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It is impossible in a few pages to even touch on the impact Gary Becker had on economics and public policy. Becker was a pioneer whose work spanned many fields, most of which he was responsible for creating. His imagination was limitless, and he applied economics to areas that few would have thought feasible, providing insight, innovation, and reason in every direction he went. Milton Friedman described him as the most important social scientist of the second half of the twentieth century, and the description is not an overstatement. Becker was more than an economist. He was a social thinker who could bring logic to any subject, no matter how unapproachable. It is for that reason that he had such an important impact on public policy. Becker’s seemingly heretical work often reversed stereotypic thoughts and provided approaches to public policy that were not only novel—they were correct. Based on economic theory and empirical analyses that backed it up, Becker provided prescriptions that were both practical and welfare enhancing. Above all, Becker was a scholar in the finest sense of the word, who believed in economics and its power to explain the world. The ultimate economic imperialist, Becker’s real-world orientation gave us new ways to think about economics and its application to policy. 1

Irma Adelman was born in Czernowitz, Romania, in March of 1930. Her father was a Jewish businessman with socialist leanings, and although her mother was educated to be a lawyer, she never practiced and thus concentrated her energies on her only daughter, Irma. Despite Irma’s Jewish background, she was educated by French Catholic nuns, and her family lived in affluence in her early life. It was not long before her family encountered anti-Semitism and discrimination in the late 1930s, her father foresaw the dark shadow of World War II, and the family immigrated to Palestine in 1939. Irma attended high school in Palestine and also fought in the Israeli war of independence. After the war, she immigrated to the United States, where she enrolled as an undergraduate at the University of California, Berkeley (UC Berkeley), as a business administration major. Soon after her arrival at Berkeley, she met and married her husband, an American physics PhD candidate. They decided to settle in the United States and had one son, Alex. After her undergraduate studies, Irma enrolled at UC Berkeley as a PhD student in economics. Given her strong quantitative skills, she benefited from training by Robert Dorfman in mathematical models in economics and from courses in econometrics and statistics offered by George Kuznets in the Department of Agricultural Economics. Her classmates in Kuznets's courses included Arnold Zellner, Zvi Griliches, and Yair Mundlak. After graduating at the top of her class in 1955, Irma faced considerable difficulties in landing a tenure-track academic position, which was typical of the discrimination against professional women at the time. She held various nontenure appointments at UC Berkeley, at Mills College, and at Stanford for several years. During this period, she published her first book ( Adelman & Morris 1973 ), the classic Klein-Goldberger paper ( Adelman & Adelman 1959 ), and the pathbreaking hedonic pricing paper ( Adelman & Griliches 1961 ), as well as many other publications in leading journals. Yet she was still unable to land a tenure-track position in the Bay Area. She and her husband decided to relocate due to her husband’s job offer, and thus she moved to Washington, DC, where she obtained a regular associate professorship at John Hopkins University. There she also met Cynthia Taft Morris, who would later become a lifelong friend and collaborator. While in Washington, DC, she became acquainted with agencies such as USAID and the World Bank. In 1966, she moved to Chicago for a position at Northwestern University, where she stayed until 1971. In 1973, she joined the World Bank along with having a professorship at the University of Maryland. From Maryland, in 1979 she returned to UC Berkeley’s Department of Agricultural Economics, where she stayed until her early retirement in 1995. She has been a professor emeritus of the Graduate School ever since.

The Lewis (1954) model of economic development is one of the rare 60 year-old papers still featured on many graduate economics reading lists. However, like many classics, the original paper, “Economic Development with Unlimited Supplies of Labor,” is probably read less frequently than it is cited. There are numerous commentaries and glosses available that save readers the trouble of wrestling with the original—even though Lewis’s writing was lucid and engaging. In particular, many development textbooks offer verbal or graphic summaries of the Lewis model, but the summaries often lose the richness of the original. Lewis’s (1954) paper bundles together theories of growth, structural transformation, inequality and distribution, wage determination, and population. The proliferation of ideas in the Lewis paper was not an accident. Lewis (p. 139) telegraphed his intention in the first paragraph of the paper, where he wrote: “This essay is written in the classical tradition, making the classical assumption, and asking the classical question. The classics, from Smith to Marx, all assumed, or argued, that an unlimited supply of labour was available at subsistence wages. They then inquired how production grows through time. They found the answer in capital accumulation, which they explained in terms of their analysis of the distribution of income. Classical systems thus determined simultaneously income distribution and income growth, with the relative prices of commodities as a minor by-product.” This paper was not a modest undertaking, and Lewis himself clearly viewed it as a major contribution.

