Marginalist Economics Research Articles

Veblen’s quadripartite response to the First World War

Prior to the First World War, Thorstein Veblen wrote extensively about economic theory, formulating the tenets of an evolutionary and institutional economics, and criticizing the static and atomistic premises of classical and marginalist economics, particularly the marginalist theory of distribution, which, in his view, wrongly saw wealth as a reward for productive human labor, rather than a result of the unproductive conduct of parasitic elites. In this period, Veblen devoted relatively little attention to the topics of war and peace. As well, he held that social-scientific inquiry is disinterested: a value-neutral search for knowledge of empirical facts and the theories that explain them. However, during the War, Veblen, while retaining the economic principles of his prewar writings, increasingly combined his emphasis on economics with greater attention to political and cultural factors. Simultaneously, he abandoned his prior insistence on value neutrality to become an activist critic of the War and of Germany’s role in fomenting and perpetuating it. This shift led him to develop: (1) a policy-laced theory of war and peace; (2) practical proposals for building an international organization to promote world peace; (3) specific measures to alleviate wartime food and labor shortages in the U.S.; and (4) a sweeping plan for postwar social “reconstruction.” As Veblen developed these four sets of ideas, he continued his opposition to static and atomistic forms of analysis as well as his commitment to an evolutionary and institutional approach, which saw economic life, along with war and peace, turning on a divide between productive human beings and unproductive parasitic elites.

Exploring the Contributions to Mathematical Economics: A Bibliometric Analysis Using Bibliometrix and VOSviewer

From Cournot, Walras, and Pareto’s research to what followed in the form of marginalist economics, chaos theory, agent-based modeling, game theory, and econophysics, the interpretation and analysis of economic systems have been carried out using a broad range of higher mathematics methods. The evolution of mathematical economics is associated with the most productive and influential authors, sources, and countries, as well as the identification of interactions between the authors and research topics. Bibliometric analysis provides journal-, author-, document-, and country-level metrics. In the present study, a bibliometric overview of mathematical economics came from a screening performed in September 2023, covering the timespan 1898–2023. About 6477 documents on mathematical economics were retrieved and extracted from the Scopus academic database for analysis. The Bibliometrix package in the statistical programming language R was employed to perform a bibliometric analysis of scientific literature and citation data indexed in the Scopus database. VOSviewer (version 1.6.19) was used for the visualization of similarities using several bibliometric techniques, including bibliographic coupling, co-citation, and co-occurrence of keywords. The analysis traced the most influential papers, keywords, countries, and journals among high-quality studies in mathematical economics.

Replacing Cost-Based Theories of Value with Marginalist and Behavioral as a Key Factor of Improving Economic Theory and Enhancing its Credibility

The purpose of the research is providing the basis for the following hypothesis: the quest for enhancement of economic science and regaining its credibility in history of economic thought has led to innovations made by adherents of marginalism, institutionalism and unorthodox neoclassical economics. It marked the start of high-quality thinking on theory of value from the prospective of its marginalist and behavioral versions. The text demonstrates the orthodox character of cost-oriented approach in theory of value, used by fathers of political economy, whose conclusions on commodity value were connected either with labor costs or with total costs of production. It was revealed that the first-wave marginalist economics defined marginal utility as a key price-determining factor, and due to it value therefore can be created only in consumption. The research also found that the second-wave marginalists considered that there are two main elements, which determine price, these are: marginal utility and marginal cost. This conclusion enabled them to overcome the subjectivism and psychologism in theory of value. The supporters of behavioral approach in theory of value put an emphasis on psychologically-based behavior of an individual, as well as on legal foundations of institutional behavior. As a conclusion, the article states that marginalist and behavioral theories of value are rather feasible, as they complement each other and could be applied in modern economic conditions, enhancing the genuine credibility of the economic science.

