparatus of ‘demand and supply analysis’ in ‘The Demand and Supply of Scientific Personnel’ (jointly with David M. Blank) that if the determining factors of demand and supply were allowed to vary, or, in others words, if the market was free, they (demand and supply) would move in such directions as would equate the quantity supplied and the quantity demanded.

Stigler’s arguments against big businesses were that they “… often possess and use monopoly power… weaken the political support for a private-enterprise system … are not appreciably more efficient or enterprising than medium-size businesses…” and he suggested, according to Samuelson, that “… large firms should be broken into small pieces,” which “… will not sacrifice any appreciable economies of large-scale production,” since with “sellers now numerous,” competition can become “much more like perfect competition than like oligopoly….” Stigler was against “any mergers that might reduce numbers still further, since many of today’s giants grew from mergers which had their goal not productive efficiency but rather monopoly control over market price” (Samuelson).

Stigler questioned Chamberlin’s ‘uniformity assumption’ of the demand and cost curves of all the firms “in the group” (Chamberlin’s ‘Theory of Monopolistic Competition’): “How can differentiated products of different firms have uniform demands and costs ?”

He said that “Oligopoly is the situation in which a firm bases its market policy in part on the expected behaviour of a few rivals,” and since oligopoly exposed concentration of sales among a few large firms, he suggested “stiffening of the anti-trust laws so as to permit breaking-up of big firms into their constituent plants” adding that “… courageous and imaginative dissolution of the biggest enterprises was overdue (to) guard against the evils of monopoly power … for a private, competitive enterprise economy (in a) liberal individualist society…”

His response to Marshall’s emphasis on the “restraining role of business ethics” and exclusion of psychological advantage for strict price analysis was: “The maintenance and expansion of the economic system cannot be explained exclusively, or perhaps even primarily in terms of the price system … Technological improvements are only partially due to economic incentives; Pasteur did not develop his method of sterilizing milk in order to gain wealth for himself. Again the explanation of population size no longer runs in the simple biological and economic terms of Malthus’ theory. A full explanation of economic progress involves a study of the society’s entire culture.”

His works are:

The Theory, of Competitive Price, 1942; The Theory of Price, 1946; The Case of Big Business, 1952; The Demand and Supply of Scientific Personnel (jointly with David M. Blank), 1957.

Famous American Economist # 16. Tugwell, Rexford Guy (1891 – 1979):

Tugwell and Adolf A. Derle, Jr. (1895- 1971) were members of the Roosevelt Brains Trust (later Brains Trust), a distinctive group of scholars rallying to his (Roosevelt’s) support.

While Berle was occupationally a lawyer, Tugwell was a Professor at the Columbia University, having persuaded a group of young economists to contribute to a volume called ‘The Trend of Economics’ under his editorial supervision, which, according to his expectation, turned to be a ‘sort of manifesto of the younger generation,’ and about which Galbraith said, “A central point of emphasis .. was the need for an examination of economic institutions — business firms, government, interest groups — and of ‘non-commercial’ as well as pecuniary incentives. All these were to be seen as they occurred in the real world rather than as they were accommodated to the needs of classical economics. The book also urged the statistical measurement of economic phenomena, an inconvenience to which the classical system did not, in general, descend.”

Tugwell’s ‘Trends’ proved to be a “pioneer document in a distinctive American economic tradition that derived from Veblen; it looked anthropologically on the accepted economics, and being unconfined by classical rigor, it was open to pragmatic reform. Eventually, such reform would be called institutional economics or institutionalism and its adherents the ‘Institutional School.”

He was a “key participant in the … Brains Trust and later in the administration” and his “academic credentials” enabled him to “persuade Roosevelt that he could break with the classical orthodoxy …”(A History of Economics: Galbraith). ‘The Trend of Economics’ (also called ‘Trends’) is his principal publication.

Famous American Economist # 17. Veblen, Thorstein Bunde (1857 – 1929):

An eminent American economist and a stern critic of the English classical doctrines, Veblen was the ‘Father’ of the Institutional School of Economics, his institutions being the “prevalent habits of thought with respect to particular relations of the individual and of the community” and his “institutionalism being a creed” for which studies in the areas of psychology, biology, archeology, anthropology and, of course, history, were indispensable.

Born in Wisconsin in the family of Scandinavian (Norwegian) immigrants, Veblen spent his early life in Minnesota and took admission in Carleton College (where he was a student of J. B. Clark, a leading American Marginalist).

He moved to Johns Hopkins University (where he studied economics with E. T. Ely, the economist, and logic with Charles Price, the philosopher and precursor of John Dewey), and then to Yale where “among his principal mentors” was William Graham Sumner, the ‘laissez-faire’ economist.

