The History of Economic Thought is the journal of the Japanese Society for the History of Economic Thought (JSHET). It has been in existence since 1963, originally as the Annals for the Japanese Society for the History of Economic Thought, and for over a decade under its present name. All research articles on its pages have been fully peer-reviewed since 1989. The journal also features review articles and book reviews.

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History of Economic Thought, 60(1), July 2018Contents

Articles

Jou Ishii, J. R. McCulloch on the Effect of Machinery

1-19

full text Abstract References

J. R. McCulloch on the Effect of Machinery

Jou Ishii

Abstract:

The differences between the theories of displacement and of compensation of machinery are related not only to issues regarding employment and income distribution but also to the dif- ferent perspectives on the market economy. Neoclassical as well as contemporary economists criticise Ricardo’s machinery theory in the third edition of his Principles(1817), which casts serious doubt on the efficiency of a market economy. The compensation theory advocated by economists, such as McCulloch, was in accordance with the neoclassical criticism of Ricardo, wherein they perceive a market economy to be an efficient one. The development of the com- pensation theory has rarely been studied so far, although its development can be observed in the same way as that of the displacement theory.

This study examines the formation of McCulloch’s compensation theory in his debate with Ricardo and its relevance to the neoclassical criticism of Ricardo’s machinery theory. McCulloch insisted on the general benefits of machinery from the beginning as stated in ‘Taxation and the Corn-Laws’(1820). The basic framework of McCulloch’s compensation theory emerged in ‘Effects of Machinery and Accumulation’(1821), in which he argued that workers displaced by the introduction of machinery could be employed again owing to the expansion of production, which would be stimulated by the growing demand for commodities caused by the fall in prices. In the correspondence with Ricardo, after the publication of the third edition of Ricardo’s Principles, McCulloch withdrew his criticism that Ricardo had accepted the possibility of a general glut and focused his criticism on the decrease in gross produce. McCulloch assumes that in arguing this, the maximum amount of a product could necessarily be achieved in the competitive market under a given condition.

JEL classification numbers: B12, B31, O33.

References:

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Blaug, M. 1978. Economic Theory in Retrospect, 3rd ed. Cambridge, UK: Cambridge University Press.
Gehrke, C. 2011. Ricardo’s Chapter ‘On Machinery’ and the Long-period Method. Review of History of Economic Thought 1:88-110.
Groenwegen, 1970. Employment and Machinery: Two Classical Debates on the Effect of Automation. Journal of Industrial Relations 12(3): 348-59.
Hozumi, F. 1958. Haijo Setsu to Hosyo Setsu(The Displacement Theory and the Compensation Theory). Economic Review(Kyoto University)82(2): 14-28(in Japanese). Jonung, L. 1981. Ricardo on Machinery and the Present Unemployment: An Unpublished
Manuscript by Knut Wicksell. Economic Journal 91(361): 195-205.
Kaldor, N. 1932. A Case against Technical Progress? Economica 12(36): 180-96.
Keynes, J. M. 1936. The General Theory of Employment, Interest and Money. London:
Macmillan.
Kubo, S. 2014. D. Stewart and J. R. McCulloch: Economic Methodology and the Making of Orthodoxy. Cambridge Journal of Economics 38(4): 925-43.
Lambert, P.[1952]2000. The Law of Markets Prior to J.-B. Say and the Say-Malthus De-
bate. In Jean-Baptiste Say: Critical Assessments of Leading Economists, ed. by John C.Wood and Steven Kates, vol. 5. London: Routledge, 16-33.
McCulloch, J. R. 1816. An Essay on the Reduction of the Interest of National Debt. London:
-. 1820. Taxation and the Corn-Laws. Edinburgh Review 33:155-87.
-. 1821. The Opinions of Messrs. Say, Sismondi, and Malthus, on Effects of Machinery and Accumulation, Stated and Examined. Edinburgh Review 35:102-23.
-.[1849]1995. The Principles of Political Economy, 4th ed. In Collected Works of J. R. McCulloch, ed. by Denis P. O’Brien, vol. 2. London: Routledge.
Malthus, T. R. 1820. Principles of Political Economy: Considered with a View to Their Prac- tical Application. London: John Murray.
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-. 1976. Capital: A Critique of Political Economy. Introduced by Ernest Mandel, translat- ed by Ben Fowkes, vol. 1. Harmondsworth and New York: Penguin Books.
Mazane, K. 1959. Kikai to Shitsugyo: Ricardo Kikairon Kenkyu(Machinery and Unemployment: Inquiry into Ricardo’s Machinery Theory). Tokyo: Riron-sha (in Japanese). Morgan, J. 2016. What is Neoclassical Economics?: Debating the Origin, Meaning and Significance. London and New York: Routledge.
Morishima, M. 1989. Ricardo’s Economics: A General Equilibrium Theory of Distribution and Growth. Cambridge, UK: Cambridge University Press.
Moroizumi, S. 2008. Ricardo no Kikairon nitsuite (Ricardo on Machinery). Journal of theFaculty of Culture and Education, Saga University 13(1): 323-34.
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-. 1992. J. R. McCulloch: A Study in Classical Economics. Aldershot: Greg Revivals. Rashid, S. 2008. Machinery Question. In The New Palgrave Dictionary of Economics, ed. by Steven N. Durlauf and Lawrence E. Blume, 2nd ed., vol. 5. Houndsmill: Palgrave Macmillan, 226-29.
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Ken Kato, The Transit of Ideas that Facilitated the American Social Reforms: John R. Commons and the “Wisconsin Idea” in the Progressive Era