Genres of Valuation: Marginalist Economics and American Literary Realism

Abstract This essay argues that late nineteenth-century American fiction, as exemplified by William Dean Howells’s The Rise of Silas Lapham (1885) and Theodore Dreiser’s Sister Carrie (1900), is entangled in the period’s embrace of a new understanding of economic conditions, one premised on the significance of consumer data as the raw material of economic interpretation and fixated on mathematical analysis as a source of knowledge about value. Marginalism in economic theory and realism in American literary practice were contemporaneous efforts to mediate value at a moment of decisive transition in America, as a model of commodity-centered competitive capitalism yielded to the regime of corporate finance. The young academic economists of the period and their literary counterparts explained the economic landscape in much the same way and to many of the same ends. Both began with the daunting question of how to reimagine value in a world characterized by fictitious goods and increasingly abstract financial instruments, a world in which the labor theory of value seemed hopelessly outdated. Both responded to this challenge by proposing novel intellectual procedures for making values appear stable again by focusing on the subjective experiences of consumers. Finally, both marginalists and realists sought to provide a quasi-scientific bedrock for fixing values in consumer society not only by appealing nostalgically to an economy of actual goods and honest work but more importantly by accommodating readers, policy makers, and stakeholders of all kinds to the new realities of finance capitalism.

Sraffa on Marshall’s theory of value in the Cambridge lectures: achievements in an unfinished criticism

In his Cambridge lectures, Sraffa criticised Marshall’s theory on the basis of the recognition of the incompatibility between classical political economy and marginalist economics. Preparing his lectures, Sraffa had also identified the need to determine prices and distribution simultaneously although some implications of this latter result were probably not yet fully evident to him. Sraffa still accepted the Marshallian thesis that classical political economy and marginalist economics identified two alternative “ultimate standards of value”. This position bears witness to Sraffa’s initial adherence to the Marshallian theoretical framework. The road towards Production of Commodities was open, but still unfinished.

Power–The Bete Noire in Much of Modern Economics

Power is a pervasive phenomenon in the economy and society, associated with inequality of income, wealth, race, gender, information etc. However, power has been and still is the bête noire in much of modern economics, with only a few exceptions. In non-mainstream economics, in the classical, the Marxian, the Kaleckian and the Post-Keynesian currents of thought, power is an important analytical category. Yet in the main parts of contemporary mainstream economics, especially in much of conventional micro- and macroeconomics, no attempt is made to come to grips with what power means and what its effects are, and the systemic importance of power relationships is widely ignored. Against this backdrop, this paper attempts to bring to the fore ideas of past economists and social and political philosophers, who basically saw socio-economic affairs and outcomes as driven by, and reflecting, power relationships, starting with the writings of late mercantilist and early classical economists. It also analyses how the attention in economics shifted away from the problem of power from the latter part of the nineteenth century with the rise to dominance of marginalist economics.

War and Economic Development in the Studies of Friedrich List and Enrico Barone

Friedrich List and Enrico Barone play a significant role in German and Italian economic literature. Both focus their economic arguments on the concept of war and they have some elements in common. The central point of the paper is the essential role played by war in economic development (viewed as a succession of stages). It is argued that List developed this theory, influencing the German Historical School. It is then put forward that Barone, despite adhering to Prussian military thinking on the one hand, and marginalist economics on the other, expressed a vision of the relation between war and economic development which was partially similar to that of List. The article aims to pinpoint those similarities, focusing on evaluating and comparing elements related to the connection between economic development and war in their studies.

Faste penge og flydende kød: Materialitet og neoklassisk økonomi i Zolas Nana og Penge

This article examines the dynamics of matter and signifiers in Zola’s two novels Nana (1880) and Money (1891). Though Zola’s novels are often read with a focus on capital and economics workings, the context of marginalist economics contemporaneous to Zola is only vaguely described. In drawing upon Jean-Joseph Goux’s work on marginalism and Zola, this topic is addressed, and the article discusses desire, fluidity, scarcity, and value and relates this to the depiction of a disintegrating matter in Nana, and to the motifs of flesh and gold running through the novel. In the reading of Money, the focus is on reckless desire and imagination gone awry, and the push towards an increasingly disconnected abstraction that allows for rapid circulation of values. Here, the two main speculative duelists are seen as representatives of two economic paradigms, and the article finally discusses the depiction of materiality and the uses of this in the novels in the context of a society where values, in the words of Goux, are increasingly fluid and mobile.