A Monetary History of the United States 1867 to 1960 published in 1963 was written as part of an extensive NBER research project on Money and Business Cycles started in the 1950s. The project resulted in three more books and many important articles. A Monetary History was designed to provide historical evidence for the modern quantity theory of money. The principal lessons of the modern quantity theory of the long-run neutrality of money, the transitory effects of monetary policy on real economic activity, and the importance of stable money and of monetary rules have all been absorbed in modern macro models. A Monetary History , unlike the other books, has endured the test of time and has become a classic whose reputation has grown with age. It succeeded because it was based on narrative and not an explicit model. The narrative methodology pioneered by Friedman and Schwartz and the beautifully written story still captures the imaginations of new generations of economists.

We discuss the traditional interpretation of Edgeworth’s conception of competition neo-Walrasian authors developed following the Debreu-Scarf ’s theorem legacy. This interpretation presents Edgeworth as the forerunner of the cooperative-games approach based on the notion of the core as a solution concept. We appraise those notions using Edgeworth’s texts. This allows us to plead in favour of Edgeworth’s originality and of the need to rescue his theory of perfect competition from a misleading way. Textual evidence allows us to assert that the language of the cooperative game theory, and the subsequent modern theory of the core, do not correspond to Edgeworth’s theory. The modern notion of coalition seems to be an interpretation of Edgeworth’s concept of “combination” and of “cooperative associations.” Both notions deeply differ from the traditional concept of coalition when one examines them more carefully. Edgeworth clearly establishes a difference between a group of agents entering in a series of bilateral contract relations and a “combination.” The logic of the former is purely individual in the sense of an individual improvement accepting bilateral contracts within a new group rather than the bilateral contracts she have formerly agreed within another group. In fact, within the new improving-group all contracts continue to be bilaterally established and, more important, these kind of association does not necessary imply giving up all previous exchanges outside this group. From this alternative interpretation about Edgeworth’s notion of “combination” we extract a completely different conclusion than that implied by the coalitional formation presented in the cooperative game theoretical framework. In this framework, the core of an economy is simply reduced by the presence of an increasing number of agents forming this kind of coalitions. From the Egeworthian point of view, the number of agents does not per se guaranteed the increasing of competition when this kind of cooperative arrangement is the rule.

Paul Samuelson's Foundations of Economic Analysis played a major role in defining how economic theory was undertaken for many years after the Second World War. This paper fills out Samuelson's account of the book's origins and corrects some details, making clear his debt to E. B. Wilson and establishes that turning the thesis into a book was a long process. The contents of the book and its reception are then reviewed. ( JEL A22, B20, B31)

In the context of the special issue on Joseph Steindl, we offer here a republication of Steindl’s contribution to the series “Recollections of Eminent Economics”, originally published in vol. 37 n. 148 of “Banca Nazionale del Lavoro Quarterly Review”. With the series of Recollections the journal aimed at publishing short autobiographic essays that contained an author’s take on the past and current state of the economic disciplines and profession. Raised in the tradition of the Austrian School, Steindl witnessed two major changes in economics: the Keynesian revolution, and the subsequent "counterrevolution". According to the author, the time for "new fashions" is not far away. JEL Codes: A11, B31, B20, PSL Quarterly Review, V. 65, N. 261 (2012)

David Hume (1711–1776) is arguably the most esteemed philosopher to have written in the English language. During his lifetime, however, Hume was as well if not better known for his contributions to political economy, particularly for the essays published as the Political Discourses (1752). Hume left his mark on the economic thought of the physiocrats, the classical economists, and the American Federalists. Adam Smith, who met Hume circa 1750, was his closest friend and interlocutor for some 25 years. Among modern economists, Hume's essays on money and trade have informed theorists of both Keynesian and Monetarist persuasions. In this essay, we begin by discussing Hume's monetary economics, and then spell out his theory of economic development, noting his qualified enthusiasm for the modern commercial system. We end with an assessment of his views on the scientific standing of economics, specifically his counterintuitive argument that economics could be epistemologically superior to physics.

Half a century ago, Economica published what its webpage claims is “the most heavily cited macroeconomics title of the 20th century”—the paper by A. W. H. “Bill” Phillips (1958) that introduced the Phillips curve. Based on admittedly circumstantial evidence, I will argue that Bill Phillips was not satisfied with the paper and had not intended to publish it in 1958. I believe that Phillips was persuaded to allow his paper to be published in 1958 by James Meade. After a brief overview of Phillips' early life and career, I attempt to show why Phillips was probably unhappy with the paper that introduced the curve that came to be identified with his name and how, nevertheless, it came to be published.

Bela Balassa's Theory of Economic Integration, published fifty years ago, is a remarkable, yet little known book. This essay reviews developments in the economic literature and in the process of European integration since the book's publication, showing that it was incredibly prescient. It anticipated by more than twenty years the modern literature on economic integration that emphasizes scale economies, imperfect competition, and economic geography. It also predicted that monetary union cannot function properly without political unification, a condition well illustrated by the recent euro-debt crisis that is likely to be a watershed in the history of European integration. (JEL B31, F15, F36, G01)

Early modern Europe in the late seventeenth and early eighteenth centuries witnessed an unprecedented increase in the rate of economic growth, and governments entertained a wide range of proposals aimed at developing and harnessing foreign trade and emerging financial markets. In his magisterial survey of foreign trade doctrine titled Studies in the Theory of International Trade (1936), Jacob Viner pointed out that enlightened authors of that time were often nonbullionist mercantilists: they favored export promotion and import reduction not on the grounds that it would lead to an accumulation of gold, but on the grounds that it would increase trade and employment. My focus here is on how some key economists of this time period—William Petty, John Law, and Richard Cantillon—adumbrated disputes between supply-side and demand-side macroeconomics that have continued to the present day.