20-39

full text (in Japanese) Abstract References

The Transit of Ideas that Facilitated the American Social Reforms:
John R. Commons and the “Wisconsin Idea” in the Progressive Era

Ken Kato

Abstract:

This study discusses the content of the “Wisconsin Idea.” It attempts to examine John R. Commons’s view on this idea and his influence on several social reforms, and it tracks how an active role played by economists led to the application of this idea to the American social reforms.

Commons took part in the social gospel movement under the guidance of Richard T. Ely. As a member of this movement, Commons worked towards the achievement of social and political reforms rooted in Christianity and social sciences. According to Frederic C. Howe(1912), in the 1910s, Wisconsin was regarded as an American state likely to accept German social reforms. During this Progressive Era, in Wisconsin, several social and political reforms were executed based on the “Wisconsin Idea,” which was named such by Charles McCarthy(1912). The idea was developed by several brain trusts under the governor Robert M. La Follette. As a member of one of these brain trusts, Commons was also involved in several social reforms. Owing to his experience not only as a former social gospeler but also as a member of such a brain trust, Commons attempted to improve social welfare through the enactment of legal rules based on cooperation between the state university and the state government. Without this cooperation, it would not have been possible to establish the comprehensive social legislation in Wisconsin.

Commons’s analysis reveals that, through the expansion of university extension programs, it was possible to enhance the professional ethics of workers and improve the social welfare of their community, and that there was a need for the associated economists to recognize the permanent interests of the nation to adopt appropriate social reforms. Therefore, it would not be an exaggeration to state that Commons was the very embodiment of the “Wis- consin Idea.”

JEL classification numbers: B15, I38, N93.

References:

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Tomonori Isaka, Scrope’s Natural Rights Theory and Criticism of Laissez-faire

40-58

full text (in Japanese) Abstract References

Scrope’s Natural Rights Theory and Criticism of Laissez-faire

Tomonori Isaka

Abstract:

This study clarifies the main features of G. P. Scrope’s political economy.
What makes his work distinctive is his idea that the laissez-faire principle is justified only under certain conditions. On the one hand, Scrope’s economics is firmly grounded in the “principle of freedom”(free competition or free markets). On the other hand, based on the natural rights theory, he maintains that the principle of freedom rests only on the assumption that it is expedient for general interests. Whenever private property is seen as inconsistent with the welfare of society, ‘society is justified- nay, bound- to modify it.’
The Irish land question and the poverty resulting from it is where Scrope most clearly presents his criticism of laissez-faire. Not only does he propose introducing (and later, improving) poor laws in Ireland, but also suggests that the government should purchase tracts of privately-owned lands, improve them, and sell or lease them as small farms. According to Scrope, land ownership in Ireland is ‘contrary to the interests and natural rights of the community,’ and, the government should exercise its ‘strict right’ to recover waste land. However, Scrope never directs his criticism of laissez-faire towards the activities of capitalists. For him, a capitalist mode of production is the key to civilisation and economic growth. He explicitly criticises Hodgskin’s argument that labourers should own all their production. His abstinence theory justifies the rights of capitalists to earn profits, and his attack on currency policy takes the readers’ attention away from the hostile relationship between capitalists and labourers.
It is important to distinguish where his criticism of laissez-faire is applied and where it isn’t. It is misleading to emphasise only one aspect of his argument as this is paramount to generalising his argument.