Interpreting the capitalist order before and after the marginalist revolution

In this article I compare the approaches to process and order of classical political economy and marginalist economics, taking into account the implicit ontological commitments of each perspective in their explanation of capitalism. I draw on the social ontology developed by Tony Lawson, especially the notion of social positioning. The classical political economists studied the capitalist economy as a process of reproduction and distribution of the economic surplus, where socio-economic order depends on the division of society into social classes. After the marginal revolution, the classical approach is definitely abandoned, in a context where the analysis of human institutions in terms of social positions is progressively replaced by methodological individualism. This leads to a conception where the notion of socio-economic order is interpreted always in terms of market exchange between individuals, and in many cases replaced with a concern with the stability of an equilibrium situation.

Average and Marginal Labour Values Are: On Log (N)-A Reply to Hagendorf

1. introductionThis article addresses a debate in Political Economy that has its origins in the 1870s with, on the one hand, the publication of Stanley Jevons' Theory of Political Economy in 1871 and, on the other, Karl Marx's Critique of the Gotha Programme in 1875. It is well known that in his article Marx advocated a communist system of economy in which workers were to be paid in labour tokens and could use these to acquire goods containing the same quantity of labour. Jevons became famous for his role in founding the marginalist school of economics, which, in the West, became the main alternative to the tradition of Classical Political Economy represented by Marx.What has not, until recently, been noticed was that there are actually linkages between the ideas in these two publications, linkages that surfaced in debates in the USSR in the 1960s.The issues addressed here are the feasibility of Marx's idea of an economic calculus based on labour time and on whether such a calculus can best be done using Marx's own definition of labour value, or whether that developed by Jevons should be used instead. We will review Klaus Hagendorf's (2014) advocacy of Jevons style of interpretation of labour value published in this issue, and then go on to present an empirical investigation into the feasibility of calculating labour values. This empirical investigation publishes for the first time an important property: the network structure of an industrial economy. This property means that proposals like those of the Soviet economist Novozhilov to use labour values directly as a tool of economic calculation may be more feasible than has hitherto been thought.Klaus Hagendorf has done political economy a service by pointing out the degree to which Jevons, the founder of marginalism, can still be described as a follower of the labour theory of value. Klaus Hagendorf points out that for Jevons the prices of commodities should be proportional to their relative marginal labour contents and argues that this marginalist interpretation of the labour theory of value is the most scientific one to adopt.1.1. Is Klaus Hagendorf's Claim Justified?Readers will be aware that the conventional interpretation of the labour theory of value emphasises Marx's definition of the value of a commodity being the average amount of labour that society has to devote to its production.The average amount of labour required to make something is not necessarily the same as the marginal amount of labour. The average labour required can in principle be above or below the marginal labour, so the issue of whether to use marginal or average labour content as the definition of value is not theoretically vacuous.Klaus Hagendorf goes on to argue that the Soviet economist Novozhilov was right to redefine the labour theory of value in terms of marginal labour content because this is the appropriate definition for socialist planning. Marginalist economics, Klaus Hagendorf argues, while it is not an appropriate theory for capitalist economy, it is the right theory to use for resource allocation in a socialist economy. In a capitalist economy, he says, monopolistic restrictions mean that marginalist theory is not appropriate, but it does potentially allow a way of computing the optimal allocation of resources in a socialist economy.This thesis of Hagendorf obviously has quite a long and respectable pedigree. Lange (1938), one of the most forceful Western theoretical advocates of socialism in the 1930s, argued from basically the same position as did Dickinson (1933). As economists trained in the marginalist tradition, they used this paradigm to structure their arguments for socialism. But they did not mix this with the labour theory of value. By the time Novozhilov was expressing his ideas in the 1950s, Lange was working for the socialist government in Poland and went on to hold high government office there. If it seems to us now to have been a genuine innovation for Novozhilov to combine marginal arguments with the labour theory of value in a planning context, it is perhaps worth recalling that this is not so far from what Lange was working on in the 1950s and 1960s (Lange 1969) so these sorts of approaches seem to have been part of the spirit of the age among Com-econ economists of the period. …