One frequently quoted passage from the work of John Maynard Keynes is that “the best way to destroy the capitalist system [is] to debauch the currency.” The passage, attributed to Vladimir Illyich Lenin, appears in Keynes' book The Economic Consequences of the Peace, which became an international bestseller when it was published in 1919. Economic historian Frank W. Fetter and others have expressed doubt that Keynes was really quoting Lenin because they found no such statement in Lenin's collected published writings. Fetter suggested that Keynes based his remark on stories about what the Soviets were supposed to be saying that he heard at the Paris peace conference of 1919. It is now possible to show that Keynes based his remark on a report of an interview with Lenin published by London and New York newspapers in April 1919. Keynes' discussion of inflation in the Economic Consequences can then be read as an extended commentary on the remarks attributed to Lenin in the interview. While the report of the interview was not reprinted after 1919, it will be also shown here that Lenin responded to Keynes in a speech that was reprinted in his Collected Works.

Susan Carleton Athey is the 2007 recipient of the American Economic Association's John Bates Clark Medal, which is “awarded biennially to that American economist under the age of forty who is adjudged to have made the most significant contribution to economic thought and knowledge.” I have had the immense pleasure of being Susan's teacher, her advisor, her coauthor, and her friend. Yet I never cease to be amazed at her abilities and her accomplishments on so many dimensions. The AEA specifically cited her work in four distinct areas: monotone information models; industrial organization and particularly auctions; macroeconomics; and econometrics. Yet there is even more breadth to Susan's research contributions than this suggests, as I will show.

In this contribution, we provide an interpretation of Friedrich von Wieser’s contribution to economics that pays tribute to the originality of his work and particularly to his view of how institutions interfere with individual behavior. This interaction takes place within a disequilibrium framework where social influences such as power or social class, and psychological factors such as force of habit or herd behavior, are the product of human action but also constitute constraints on further action. Section II stresses the institutionalist background of Wieser’s economics. We concentrate on Wieser’s general method—which we assimilate to an example of Joseph Agassi’s (1975) institutional individualism—and his analysis of the emergence and evolution of institutions via the dynamics of leaders and masses. In section III, we reinforce and illustrate the institutionalist stamp of Wieser’s economics by focusing on his work on monetary economics (Wieser 1904, 1909a, 1909b, 1927b) and his analysis of the emergence of money, based on our reading of Wieser’s Social Economics ([1927a] 1967) and The Law of Power ([1926] 1983).

German policy during the Eurozone crisis supposedly follows an ordoliberal tradition. In this paper, we discuss to what extent this contention holds and to what extent Germany pragmatically responded to different crisis phenomena. A proper analysis of ordoliberal thinking reveals that European Monetary Union can be justified on ordoliberal grounds as an economic constitution for Europe in which several pillars supposedly aim at ensuring sound money in the Eurozone. The policies the German government pushed during the Eurozone crisis have been informed by the ordoliberal tradition. In particular, this tradition may explain why the German government has been hesitant to support the call for Eurobonds and has only reluctantly established the European Stability Mechanism (ESM). However, the decisions on the ESM and the acceptance of unconventional monetary policy in Europe show that German economic policy largely responded pragmatically to the challenges offered by the crisis. JEL-Classification: B25, B26, B31, D78, E61, E63 Keywords: Ordoliberalism, Eurozone Crisis, Monetary and Fiscal Policy ----- Bibliography: Feld, Lars P./Kohler, Ekkehard A./Nientiedt, Daniel: Ordoliberalism, Pragmatism and the Eurozone Crisis: How the German Tradition Shaped Economic Policy in Europe, ERIS, 3-2015, pp. 48-61. https://doi.org/10.3224/eris.v2i3.23448

This article offers a revisionist account of certain episodes in the development of F. A. Hayek's thought. It offers a new reading of his 1937 paper, “Economics and Knowledge,” that draws on unpublished lecture notes in which he articulated more fully the distinctions he made in the paper between a “pure logic of choice,” or the economic calculus, and an “empirical element,” which he would later call the competitive market order. Next, the essay shows that Hayek continued to try to develop his ideas about the role of the economic calculus through the 1950s and early 1960s, an effort that has been missed because it never led to any published work. Finally, the article examines Hayek's attempt to articulate a theory of the market process, one that would be at the same level of generality as the economic calculus, in lectures he gave at the University of Virginia. He never developed a full-fledged formal theory, but his failed efforts still bore fruit in leading him to his contributions on spontaneous orders and the (verbal) theory of complex phenomena. This work anticipated contributions by others who were more technically trained.