He joined faculty positions at the Chicago, Stanford and Missouri universities, and lastly at the New School for Social Research in New York. Although a person of ‘simple living’, he was a hard task-master as a teacher, allowing “no concession to stupidity,” according to George Soule. David Riesman, his biographer, extolled him as a “giant out of the earth” for his varied and wide study.

Veblen was opposed to the classical and neo-classical economists’ abstract and static concepts and objective assessment without paying attention to the “psychological basis of human action.”

He was firm in his contention that “hedonistic psychology of marginal valuation implies a teleological imputation of rationality into the economic process which moreover makes it impossible for economic theory to concern itself with its most important task: the theoretical study of economic change and long-run development.” (Readings in Economics: ed. Kapp & Kapp).

Veblen’s greatest contribution was a clear challenge to the classical economists’ unscientific assumptions and deductive reasoning, and it was his conviction that by research into the economic behaviour of people, throughout the ages, valid conclusions might be drawn as to the persistent psychological factors which motivate human behaviour,” and that valid assumptions might then be made about “these psycho-social drives” without which “economics” would be of doubtful existence.

He was very unhappy with the “conspicuous waste” or “conspicuous consumption” and said that “in an industrial community … propensity for emulation expresses itself in pecuniary emulation … and this … is virtually equivalent to saying that it expresses itself in some form of conspicuous waste …” His use of terms like ‘conspicuous consumption’, ‘conspicuous waste’ etc. signified the manner of ‘consumption’ without any reason by the ‘leisure class’, having earned wealth not by work, and he observed that this tendency dominated the society at large.

His work ‘The Theory of the Leisure Class’ indicated that consumption by the ‘high income’ group of persons, if too much (as was generally the case), was “futile, socially wasteful, and not motivated”, associated with a desire to “keep up with the Joneses” and even to surpass them as much as possible (The Theory of the Leisure Class).

Veblen was a sharp critic of the society, charging it with fraud, force and corruption.

Veblen understood ‘competition’ as having more serious implications for society than the competition of the market place, for example, the modem businessman, with a view to demonstrating his superiority over his fellow competitors, would not confine his efforts to better and cheaper production but would be after pursuit of wealth and power, undermining the market conditions by perfecting control over production factors and distribution.

He held, as against the classical economists’ concept of competition as being natural or normal state of the market, that free competition was impossible in an industrial society because of profit motive and monopolistic practices. The setting of prices, he held, was not a free play of market forces, as assumed by the Classicists, but the result of “innumerable controls exercised over the factors of production and distribution” by the big businessmen. (The Engineers and the Price System).

His criticism of ‘finance capitalism’ and his belief in the occurrence of cyclical depressions in business enterprises in the presence of ‘uncontrolled’ competition, and besides, his opposition to ‘capitalism’ and preference for something better, bringing ‘salvation’ to the economic science through a group of young ‘engineers of economics’ as a ‘breakthrough’ of the old system could claim distinction. (The Theory of Business Enterprise).

It is, not un-often, said that Veblen was more a social scientist than a mere economist, because of his wide range of knowledge in conformity with ‘Institutionalism’, a new outlet of economic thought, and that despite his comment on Marxian economics as being an ‘offshoot’ of ‘Classicism’, he looked upon Marx as a great original thinker.

His works include:

The Theory of the Leisure Class, 1899; The Theory of Business Enterprise, 1904; The Instinct of Workmanship, 1914, The Technicians and Revolution, 1921; The Engineers and the Price System, 1921; The Absentee Ownership; Business Enterprise in Recent Times, etc.

Famous American Economist # 18. Walker, Francis A. (1840 – 97):

An American economist, Professor at Yale University and then President of Massachusetts Institute of Technology, Walker was the son of a teacher of economics and educated at Amherst.

Before joining the Yale University, he was in the Union Army, a journalist serving a Massachusetts newspaper, and also a statistician for the U.S. Government during the Censuses of 1870 and 1880. (Economists — Past and Present: John W. McConnell).

He was a leading critic of Mill’s ‘Wages Fund’ theory and said that it was the consumers who set the demand for labour and that workers might be provided for out of current income as well as from capital.

It was argued that there was no specific fund for wages which were separable from other funds to be used in production, and that the ‘fund’ then was really a matter of the employers’ discretion as to how much he would provide for wages.

He did more than anyone to ‘destroy’ the ‘Wages Fund’ theory. (History of Economic Thought: Haney).

His another contribution was to treat ‘profit’ as the remuneration of the entrepreneur, distinct from interest payable to the owner of capital and wages to the workers, and he explained the functions of the entrepreneur as “anticipating the fluctuations of the market,” “organizing production to meet them,” and his duties would, accordingly, be “To furnish … technical skill, commercial knowledge, and powers of administration; to assume responsibilities and provide against contingencies; to shape and direct production, and to organize and control the industrial machinery.”(A History of Economic Doctrines: Gide and Rist).

‘The Wages Question’ (1876) is his major work.