NEW YORK UNIVERSITY
DEPARTMENT OF ECONOMICS
History of Economic Thought Prof. Harry Kitsikopoulos
Contact schedule: My office hours are Monday and Wednesday 9:30-10:30. The office # is 803 at 19W 4th Street. I can also be reached by e-mail at email@example.com.
Textbook and readings: The textbook is E. K. Hunt, History of economic thought, updated second edition (M. E. Sharpe, 2002). Assigned readings are the following chapters and pages:
Chapter 1: Introduction (everything).
Note: This chapter should be read at the beginning very carefully. The material is relevant both for the discussion on mercantilism, our first topic, as well as other topics that we will cover throughout the semester.
Chapter 2: Economic ideas before Adam Smith (24-36).
Chapter 3: Adam Smith (everything).
Chapter 4: Thomas Robert Malthus (everything).
Chapter 5: David Ricardo (92-118, 121-4).
Chapter 6: Rationalistic subjectivism: the economics of Bentham, Say, and Senior (everything).
Chapter 7: Political economy of the poor: the ideas of William Thompson and Thomas Hodgskin (154-6).
Chapter 8: Pure versus eclectic Utilitarianism: the writings of Bastiat and Mill (175-7, 187-201).
Chapter 9: Karl Marx (everything).
Chapter 10: The triumph of Utilitarianism: the economics of Jevons, Menger, and Walras (248-65, 279-84).
Chapter 11: Neoclassical theories of the firm and income distribution: the writings of Marshall, Clark, and Bohm-Bawerk (286-7, 302-10).
Supplementary readings: The following works will be required components of your readings. Both are on reserve at Bobst and, most likely, at the New School library:
The New Palgrave: A Dictionary of Economics edited by John Eatwell, Murray Milgate and Peter Newman will be your primary source of additional readings. It is a sort of encyclopedia, of four volumes, with entries on particular topics and thinkers by the best experts on the field. Its high price prohibits its purchase, thus you can only xerox particular entries from the library. Please bear in mind that there is an electronic version of it and other printed editions with different editors available at Bobst but the page numbers of articles may be different than the cited edition.
R. Heilbroner's Teachings from the Wordly Philosophy contains long quotations from the original works of thinkers (so does your textbook but on a limited scale) we are going to examine and short introductory comments by the author. Interweaving some of these quotations with your own narrative in your assignments will certainly enhance the quality of your presentation. I strongly encourage you to buy this paperback because its usefulness is inversely related to its cost.
Assignments: Your grade will be determined on the basis of 7 short essays chosen from the list following the syllabus. At the end of certain classes, that will not be specified in advance, you will be given a topic along with extra assigned readings from the supplementary sources. Each topic will relate to material covered during that day in class. The following requirements should be observed:
Most of the material needed to address any of the questions can be found in the textbook (note: it’s very important to bear in mind that the relevant material may be scattered throughout a chapter, therefore, it’s important to read the latter in its entirety). In some cases, however, the textbook does not address either partially or entirely some questions. In this case the textbook has to be supplemented in two ways. First, through all of the extra readings, quotations from which have to be cited in your essays (in the case of the Palgrave, if more than one entry is given, you have to have citations from at least one); this is a requirement, not an option. Second, you should also rely on class notes because during the lecture I will be elaborating on certain topics to a degree that will not be found in any of the readings. Keeping detailed notes is also important because it will indicate the angle(s) from which I would like a particular topic to be approached. Bear in mind, however, that giving me an essay that relies exclusively on class notes is likely to lack in analytical depth and thus not likely to get you a high score.
The paper should not exceed four pages (that’s an upper limit), not including bibliography; it should be typed with a minimum of 11 point type and 1.5 space between lines.
The writing style should be scholarly, clear, without grammatical errors and typos, and with careful attention to citations. There are several styles but the following is probably the easiest. Provide a bibliography, in alphabetical order by the last name, at the end of the paper. For example:
Hunt, E. K., History of economic thought, updated second edition (Armonk, N.Y. and London, 2002).
Eatwell, John, Murray Milgate, and Peter Newman, eds., The New Palgrave: a dictionary of economics, (London: 1987).
Allen, William, “Mercantilism,” in Eatwell et. al., eds., The New Palgrave, vol. 3, pp. 445-9.
Notice that when you cite an article from a collection of essays, as in the Palgrave, you need two citations, a full one referring to the book, as well as a specific one referring to the particular article.
Subsequently, when you provide a direct quotation or a summary from a source in your main text, indicate it in the following way: (Hunt: 51-5); or (Allen, vol. 3: 446) when you refer to articles from the New Palgrave. Finally, if you provide a direct quote from an original author that you found in one of the three assigned books, use the phrase “cited in”; for example, (cited in Heilbroner: 25), referring to a direct quotation by Thomas Mun.
Papers have to be returned one week after the topic has been handed out.
Important note: Failure to provide quotations from the supplementary readings in your essay will result in losing points from your score. Failure to return your paper on time without my explicit prior permission will result in getting a zero for the particular assignment.
Grading policy: Each paper is worth 10 points. Your final grade will be determined by taking an average
10 A of your scores in the 7 assignments, and it will be based on the scale outlined in the left
A- margin. If your average falls between two letter grades, I will curve it up to the next
B+ highest; for example, if your average is 9.2, your grade will be A-.
B To maximize your performance, you may wish to consider forming study groups. This
B- has two advantages: it will minimize the time it takes you to locate supplementary
C+ sources since members of the group can alternate in terms of this chore; and, most
C importantly, it provides a useful forum to exchange perspectives with each other.