Le but de cet article est de decrire la notion de "self-interest" et ses relations avec celle d’individu, considere comme sujet economique, dans la Richesse des Nations. Le concept de "self-interest" est analyse a travers trois differents points de vue qui en illustrent la complexite. En outre, on demontre qu’il faut corriger la vision selon laquelle le "self-interest" est un principe homogene et transparent, qui dirige les actions individuelles et specifie par un ensemble de caracteristiques partagees par la plupart des individus.

This essay provides an approach to the analysis of the link between Thorstein Veblen's evolutionary approach and evolutionary game theory (EGT). We shed some light on the potential contribution of Veblen's theory of socioeconomic evolution to the discussion on the application of EGT to social environments. We also investigate to what extent elements of EGT can be used to formalize some of the basic evolutionary principles proposed by Veblen. The methodological imperatives laid down by Veblen, defining an evolutionary approach, are presented. We provide an analytical framework that allows the evaluation of EGT in terms of Veblen's evolutionary approach. To better understand the main principles and rationale behind EGT and how it can be applied as a tool for analyzing issues on the diversity, interaction, and evolution of social systems, we discuss this nontraditional approach and its basic concepts. Finally, the main characteristics of EGT are contrasted with Veblen's principles.

The journal of the Econometric Society, Econometrica, was established in 1933 and edited by Ragnar Frisch for the first 22 years. As a new journal Econometrica had three key characteristics. First, it was devoted to a research program stated in few but significant words in the constitution of the Econometric Society and for many years printed in every issue of the journal. Second, it was the first international journal in economics. Third, it was the journal of association (Econometric Society) with members committed to a serious interest in econometrics. The paper gives a brief account of the circumstances around the establishment of the journal and of the relationship between Frisch and Alfred Cowles 3rd who in various capacities played a major role in launching the journal and keeping it going. It furthermore conveys observations and comments related to the editing of the first seven volumes of Econometrica, i.e. 1933-39. The main aim of the paper is to shed light on how the editor and a small core group of econometrician attempted to promote econometrics via Econometrica. The paper is overwhelmingly based on unpublished material from Frisch’s editorial files. Editorial principles, controversies, and style are illuminated through excerpts from the editorial correspondence. The paper was presented at ESEM-67, University of Gothenburg, 26-30 August, 2013.

Gary Becker's classic study, ‘A theory of the allocation of time’, laid the analytical foundations for the study of household production and the allocation of time within the household. It spawned a large literature and continues to influence economics and other social sciences. The article was written when Becker was in his mid-30s, teaching at Columbia University and conducting research at the National Bureau of Economic Research, then headquartered in New York. Over the period 1958–69, Becker, along with Jacob Mincer, organised the legendary Columbia Labour Economics Workshop. Becker, Mincer and their students applied price theory to study the economics of fertility, labour supply, income inequality, education, on-the-job training, crime and punishment and the theory of irrational behaviour, among other topics. The interplay between theory and data was the hallmark of that group. From this crucible emerged the modern theory of human capital (Becker, ,) and important components of the modern economics of the family that were distilled and extended in Becker's classic A Treatise on the Family (1981, enlarged in 1991). A generation of productive and influential scholars was trained at Columbia during this period (Heckman, 2014). In his introduction to this article, Becker discusses the body of research on the economics of time that was being conducted at Columbia, to which he contributed and from which he had drawn. This article is the analytical synthesis of a body of ideas developed in that intense intellectual climate. Many scholars have tried to disentangle the contributions of Jacob Mincer from those of Gary Becker during the period of their synergistic collaboration. Attempts to do so miss the highly interactive and mutually supportive intellectual environment of the Columbia group and the ability of Becker to create clean analytical insights from diverse bodies of empirical work and to stimulate all those around him.

Andrei Shleifer is the 1999 recipient of the John Bates Clark Medal, an award presented by the American Economic Association to an outstanding economist under the age of 40. The Clark medal citation singles out his contributions to three fields: corporate finance (corporate governance, law and finance), the economics of financial markets (deviations from efficient markets), and the economics of transition. One could add a fourth area, an early but then spurned love, macroeconomics (the role of increasing returns in cycles and growth). In each area that Andrei has touched, his contributions have shaped the basic paradigm and have triggered considerable follow-up research. The reason is that Andrei focuses on the big issues of economics. A recurring theme of his research is the respective role of markets, institutions, and governments. In his work, markets do not work perfectly and institutions are of the essence. But one should not trust governments always to do the right thing, be it in the design of institutions or in direct interventions. Governments are not perfect and sometimes they can be quite bad indeed. In the hands of others, such themes could lead to ideological blabber or to banal generalities. In Andrei’s hands, they don’t. In each case, Andrei focuses on a specific market, a specific institution, a specific mechanism. He writes down a simple model, very much in the old Chicago tradition, and uses it as a guide to the empirical evidence. He looks at the available evidence, often, as in his work on law and finance, assembling that evidence for the first time. The general lessons come from the accumulation of papers and evidence. This is why his work is so convincing, influential, and likely to endure.