A Stock-Flow Approach to a General Theory of Pricing

The paper seeks to lay out a stock-flow-based theoretical framework that provides a foundation for a general theory of pricing. Contemporary marginalist economics is usually based on the assumption that prices are set in line with the value placed on goods by consumers. It does not take into account expectations, or the fact that real goods are often simultaneously assets. Meanwhile, contemporary theories of asset markets are flawed in that they either rely, implicitly or explicitly, on a market equilibrium framework or provide no framework at all. This paper offers a working alternative that relies, not on a market equilibrium framework, but rather on a stock-flow equilibrium framework. In doing so, we lay out a properly general theory of pricing that can be applied to any market — whether financial, real, or a real market that has been financialized — and which does not require that prices inevitably tend toward some pre-specified market equilibrium.

Schmoller's Method as a Critique and Alternative to Marginalist Economics: a Comment to Louzek

AbstractThis article comments upon Louzek () in this journal, claiming that the analysis of Schmoller's method, as evidenced by his practice, allows us to highlight a few themes that are relevant not only in reconstructing his critique of Menger's methodological proposal but also for an extension of such critique to the current mainstream economics.

Pareto's ‘Chronicles’ in Relation to his Sociology

The ‘second series’ of the Giornale degli Economisti commenced in 1890 and established itself as the leading Italian vehicle for the dissemination of the new marginalist economics. From 1891 it also included a special feature entitled ‘cronaca’, which critically chronicled practical developments in Italian public policy, public finances and the state of the economy. Vilfredo Pareto was the regular author of the chronicles between 1893 and 1897. This study provides the context necessary for an appreciation of the juxtaposition evident in Pareto's chronicles between his radical-liberal critique of leading Italian politicians and his relatively gentle commentary on some Italian leaders associated with the extreme left. It also identifies attributes from Pareto's chronicles that extended, albeit in a modified form, to his 1916 Trattato di Sociologia Generale. In both instances: the actual political world is characterised on a similar basis; criticism is undertaken on a brutal, sarcastic and often polemic manner; and the left–right political divide is treated as a relatively low-order issue.

Effective Tension in Robbins' Economic Methodology

Lionel Robbins' Essay is one of the most influential methodological works in twentieth century economics. This said, the Essay is not philosophically seamless; it exhibits certain tensions that are not easily reconciled within any specific philosophical characterization of scientific knowledge. This paper discusses these issues, but also emphasizes that these tensions did not inhibit the influence of the Essay within economics. In fact, it is argued that these philosophical tensions actually contributed to its influence. It was a methodology for economics, not for philosophers, and its influence needs to be understood within the context of 1930s marginalist economics.

Professionalization and the Spread of Marginalist Economics in the United States

Professionalization and the Spread of Marginalist Economics in the United States

Effective Tension in Robbins's Economic Methodology

Lionel Robbins' Essay is one of the most influential methodological works in twentieth century economics. This said, the Essay is not philosophically seamless; it exhibits certain tensions that are not easily reconciled within any specific philosophical characterization of scientific knowledge. This paper discusses these issues, but also emphasizes that these tensions did not inhibit the influence of the Essay within economics. In fact, it is argued that these philosophical tensions actually contributed to its influence. It was a methodology for economics, not for philosophers, and its influence needs to be understood within the context of 1930s marginalist economics.