JJEL classification numbers: B12, B31.

References:

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Timm Graßmann, The Unsolved Problem of Economic Crisis as a Turning Point of Marx’s Critique of Political Economy, 1844-45

full text Abstract References

The Unsolved Problem of Economic Crisis as a Turning Point of Marx’s Critique of Political Economy, 1844-45

Timm Graßmann

Abstract:

With the continuing publication of the complete works of Karl Marx and Friedrich Engels (Marx-Engels-Gesamtausgabe, MEGA), a bulk of new material concerning Marx’s studies of economic crises has been made available- with further releases expected to follow. These publications have revealed Marx’s enormous efforts to examine in detail every economic cri- sis through which he lived. The most prominent examples are the three Books of Crisis (Krisenhefte), which he compiled in 1857-58 amidst the first truly global economic crisis. This paper sets out to, first, provide an overview of new MEGA-texts regarding Marx’s studies of contemporaneous 19th century revulsions. In the main part, a closer look will be taken at the origin of Marx’s crisis studies in the 1840s. A comparison between his notes on James Mill’s Elements of Political Economy, written in the Paris Notebooks(1844), and his excerpts from John Stuart Mill’s Essays on Some Unsettled Questions of Political Economy, taken in his Manchester Notebooks(1845), reveals Marx’s changing stance on classical political economy’s ‘general glut controversy,’ i.e., the debate over the (im)possibility of overproduction crises in commodity-producing societies. In between his stays in Paris and Manchester, Marx took extensive notes on the works of Simonde de Sismondi in his Brussels Notebooks
(1845), which played a major role in his break from anthropological-essentialist thinking. JEL classification numbers: B00, B51, E32.

References:

Scribal Abbreviations
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Taichi Tabuchi, Ricardo’s Theory of Value and International Trade: On the Invalidity of the Alleged ‘Labour Theory of Value'

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Ricardo’s Theory of Value and International Trade: On the Invalidity of the Alleged ‘Labour Theory of Value’

Taichi Tabuchi

Abstract:

This paper presents a new interpretation of Ricardo’s international trade theory. It shows that Ricardo’s value theory in his Principles can be understood exclusively as the cost-of-production theory of value, which integrates the domestic value theory and international value theory, requisitely taking into consideration changes in the value of money when it is applied to the analysis of international exchange.

In Section II, we critically re-examine the standard interpretation of Ricardo’s trade theory in the so-called ‘Ricardian Model’ in textbooks today. Based on the concepts of ‘comparative advantage’ and ‘gains from trade’ within the two-country two-commodity framework, we show that it is a distorted interpretation, which originated from J. S. Mill’s arguments and established through the debate between Viner and Haberler, in the opposite direction of Ricardo’s original value theory. In Section III, we present that Ricardo consistently adopted the cost-of-production theory of value, which is valid not only for domestic, but also international, exchange based on the concept of natural price, with the so-called ‘labour theory of value’ being merely a subset rule in the analysis of domestic exchange. We then show that Ricardo’s original value theory inevitably takes into consideration the differences and adjustments in the value of money in international exchange, in the analysis of international exchange. Finally, we will briefly review that Ricardo was heading in the right direction towards today’s theory of international trade including intermediate goods.

JEL classification numbers: B12, B17.

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English Translation Series: Japanese Historians of Economic Thought〈6〉 Shiro Sugihara, Nature, Human Beings, and Labour Translated by Robert Chapeskie and Natsu Matsui

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Reviews

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Erwin Dekker, The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered, Cambridge: Cambridge University Press, 2016, 236 pp.

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