Wicksteed's Recantation of the Marginal Productivity Theory

Abstract

There has always been some obscurity surrounding Philip H. Wicksteed's withdrawal of his mathematical demonstration of the marginal productivity theory of distribution which he presented in An Essay on the Co-ordination of the Laws of Distribution (1894), a work which is now hailed as one of the classics in marginalist doctrine. As Lionel (now Lord) Robbins has stated, the main proposition of the Essay ... [is] that if each factor is rewarded according to its marginal productivity, the sum of the remunerations of the separate factors will exactly exhaust the product; in other words, that the marginal productivity analysis is a sufficient explanation of distribution in this sense . . .In later years, Wicksteed himself, as the result of criticism by [F. Y.] Edgeworth and [Vilfredo] Pareto, became dissatisfied with his own demonstration, declared it to have been a premature synthesis, and in The Common Sense of Political Economy [1910] announced it to be finally withdrawn .1 Precisely what Wicksteed retracted has heretofore been obscure, because nowhere in his published writings does he substantially elaborate his statement that he agreed with Edgeworth and Pareto that his solution of the general problem of distribution erroneous '.2 However, a letter which has recently become available throws some light on the matter. J. M. Clark, whose father was another pioneer in the formulation of the theory of marginal productivity, had informed Wicksteed in 1915 that he had worked out a diagrammatic geometric proof of the equality of the sum of marginal products and total product.3 Wicksteed replied:4