Max Weber und Rational Choice by Zenonas Norkus (review)

Book Reviews 155 seem to have read its literature very widely. From an Anglophone perspective, this is very refreshing; so many red herrings and cul-de-sacs simply left unpursued and unexplored. The theme is however the same, whatever the language—selective translations of varying quality in combination with disciplinary developments, together with the efforts of system-builders seeking legitimation, have contrived to hide from us Weber's originality. It is however the variations that make up the tune, in which there is scope for the exploration of ideas and the work of criticism. The caricature of Max Weber that exists in textbook and commentary derives from a compulsion to identify a 'theme' that allows everyone to 'place' Weber, without for the most part ever having to even read him. But if the purpose of our intellectual labour were simply to identify and register 'themes' and then move on to the next 'thinker' we would be like John Osborne's mother, who came to his production of Hamlet and helpfully explained to her friend: 'I've seen it before.. .he dies in the end'.47 Keith Tribe King's School, Worcester Keith Tribe Zenonas Norkus, Max Weber und Rational Choice (Marburg: Metropolis: 2001), pp. 576. ISBN 3-89518-321-0. €59.80 pb. Most of the literature on Weber has been written by historians and by sociologists of humanistic bent. The result is that our understanding of Weber has been somewhat biased in in favour of history and humanistic sociology, while his involvement with marginalist economics has been neglected. It is known, of course, that Weber was influenced by marginalist economics and, especially by the Austrian school of eco nomics—most recently illustrated by Fritz Ringer's Max Weber's Methodology (Cam bridge, MA: Harvard University Press,1997), but the extent to which his interpretive sociology was influenced by this branch of economics has been underestimated. For a similar reason, Weber's role as a precursor of rational choice in social science has also been insufficiently recognized. Norkus' extensive treatment of Weber's role as a pre cursor of rational choice theories fills this lacunae in an excellent way, and is also an important contribution to the development of social scientific theory. Let me say it straight away: this is a great book that contributes significantly to our knowledge both of Max Weber and of rational choice, and, additionally, to a large number of topics that the author touches upon in this comprehensive work of more than 500 pages. Norkus has an impressive grasp of literature in a number of fields and his argumenation is, in general, most convincing. Reading this book takes time, but it is rewarding. Norkus' book is divided into five parts. In the first part, we find a discussion of the relation between Weber's socio-economics and his interpretive (verstehende) sociology. Norkus takes issue with Wilhelm Hennis' interpretation of Weber as belonging firmly to the Historical School in economics and as being a representative of the classical tradition in social philosophy. Norkus agrees that Weber was first of all an economist 47. John Osborne, in his A Better Class of Person 1929-1956, reprinted in his Looking Back: Never Explain, Never Apologise (London: Faber and Faber, 1999), p. 229.© Max Weber Studies 2005. 156 Max Weber Studies and also that he shared some concerns with classical social philosophy, especially the interest in the kind of human beings produced by different societies, but he disagrees with the interpretation of Weber as strongly attached to the Historical School in economics. This interpretation seriously underestimates the extent to which Weber was influenced by marginalist economics, he suggests, and gives a false picture of Weber's work as a whole. I believe that Norkus is entirely correct on this point. In part two, Norkus asks if Weber may be interpreted as a rational choice theorist, avant la lettre. The answer is that Weber was indeed a precursor of contemporary rational choice theories. More precisely, Weber advocated a form of rational choice that insists upon microfoundations, without denying the equal importance of macro foundations. In fact, Weber's own substantive work is mainly at the macrolevel, lacking microfoundations and so...