The paper considers Keynes’s major contributions before "The General Theory", namely "A Tract on Monetary Reform" and "A Treatise on Money", and shows that they were close to the views which Friedman would later develop. However, "The General Theory of Employment, Interest and Money" represented a major challenge to the orthodoxy of the time, and it was to this that Friedman radically objected. We identify the main areas in which Keynes departed from the mainstream theory of the time, and show how Friedman attempted to undermine each of Keynes’s major contributions and the extent to which he was successful. Friedman regarded Keynes’s contributions as detrimental to, and a definitive step backward for, the economics profession.

While Harriet Taylor Mill's work on feminist economics has only recently begun to receive the attention it deserves, one can hardly say that she was earlier ignored: for more than a century, debate has raged over the extent and nature of her "influence" on John Stuart Mill. The debate was provoked by Mill himself, who used quite extravagant language in describing his wife and her contributions to his work.1 The following example is from his Autobiography (J. S. Mill, 1873 [1965 p. 251]), completed after Harriet's death and published only after his own

This paper evaluates Schumpeter's grand vision as reflected in his Capitalism, Socialism and Democracy, and elaborates it in conjunction with the so-called "globalization" trends characteristic of the wake of the twenty-first century. In addition to the evolutionary nature of his methodology, the institutionalist dimension of Schumpeter's definitions are brought to light. A case is made for a fundamental process of "uncreative destruction" as far as the institutional setup of the economy is concerned. The contention of this paper is that there is ample support in Schumpeterian analysis for a counterpoint to the liberal thesis that envisages the worldwide spread of individualism, market economies, and democratic forms of government.

Kevin M. Murphy is the winner of the 1998 John Bates Clark Medal, presented by the American Economic Association every second year to an outstanding economist under the age of forty who is selected for special recognition. He is the George Pratt Schultz Professor of Business Economics and Industrial Relations in the University of Chicago's Graduate School of Business and is the model of an applied economist. I will survey a selection of his papers, highlighting his accomplisments in three principle areas--income inequality, unemployment, and economic growth--and considering a representative smattering of other topics.

The economics of Leon H. Keyserling influenced the Roosevelt era in terms of housing, agriculture, labor, and antitrust legislation. During the Truman era, discussed herein, Keyserling was influential as chair of the Council of Economic Advisors, stressing long-term growth, general and selective fiscal, monetary, and interest rate policies, and the view that economic growth, equity, and welfare are tied together via a full employment goal. Thus he was a liberal Keynesian and a pragmatist realizing that the keys to prosperity were consumption (wages) and investment (profits).

Chapter 2 is one of the most important chapters in the General Theory. Not only does it set out Keynes’ disagreements with key elements of the classical model, it lays out his own model of the working of the labour market, which underlies the analysis in the remainder of the General Theory. The issue of how labour’s response to a change in its real wage differs depending on whether the change is driven by a change in the nominal wage or in the price of consumer goods plays a key part in the way Keynes’ theoretical model is developed here. This chapter introduces Keynes’ concept of involuntary unemployment and sets out his argument about the causal relation between the real wage and the level of unemployment, and about the consequent cyclicality of the real wage. Chapter 2 also includes Keynes’ discussion of Say’s Law.

In Chapter 4 of the General Theory, Keynes discusses the units of measurement he will be using in the remainder of the book, in particular his reason for measuring in nominal rather than real terms, objection to aggregate measures of real output and physical capital stock, and his concept of wage units, which is a source of difficulty in following bits of the later exposition. Chapter 5 introduces expectations and discusses the role of short run expectations in determining the behavior of firms and of economic aggregates.

This paper is one of three contributions to a symposium commenting on papers previously published by the other authors. Allain (Allain, O. (2009) Effective demand and short-term adjustments in the General Theory, Review of Political Economy, 21, pp. 1–22) argues that Keynes elides a distinction between aggregate demand and global expenditure that is necessary to explain the formation of price expectations by individual entrepreneurs. Allain's conclusions depend upon redefinitions of aggregate and effective demand and the consumption function. Hartwig (Hartwig, J. (2007) Keynes vs. the Post Keynesians on the principle of effective demand, European Journal of the History of Economic Thought, 14, pp. 725–739) argues that entrepreneurs must take into account the state of the economy as a whole, in order to form price expectations independently and not as a market equilibrium determined by aggregate supply and demand. This leaves demand price expectations to be determined outside the principle of effec...

