RESEARCH CHOOL OF ECONOMICS

COLLEGE OF BUSINESS & ECONOMICS

2014

ECHI2005

History of Economic Thought

COURSE INFORMATION Teaching Staff The Course Coordinator is Dr William Coleman, in room 1021 in the HW Arndt Building. He can be contacted by email William.Coleman@anu.edu.au. Course Administrators Terry Embling and Fin Wijnberg: Room 1014, Arndt Building, phone 6125 3590 Teaching Hours There are two lectures and one tutorial each week during the Semester. Lecture Times:

Tuesday 10.00: Arndt Lecture Theatre 2

Wednesday 11.00: CBE Bld LT 4 In Weeks 2 and 3 there will be an additional Lecture.

Friday 10.00 CBE Bld LT 4 Tutorial Times: TBA Dr Coleman shall give at least one tutorial. Tutorials will begin in Week 3. Students will enroll in a tutorial online via the university's ETA system. Any students wanting to change their tutorial time may use the ETA system to do so for two weeks after the first lecture. After this two week grace period, students can change their tutorial only by applying to William Coleman, and supplying him with adequate grounds for changing. The ETA website is http://eta.fec.anu.edu.au/eta/index.php Course Description

This course is an introduction to the history of economic theory. While the major phases in the development of economics (in the technical sense) will be studied, the aim will be to treat them against the background of their historical environment, including political and social thought and current economic problems. The course will include, but not be confined to, the work of Smith, Ricardo, Marx, Marshall and Keynes.

Study requirements and expectations

Participation in this course requires you to:

attend each lecture attend all tutorials (a roll will be marked) complete the essay assignment

Learning Outcomes

Upon successful completion of the requirements for this course, students will be able to: • Understand key models and concepts of the history of economic thought • Understand scholarly articles concerned the history of economic thought • Produce simple appreciations of the history of economic thought texts • Have a historical consciousness of economic ideas.

Assessment Assessment turns on the following: 1. Exam There is an examination at the end of the Semester. 2. Essay Students are required to submit ONE essay from the list of topics supplied at the conclusion of the outline. The deadline for submission is 6pm Friday 24 October. 3. Tutorials The readings discussed in tutorials will be the subject of a compulsory exam question (see below). Assessment Scheme Exam 75 marks Essay 25 marks TOTAL 100 marks The Exam will consist of 3 questions on the Lectures (worth 20 marks each) plus one question on the Tutorials (worth 15 marks).

Reading Brick. A „brick‟ of photocopied materials will be available from the School administrators, Maria Tartarow and Terry Embling. They will supply you one on your production of a receipt for $? from the University Cashier. The brick will provide the subject matter of the tutorial program. Textbooks No textbook is recommended to students for purchase. A principal aim of this course is to encourage students to read the original texts. However, there are several textbooks that may be helpful in locating the original texts in their intellectual and social context. Some of the better ones are listed below. Scholarly M. Blaug, Economic Theory in Retrospect, Third Edition (Cambridge: Cambridge University Press, 1979); Fourth Edition (1985). Robert B. Ekelund and Robert F. Hebert, A History of Economic Theory and Method (New York: McGraw Hill, 1990) Both have been placed on 2 hour closed reserve in the Chifley Library. Popular Larry White, The Clash of Economic Ideas (Cambridge, 2012).

Sylvia Nasar, Grand pursuit : the story of economic genius (London: Fourth Estate, 2011) Roger E. Backhouse, The Penguin History of Economics (Harmondsworth: Penguin Books, 2002). Todd G. Buchholz, New Ideas from Dead Economists (Harmondsworth: Penguin Books, 1999). Robert Heilbroner, The Worldly Philosophers (Harmondsworth: Penguin Books, 1995) Paul Strathern, Dr Strangelove’s game: a brief history of economic genius, (London : Hamish Hamilton, 2001). William J. Barber, A History of Economic Thought (Harmondsworth: Penguin Books, 1970).