Buying Brains: Trollope, Oliphant, and Vulgar Victorian Commerce

Grant Allen's 1894 description of the shift from "the old asceticism [which] said, 'Be virtuous, and you will be happy' [to] the new hedonism [which] says, 'Be happy and you will be virtuous'" (377) applies to large-scale economic movements of the nineteenth century. During the era preceding the expansion of the credit economy, capital was hard to come by; in order to expand businesses, entrepreneurs had to save, borrow from relatives and friends who had also saved, or both save and borrow. "In these circumstances abstinence became a buttress of industrial expansion because what was not spent on personal account stayed in the business. Personal abstinence is one of the qualities most universally attributed to the entrepreneurs" (Mathias 143). With the expansion and centralization of the banking industry in the 1860s and 70s, commerce was no longer based on saving but on the ability to borrow capital and amass credit, which led to the development of a "plutocracy of big business men and great landowners [. . .] in which the old virile, ascetic and radical ideal of active capital was submerged to the [. . .] supine, hedonistic and conservative ideal of passive property" (Perkin, Origins 436). These changes were associated with the emergence, in the early 1870s, of marginalist economics, which negotiated what Regenia Gagnier calls a "paradigm shift" (137), when it turned critical attention from production, and the habits of saving associated with it, to consumption, and the habits of expenditure associated with it. I examine here a pair of interconnected novels by Anthony Trollope and Margaret Oliphant, authors noted for their explicitness in dealing with money and money-making. Published in 1867 and 1876 respectively, The Last Chronicle of Barset and Phoebe Junior: A Last Chronicle of Carlingford bracket the moment when the [End Page 77] philosophy of consumption and pleasure was articulated publicly in W. Stanley Jevons's The Theory of Political Economy (1871). Both novels function in a quasi-anthropological sense, evoking, through the drama of individual characters' financial problems, an entire culture's response to dramatic changes in economic practice and theory taking place in the last third of the nineteenth century.

Buying Brains: Trollope, Oliphant, and Vulgar Victorian Commerce

Grant Allen's 1894 description of the shift from "the old asceticism [which] said, 'Be virtuous, and you will be happy' [to] the new hedonism [which] says, 'Be happy and you will be virtuous'" (377) applies to large-scale economic movements of the nineteenth century. During the era preceding the expansion of the credit economy, capital was hard to come by; in order to expand businesses, entrepreneurs had to save, borrow from relatives and friends who had also saved, or both save and borrow. "In these circumstances abstinence became a buttress of industrial expansion because what was not spent on personal account stayed in the business. Personal abstinence is one of the qualities most universally attributed to the entrepreneurs" (Mathias 143). With the expansion and centralization of the banking industry in the 1860s and 70s, commerce was no longer based on saving but on the ability to borrow capital and amass credit, which led to the development of a "plutocracy of big business men and great landowners [. . .] in which the old virile, ascetic and radical ideal of active capital was submerged to the [. . .] supine, hedonistic and conservative ideal of passive property" (Perkin, Origins 436). These changes were associated with the emergence, in the early 1870s, of marginalist economics, which negotiated what Regenia Gagnier calls a "paradigm shift" (137), when it turned critical attention from production, and the habits of saving associated with it, to consumption, and the habits of expenditure associated with it. I examine here a pair of interconnected novels by Anthony Trollope and Margaret Oliphant, authors noted for their explicitness in dealing with money and money-making. Published in 1867 and 1876 respectively, The Last Chronicle of Barset and Phoebe Junior: A Last Chronicle of Carlingford bracket the moment when the [End Page 77] philosophy of consumption and pleasure was articulated publicly in W. Stanley Jevons's The Theory of Political Economy (1871). Both novels function in a quasi-anthropological sense, evoking, through the drama of individual characters' financial problems, an entire culture's response to dramatic changes in economic practice and theory taking place in the last third of the nineteenth century.

Friedrich Benedikt Wilhelm Hermann on capital and profits*

The paper recalls some of the achievements of Friedrich Benedikt Wilhelm Hermann, a remarkable German economist whose work, once praised by authors such as von Thünen, Menger, Marshall and Schumpeter, has largely fallen into oblivion. The emphasis is on Hermann's contributions to the theory of capital, profits and relative prices. It is argued that Hermann's writing reflect a period of upheaval, both theoretically and socio-economically – a period of transition from classical to marginalist economics and one in which the ‘social question’ became ever more pressing. On the one hand Hermann contributed to the development of the classical theory of value and distribution, and on the other he prepared the ground for the replacement of that theory by marginal productivity theory.