In this article we address the story of developments in general equilibrium theory in the Soviet Union during the 1970s through the lens of a single biography. The Soviet advances in mathematical economics give an occasion to reflect on the extension of the Walrasian paradigm to nonmarket societies, as well as on the ideological effects of general equilibrium theory and its interpretations in a Soviet context. Our contribution is focused on the development of general equilibrium theorizing in the work of Victor Meerovich Polterovich (b. 1937), who has been one of the leading figures in mathematical economics and general equilibrium theory in the Soviet Union and post-Soviet Russia. His papers on the abstract models of exchange, dynamic general equilibrium and optimal growth theory, excess demand correspondences, monotonicity of demand functions, and disequilibrium theory were for the most part published in English and gained considerable attention within the field. We reconstruct the political and ideological basis of the general equilibrium concept and show how abstract mathematical models reflected the discursive shift from optimal centralized planning to various forms of decentralization. We argue that the Soviet work on general equilibrium was a part of the global development of mathematical economics but was not integrated into it institutionally.

Chapters 8, 9 and 10 set out Keynes’ theory of consumer behavior. Chapter 8 is entitled The Propensity to Consume: I. The Objective Factors, Chapter 9 is The Propensity to Consume: II. The Subjective Factors, and Chapter 10 is The Marginal Propensity to Consume and the Multiplier. Contrary to the widely held belief, Keynes saw the consumer as an intertemporally optimizing agent, in a manner which is quite consistent with Frank Ramsey’s model of intertemporal saving behavior and with modern theories of the behavior of the optimizing consumer. While he did conclude that in the short run income would be the dominant factor underlying consumer behavior, this was an empirical judgement, not simply an assumption about fundamental psychological propensities. Chapter 10 formally introduces the marginal propensity to consume and the multiplier.

Irving Fisher's monograph Appreciation and Interest (1896) proposed his famous equation showing expected inflation as the difference between nominal interest and real interest rates. In addition, he drew attention to insightful remarks and numerical examples scattered through the earlier literature, and he derived results ranging from the uncovered interest arbitrage parity condition between currencies to the expectations theory of the term structure of interest rates. As J. Bradford DeLong wrote in this journal (Winter 2000), “The story of 20th century macroeconomics begins with Irving Fisher” and specifically with Appreciation and Interest because “the transformation of the quantity theory of money into a tool for making quantitative analyses and predictions of the price level, inflation, and interest rates was the creation of Irving Fisher.” I discuss the message of Appreciation and Interest, and assess how original he was.

In 1987, Greenwald and Stiglitz accused Keynes’s summary of the "General Theory" in chapter 18 of relying upon “neoclassical and Marshallian tools.” A number of contributions have on the contrary emphasized the methodological importance of this chapter, which this paper revisits in the light of "A Treatise on Probability." It thereby shows that the notions of cause and dependence used to discuss the relationships between independent and dependent variables of the "General Theory" are related to the concept of “independence for knowledge,” which concerns logical connections between arguments rather than material connections between events. We demonstrate that such logical connections established in chapter 18 are rediscussed in chapters 19-21, where Keynes allows for probable repercussions between the factors and removes the simplifying assumptions previously introduced. After stressing the methodological continuity this method provides with the analysis of credit cycles in "A Treatise on Money," we argue that chapter 18 is an indispensable tool to decode the internal text structure of the "General Theory." We thus characterize the latter as a vademecum to the complex economic world, the author providing an analytical method allowing – and requiring – the readers to emulate his efforts to grasp the complexity and interdependence of the economic material.

Starting from MacIntyre's virtue ethics, we investigate several codes of conduct of banks to identify the type of virtues that are needed to realize their mission. Based on this analysis, we define three core virtues: honesty, due care and accuracy. We compare and contrast these codes of conduct with the actual behavior of banks that led to the credit crisis and find that in some cases banks did not behave according to the moral standards they set themselves. However, notwithstanding these moral deficiencies, banks and the professionals working in them cannot be fully blamed for what they did, because the institutional context of the free market economy in which they operated left little room for them to live up to the core values lying at the basis of the codes of conduct. Given the neo-liberal free market system, innovative and risky strategies to enhance profits are considered desirable for the sake of shareholder's interests. A return to the core virtues in the financial sector will therefore only succeed if a renewed sense of responsibility in the sector is supported by institutional changes that allow banks to put their mission into practice.

Condy Raguet (1784-1842) was the first Charg%E9 d'Affaires from the United States to Brazil and a conspicuous author of political economy from the 1820s to the early 1840s. He contributed to the era's free-trade doctrine as editor of influential periodicals, most notably The Banner of the Constitution. Before leading the free-trade cause, however, he was poised to negotiate a reciprocity treaty between the United States and Brazil, acting under the authority of Secretary of State and protectionist apostle Henry Clay. Raguet's career and ideas provide a window into the uncertain relationship of reciprocity to the cause of free trade.