Alexander Gray and A.E. Thompson, The Development of Economic Doctrine, Second Ed. (London and New York: Longman, 1980). Bernard Canavan, Economists for Beginners, (Pantheon 1983) Lecture Notes Lecture notes will not be distributed in this course. However, certain „lecture aids‟ will be episodically distributed. Web Resources Many of the great books in the history of economic thought are available on the web. Students are encouraged to find references and relevant reading materials by using search engines such as Google (search for history of economic thought or under the name of the economist). Some useful web sites are: The Library of Economics and Liberty http://www.econlib.org/library/classics.html McMaster University Archive for the History of Economic Thought http://socserv.mcmaster.ca/econ/ugcm/3ll3/ Further, many HET journal papers can be found by searching JSTOR e-journal collection maintained by the Library. The Library subscribes to the electronic edition of the leading HET journal History of Political Economy, as well as the Journal of the History of Economic Thought, and the European Journal of the History of Economic Thought. The History of Economics Review may be accessed free on the web at, http://www.hetsa.org.au/ “Critical Assessments in Economic Thought” and “The Economics of …” For many of the economists we are looking at this year (Adam Smith, David Ricardo, Alfred Marshall, etc), John Cunningham Wood has reproduced in multiple volumes all the major articles covering their work. These volumes can be accessed from the ANU Library Catalogue under the name of the editor (Wood, John Cunningham). Samuel Hollander has produced a series of massive studies of major economists: Smith, Malthus, Ricardo, Mill. They all have the title „The Economics of [name]‟, and are held by the Library.

“New Palgrave Dictionary of Economics” This is also a valuable reference, held by the Library. There is also an online version that may or may not be free to user: http://www.dictionaryofeconomics.com/dictionary

READING LIST The Primary Readings are central. The Secondary Readings are intended to assist the understanding of the Primary Readings. Under „Secondary Reading‟ one may automatically assume that mentioned earlier: the New Palgrave Dictionary, the New School web site, and the text books. Obviously, the substantial „Biographical‟ material listed below can only be selectively consulted. BEFORE ADAM SMITH Primary Reading England’s Treasure by Forraign Trade. or The Ballance of our Forraign Trade is The Rule of our Treasure, Thomas Mun, chapters 2 and 3 David Hume: Writings on Economics (1955), ed. By Eugene Rotwein „On the Jealousy of Trade‟, „On Interest‟. SMITH Primary Reading Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations Book I: Chapters 1, 2, 3, 7 and 8. Book IV: Chapters 1, 2, 8 and 9 Secondary Reading Jacob Viner, "Adam Smith and Laissez Faire" reprinted in J.M. Clark et al., Adam Smith, 1776-1926: Lectures to Commemorate the Sesquicentennial of "The Wealth of Nations" (reprinted, Augustus M. Kelley, New York, 1966). G.J. Stigler, "Smith's Travels on the Ship of State". A.S. Skinner and Thomas Wilson (eds), Essays on Adam Smith (London, 1976). MALTHUS AND RICARDO Primary Reading T.R. Malthus, An Essay on the Principle of Population (First ed., 1798), reprinted for the Royal Economic Society, Macmillan, 1926. Also reprinted in The Works of Thomas Robert Malthus, edited by E.A. Wrigley and David Souden (London 1986). Chapters 1, 2, 3, 4, 5, 6, 9 and 10. David Ricardo, On the Principles of Political Economy and Taxation (1817), in Works and Correspondence, ed. by Sraffa, Vol. 1 (Cambridge, 1951)

Chapters 1,2, 3, 5, and 6. Secondary Reading D.P. O‟Brien, The Classical Economists, Oxford: Clarendon Press Biographical J.M. Keynes, Essays in Biography (Collected Writings Edition), Vol. X (London, 1972), Chapter 12. MARX Primary Reading Capital, Karl Marx, Volume 1; chapters 1, 8, 9 and 25 (sections I, II and III). Background Reading Anthony Brewer, A Guide to Marx's Capital (Cambridge: Cambridge University Press, 1984). Biographical Isaiah Berlin, Karl Marx: His Life and Environment (London, 1963). David McLellan, Karl Marx: His Life and Thought (London, l973). Francis Wheen, Karl Marx (London, 1999). THE MARGINAL REVOLUTION Primary Reading W.S. Jevons, The Theory of Political Economy (first published 1871: Chifley Library has the 1911 edition) Chapters 1, 2, 3 and 4. John B. Clark „The Possibility of a Scientific Law of Wages‟, Publications of the American Economic Association vol.4, no.1 Secondary Reading T.W. Hutchison, On Revolutions and Progress in Economic Knowledge (Cambridge, 1978). Biographical "William Stanley Jevons", in John Maynard Keynes, Essays in Biography. "Alfred Marshall", J.M. Keynes, Economic Journal, September 1924 (reprinted in A.C. Pigou (ed.), Memorials of Alfred Marshall , Keynes' Essays in Biography (1933) and The Collected Writings of John Maynard Keynes, Vol. X. )