This paper addresses the enduring insistence on the moral dimension of international economic relations in Keynes’s economics and diplomacy. The issue has so far raised scarce attention in the literature, which tend to attribute some outstanding failures of Keynes’s economic diplomacy to the presumed instrumental use Keynes made of moral arguments. The paper provides a comprehensive account of the ethical arguments used by Keynes in his lifelong attempt to design a fair international order, and aims to demonstrate that this moral dimension is part of a well-defined ethics of international relations which privileges national policy space and freedom to choose.

The Austrian school of economics is generally considered an antiwar school. The Austrian view is not derived from a religious or class-based ideological view. Instead, it derives entirely from the school's fundamental economic tenets. This article applies the economic views of the Austrian school's founders - Menger, Bohm-Bawerk, and Wieser - to the issue of war.

The Industrial Institute for Economic and Social Research (IUI) was founded in 1939. In less than ten years, IUI grew from a small survey bureau to a leading research institute focused on microeconomic research relevant to industrial development. Based on a number of new commemorative essays and biographies written by or about former IUI researchers published in Henrekson (2009), this essay describes the Institute’s accomplishments and the particular research environment at IUI. It also discusses the conditions conducive to a creative, productive research environment. While most of these accounts do not extend beyond the end of the 1970s, the insights provided are highly relevant for contemporary research institutes.

Victor Fuchs is a towering figure. His contributions to economics have spanned nearly 35 years. As his career has progressed, he has increasingly come to write on subjects of broad interest in a style that is accessible to noneconomists, thereby magnifying his influence. His gift is an ability to ask questions that are usually based on simple theory, but which nonetheless in his hands seem novel, and then proceed to answer those questions with simple, straightforward data analysis that is all the more powerful for its simplicity. Victor's work is usually “low tech,” to use his term, but almost always persuasive in ways that high-tech methods would not necessarily be. In this essay, I focus principally on Victor's contributions to the economics of health and medical care, but I have a bit to say about his other contributions as well.

Bob Gregory contrasts 'the presuppositions of Royal Parade' of 1950 Melbourne with the present outlook of himself and Australia at large. He outlines the evolution of his methodological position from the University of Melbourne student to the Canberra policy advisor, and defends that position from criticism. He recalls the genesis of the Gregory Thesis, and advances his account of the decline of trade unionism, the impact of the welfare state on household formation, and Aboriginal unemployment. He was interviewed in his Canberra home in June 2007.

In their latest book (2008), Bruno Frey and the members of the research group he chairs at the University of Zurich announce that happiness research is leading a revolution in economics. More precisely, the revolutionary character of happiness economics would draw on measurement, on how people value goods and social conditions, as well as on policies. This paper aims to discuss critically this claim and what we identified as five crucial issues of mainstream happiness economics, i.e.: 1. the ambiguous relationship between income and happiness, 2. the “back to Bentham” approach, 3. problems of incommensurability, 4. heterogeneity and multidimensionality, 5. the scope of economics in relation to happiness. In so doing, we attempt to review John Maynard Keynes’s vision about happiness and economics, starting from a revisiting of his essay Economic Possibilities for Our Grandchildren in the light of his early unpublished writings on ethics as well as of the whole bulk of his writings in economics. We then provide reasons to argue that the rediscovery of Keynes’s legacy in this respect can be of help to point out and examine the most controversial aspects of today’s happiness research.

Guy Henderson Orcutt was born and grew up in Michigan, near Detroit, and had established a lifelong curiosity about how things work before he entered high school. His earliest efforts involved electrical devices and experiments, sometimes with explosive effects, but with continuing support and encouragement from his parents. His later efforts, as he progressed from engineering through physics to economics and econometrics, have given several generations of economists new ways to think about economic phenomena and new and better tools for investigating them. Guy has now moved to a new phase of his career and we can confidently expect further insights and inspiration from this distinctive and Distinguished Fellow of our Association. Most of Guy's career has been at four universities: Michigan, where he earned all three degrees, Harvard, Wisconsin, and Yale. In between, he spent periods at MIT, Cambridge University in England, the International Monetary Fund, the World Bank, and The Urban Institute. To me, Guy is several persons rolled into one: inventor, visionary, empiricist, mentor and friend.

Trygve Haavelmo was in the United States from 1939 to 1947, and in this period he published most of his path-breaking contributions to econometrics for which the Nobel committee awarded him the prize. His list of publications after 1947 contains more than 100 items. We review his contributions to econometrics only briefly in order to cover his other research, which has focused on the relationship between population, natural resources, and growth; investment and capital theory; the notion of equilibrium and disequilibrium; the nature and stability of preferences; and the nature and problems of democracy.