VEBLEN AND SCHUMPETER Identify, explain and appraise Thorstein Veblen theses in The Theory of the Leisure Class (1912). Background Reading: P. A. Saram, „The Vanishing Subtitle in Veblen's "Leisure Class"‟, International Journal of Politics, Culture, and Society, Vol. 13, No. 2 (Winter, 1999), pp. 225-240 THE IMPERFECT COMPETITION REVOLUTION Primary Reading Nicholas Kaldor „Mrs. Robinson's "Economics of Imperfect Competition" Economica New Series, Vol. 1, No. 3 (Aug., 1934), pp. 335-341 Secondary Reading G.L. S Shackle, The years of high theory: invention and tradition in economic thought 1926-1939, Cambridge University Press History of Economic Thought Handbook KEYNES Primary Reading J.M. Keynes, The General Theory (1936) Macmillan (also Vol. VII of Collected Writings) Background Reading Don Patinkin, Keynes' Monetary Thought, a Study of its Development (Durham, North Carolina, 1976). Biographical Robbert Skidelsy, John Maynard Keynes: A Biography, volumes 1, 2 and 3, London : Macmillan, 1983-2000 NEO-LIBERALISM : HAYEK, FRIEDMAN, COASE AND BUCHANAN Primary Reading F. A. Hayek , ‘The Use of Knowledge in Society’ The American Economic Review Vol. 35, No. 4 (Sep., 1945), R. H. Coase , Coase, R. H. (1959) ‘The Federal Communications Commission’ Journal of Law and Economics, Vol. 2, pp. 1-40

James Buchanan, The Economics of Politics, The Institute of Economic Affairs, 1978 Background Reading G.L.S. Shackle, „F.A. Hayek‟, in D.P. O'Brien and John P. Presley (eds), Pioneers of Modern Economics in Britain (London: Macmillan, 1981). Edmund W. Kitch, 1983, ‘The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932-1970’, Journal of Law and Economics, 26(1) Richard A. Posner „Nobel Laureate: Ronald Coase and Methodology‟, The Journal of Economic Perspectives Vol. 7, No. 4 (Autumn, 1993) Biographical Bruce Caldwell, Hayek's challenge : intellectual biography of F. A. Hayek , Chicago ; London : University of Chicago Press, c2004 OLSON AND HIRSCHMAN Mancur Olson, 1983 “The South Will Fall Again: The South as Leader and Laggard in Economic Growth” Southern Economic Journal, Vol. 49, No. 4, pp. 917-932 Albert O. Hirschman ‘Exit, Voice, and the Fate of the German Democratic Republic: An Essay in Conceptual History’ World Politics, Vol. 45, No. 2 (Jan., 1993), pp. 173-202 GAME THEORY Robert Leonard, „From Parlor Games to Social Science: Von Neumann, Morgenstern, and the Creation of Game Theory, 1928-1994‟ Journal of Economic Literature, vol. 33, no. 2, June 1995, pp. 730-61 History of Economic Thought Handbook page 11

TUTORIAL TOPICS, (with provisional dates) 1. Week beginning 4 August David Hume's "Of Money", and "Of the Balance of Trade". 2. Week beginning 11 August Adam Smith's The Wealth of Nations, Book V, Chapter 1, part 1, Article II „On the Expence of Institutions for the Education of Youth‟ 3. Week beginning 18 August Malthus’ Essay on the Principle of Population, chapters 9 and 10 Geoffrey Gilbert (ed.) An Essay on the Principle of Population (first edition), 1993 [1798] Oxford University Press 4. Week beginning 25 August Ricardo’s Principle of Political Economy and Taxation, chapter 2 5. Week beginning 1 September Post-Ricardian controversies over profit William Senior, ‘Statement of Advantages Derived from the Use of Capital’, Political Economy ‘The Plane’, Claude Frédéric Bastiat , Capital and Rent, ‘Of Interest and the Cause of Interest’, Henry George, Progress and Poverty 6. Week beginning Sept 29 Consumer surplus. Principles of Economics, ‘Value and Utility’, chapter 6, book III, pp124-128 Principles of Political Economy, J.Shield Nicholson, pp.53-60 ‘Professor Nicholson on Consumers‟ Rent‟ ‘, F.Y. Edgeworth, Economic Journal, 1894 7. Week beginning 7 October The kinked demand curve. Paul Sweezy, „Demand Conditions Under Oligopoly; Journal of Political Economy, August 1939 George Stigler, „The Kinky Oligopoly Demand Curve and Rigid Prices‟, Journal of Political Economy, October 1947 8. Week beginning 13 October Keynes.

Chapter 24 „Notes on the Social Philosophy Towards which the General Theory might Lead‟ , The General Theory of Employment Interest and Money 9. Week beginning 20 October Friedman, Chapter 6 ‘The Role of Government in Education’ Capitalism and Freedom. 10. Week beginning 27 October Coase ‘The Lighthouse in Economics’, 1974’,The Journal of Law and Economics 17(2), 357-

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ESSAY The essay will be marked in accordance with how effectively you report, and appreciate, deploy the nominated primary sources to answer the question at hand. Structure Essays should be written in sections. Students should begin their essay with a clear statement of (i) the question at hand, (ii) the answer they are advancing, and (iii) a summary (or anticipation) of their case for their answer. Length A sensible length should suggest itself. Around 2,500 is probably the minimum required to do justice to a topic. You may well wish to write more. There is no limit. But redundancy, whatever the word length, will be penalised. A copy of Notes on the Writing of Essays, will be supplied you on request to the Administrator, School of Economics. References and Footnotes1

Please use ‘author: date’ style of references eg Author (2003) said, “Macroeconomics

3 changed my life” (p 45). Then in the list of references

Book: Author, A. B. and B. C. Author (2009) Book Title in Italics

in Full, Location: Publisher.

Chapter in edited volume: Author, A. B. (2009) ‘Chapter Title’, in C. D. Editor and E.

F. Anothereditor (eds.) Book Title in Italics in Full, Location: Publisher.

Journal article: Author, A. B. (2009) ‘Article Title’, Journal Title in Italics in

Full, volume, issue, page range.

Online document: Author, A. B. (2009) ‘Document Title’ Source:

http://www.theinternet.com/mypaper.html (accessed 10/10/2009).

Marks will be deducted if references to sources and bibliography is not provided

1 With thanks to the style guide of the Institute of Economic Affairs.

Submission Date The essay should be placed in the box for economic history essays located in the foyer outside the office of the School of Economics, (Room 1088, Copland Building), no later than 6.00 pm on Friday 24 October. Essays submitted after this point in time will be awarded a zero mark. Plagiarised essays will be awarded a zero mark, and reported to the Dean. Some very effective software will be deployed to check for plagiarism. TOPIC 1 With the publication of A Letter from Sydney, E.G. Wakefield adapted classical doctrines to advocate a means of accelerating growth in New World societies, such as Australia. Outline Wakefield‟s theses, and relate them to Smithian and Ricardian doctrines. A Suggestion for Background Reading: Edward R. Kittrell, „Wakefield's Scheme of Systematic Colonization and Classical Economics‟ American Journal of Economics and Sociology, 32(1) (Jan., 1973), pp. 87-111 TOPIC 2

Explain how Walter Bagehot in The postulates of English political economy seeks to

defend economics from its late 19th c critics.

A Suggestion for Background Reading, Gregory C. G. Moore, September 1996, ‘The Practical Economics of Walter Bagehot’ Journal of the History of Economic Thought, Volume 18, Issue 02, pp 229 -249 TOPIC 3 What according to chapters four and five of Veblen’s Imperial Germany and The Industrial Revolution are the key differences between England and Germany. What is his explanation of those differences? A Suggestion for Background Reading, Arthur K. Davis, 1944 ‘Veblen's Study of Modern Germany’ American Sociological Review, Vol. 9, No. 6, pp. 603-609

TOPIC 4 Colin Clarke’s The National Income of Australia (Sydney: Angus and Robertson, 1938) provided the first empirical assessment (‘test’) anywhere of Keynes multiplier doctrine of national income. Outline and appraise Clarke’s assessment. A Suggestion for Background Reading, ‘Colin Clark, 1905-1989: An Affectionate Memoir’. Perkins, J.O.N.; Powell, Alan A. Economic Record, 1990, 66(195) TOPIC 5 In Academia in anarchy: an economic diagnosis (James M. Buchanan & Nicos E. Devletoglou), James Buchanan attempts to provide an explanation of the student militancy of the 1960s in terms of economic principles. Outline and appraise that explanation. A Suggestion for Background Reading: ‘Country Aesthetic’ Chapter 8 Economics from the Outside In, James M. Buchanan TOPIC 6

Identify, explain and critically appraise the salient theses of Mancur Olson’s How

bright are the northern lights? : Some Questions about Sweden (Institute of Economic

Research, Lund University, 1990).