A large number of interpretations have been proposed for current global imbalances, with a variety of future scenarios for world economy. The perspective here adopted tries to be fully respectful of the assumption of global economic interdependence as well as to cope with the complexity of a political, and not exclusively an economic, problem. By the use of the three alternatives outlined by Keynes in his 1945 memorandum "Overseas Financial Policy in Stage III" for the restart of multilateralism at a global level, we propose to rearrange views about current imbalances according to the unilateral, bilateral or multilateral nature of the adjustment they propose - if any - for their unwinding. Comparisons are made between Keynes's "Starvation Corner" and "gloomy views", together with scenarios suggesting the need of unilateral adjustments. Keynes's "Temptation" is used to analyse views stating that global imbalances are sustainable due either to the working of market mechanisms, related to the strength of the American economy, or to the (tacit) agreement of a "revived Bretton Woods system". The parallel with Keynes's "Justice" leads to consider views highlighting shared responsibilities for the imbalances and prompting for collective actions to reduce them.

This paper proposes a general interpretation of Edgworth's thought based on the recognition of a unitary philosophical project in his contributions to ethics, economics, probability and statistics. This project consists in the search for a common epistemological foundation for the social sciences. The point is illustrated in reference to the coexistence in Edgworthian scientific programme of the 'regularity of law' with the 'impartiality of chance'. The interpretation here proposed challenges the traditional stereotypes according to which Edgeworth was a crass utilitarian, and an ingenuous advocate of a rather primitive neoclassical economics. His plea for the use of mathematics, and his choice of deterministic models for the description of the economic behaviour, appear more innovative when the role of probability is considered.

The invisible hand as it appears in the Theory of Moral Sentiments is commonly treated as an afterthought in discussions of the version in the Wealth of Nations, but it deserves attention in its own right. I will argue that there is an entirely coherent (if not entirely plausible) economic argument underpinning the invisible hand of the Theory of Moral Sentiments. It is quite different from the invisible hand argument of the Wealth of Nations, not because of any conflict but because they address different questions. The argument in the Theory of Moral Sentiments allowed Smith to maintain an ironic distance from the inequality and greed that he saw around him while arguing that it did no harm, and allowed him to resolve, at least to his own satisfaction, an age-old debate about the ethical and political consequences of luxury consumption. Some of these themes were further developed in the Wealth of Nations, but without the phrase 'invisible hand', which was switched to a different part of the argument.

In Appreciation and Interest Irving Fisher (1896) derived an equation connecting interest rates in any two standards of value. The original Fisher equation (OFE) was expressed in terms of the expected appreciation of money [percent change in E(1/P)] whereas the ubiquitous conventional Fisher equation (CFE) uses expected goods inflation [percent change in E(P)]. Since Jensen?s inequality implies the non-equivalence of the two equations, the OFE is not subject to standard criticisms of non-rationality leveled against the CFE. The puzzling substitution of inflation for expected money appreciation in Fisher (1930) is resolved by taking into account Fisher's theory of “money illusion.”

This paper explores the contribution and evolution of Persio Arida concept about the stabilization of high and chronic inflation in the brazilian economy. He was an important economist of the team responsible for the formulation of Cruzado Plan and Real Plan. In the beginning, the heterodox stabilization with indexed money was presented as better than others stabilizations alternatives because of two stressed characteristics: the stabilization program would be almost painless and guided by the neutrality principle. However, both the neutrality and almost painless notions will be abandoned in yours reflections after several failed stabilizations in Brazil. Palavras-chave: estabilizacao de precos, inflacao alta e cronica, reforma monetaria com moeda indexada, principio da neutralidade; liquidez excessiva da divida Key-words: price stabilization, chronic and high inflation, monetary reform with indexed money, neutrality principle, excess liquidity debt

In this paper we consider Georgescu-Roegen’s approach to uncertainty, showing that his characterization of expectations cannot be reduced to any probabilistic decision-making model. Drawing upon Georgescu-Roegen’s lesson a lexicographical utility function is proposed and analysed in the mark of his own peculiar scientific methodology. It is demonstrated that such a formulation can be useful in solving the usual failure of the expected utility model, such as the Ellsberg paradoxes. The epistemic limits of our re-construction are considered.

In December 1913, William Ernest Johnson (1858–1931), a Cambridge logician, published a famous article on demand theory in the Economic Journal (EJ) entitled “The Pure Theory of Utility Curves.” Although Johnson's treatment of the subject was in some ways original, in others it strongly resembled the analysis set forth by Vilfredo Pareto in earlier contributions, particularly in the Manuel d'économie politique (Italian edition 1906, French edition 1909). Despite this resemblance, Johnson did not cite Pareto. This failure to acknowledge Pareto's precedence aroused resentment and some suspicion of plagiarism among the Italian Paretians. In the end, however, the Paretian economists of the period generally assumed that Johnson was unfamiliar with Pareto's works and had obtained his results independently. For example, in 1916, Luigi Amoroso published a review of Johnson's 1913 paper in the Giornale degli Economisti, in which he wrote, “From Johnson's article it comes out that Johnson does not know Pareto's work” (Amoroso 1916, p. 410, author's translation). Amoroso attributed Johnson's ignorance of Pareto's work to a more general ignorance on the part of English economists, “Johnson's lacuna, more than particular to him, is a lacuna of the area in which he lives” (Amoroso 1916, p. 410, author's translation).