The readings given with each question refer only to the supplementary readings (i.e., Palgrave and Heilbroner). Before going to them you should read the relevant chapter from the textbook (see reading list in the first page). Pages from the textbook are specified in some of the questions only if they come from a chapter other than the one the question refers to.
What was the ultimate goal of the mercantilist philosophy, according to the traditional view, and why was this goal considered radical at the time? Which yardstick did they use to assess the achievement of their ultimate goal and what was supposed to be its role in terms of stimulating the domestic economy?
Extra readings: William Allen on mercantilism, vol. 3, pp. 445-9.
What was the significance and role of trade in the overall mercantilist scheme and how did their notions on the subject differ from modern views? What type of exports/imports did they encourage/discourage and what was the impact of these policies on the domestic working population? Finally, how did the role of colonies fit, given their views on foreign trade and how did later writers revise the traditional view on the outflow of bullion to promote colonialism?
Extra readings: Allen, as in (1); Heilbroner, pp. 25-7.
What were the mercantilist views on the labor supply, wage levels, and work ethic? After presenting these views, assess them by referring to the modern theories of the income and substitution effects. Finally, discuss the revisionist idea that reverses the chain of causation when it comes to the emphasis mercantilist writers placed on the significance of full-employment, as opposed to the accumulation of bullion.
Extra readings: Allen, as in (1).
Assess, critically, the flaws of the mercantilist theories in terms of their lack of vision when it comes to the achievement of economic growth and the internal contradictions of their argument which, under particular conditions, may cancel their goal of having a favorable balance of trade (use the monetarist equation of exchange). Furthermore, discuss the positive contribution of the school in terms of capturing intellectually the socioeconomic changes taking place during the post-medieval period, specifically in regard to the role of the merchants.
Extra readings: Allen, as in (1); review also pp. 8-17 from the textbook.
What is the role of self-interest, according to Smith, in setting capitalism into motion and how do the concepts of sympathy and of the impartial spectator relate to it?
Extra readings: Andrew Skinner on Adam Smith, vol. 4, pp. 357-74; Heilbroner, pp. 58-63, 67-9.
What is the meaning of the “invisible hand”? (provide concrete illustrations/examples referring to product and/or labor markets). What type of markets does he assume in regard to this concept and to what extent is this assumption realistic for the British economy of his time? Describe also the extent to which Smith borrows from the Newtonian imagery of the Universe in promoting his idea of a self-equilibrating capitalist economy. Do you consider his statements in this regard factual or ideological (please explain analytically)?
Extra readings: Karen Vaughn on the invisible hand, vol. 2, pp. 997-8; Skinner, as in (5).
Describe analytically the concepts of natural and market prices and how they relate to each other.
Extra readings: G. Vaggi on market price, vol. 3, p. 334, and on natural price, vol. 3, pp. 605-8; Heilbroner, pp. 86-9.
Why did Smith object to the notion of an activist government and what specific functions did he envision as being appropriate?
Extra readings: Skinner, as in (5); Heilbroner, pp. 95-105.
Provide an algebraic formulation of Smith’s theory of growth and describe analytically his distinction between productive/unproductive labor. Is this distinction still relevant in modern economics?
Extra readings: Guido Montani on productive and unproductive labor, vol. 3, pp. 1008-10; Skinner, as in (5).
Explain the concept of the division of labor, the preconditions that make it possible, and the implications that follow from it.
Extra readings: Peter Groenewegen on division of labor, vol. 1, pp. 901-5; Skinner, as in (5); Heilbroner, pp. 75-86.
Explain, through the water/diamond paradox, why Smith dismisses the importance of use-value, focusing instead on explaining exchange-value.
Extra readings: Skinner, as in (5).
Develop analytically Smith’s labor theory of value applying to primitive societies, explain the difficulty that led him to reject it in relation to an advanced economy and substitute it, instead, with the cost-of-production theory. Describe the latter briefly and point out its main flaw.
Extra readings: Skinner, as in (5).
Describe Smith’s logic in regard to the determination of wages, profits, and rents.
Extra readings: Skinner, as in (5); Heilbroner, pp. 90-5.
Outline the socioeconomic changes brought by the Industrial Revolution and the intellectual reaction they induced on the part of thinkers such as Godwin and Condorcet. In discussing their ideas, refer to both their views on the causes of social problems and the solutions they offered.
Extra readings: none.
Present a complete and analytical account of Malthus’s population theory, including a graphical depiction of it. In addition, outline his views on the Poor Laws and make also a reference to the revisions of these laws by the British government in 1834.
Extra readings: J. M. Pullen on Thomas Robert Malthus, vol. 3, pp. 280-5; D. R. Weir on Malthus’s theory of population, vol. 3, pp. 290-3; Heilbroner, pp. 107-10.
Provide a critical assessment of the Malthusian theory of population both from a conceptual and an empirical point of view. Regarding the latter, evaluate it in light of both modern and pre-modern evidence.
Extra readings: Weir, as in (15).
Present Malthus’s theory of market gluts and the remedies he proposed to deal with them.
Extra readings: S. Rashid on Malthus and classical economics, vol. 3, pp. 285-90.
Present a historical account of the Corn Laws controversy, including the causes that brought about this legislation, its provisions, and the arguments made by the two opposing parties.
Extra readings: B. Hilton on Corn Laws, vol. 1, pp. 670-1; review also pp. 71-2 from the textbook.
Specify the implicit assumptions in Ricardo’s theory of rent and present his theory both from the product (referring to the extensive and intensive margins of cultivation) and the cost side. In addition, address the following two questions: a) Is rent one of the determinants of market price? b) is the high price of grains due to the existence of high rents?
Extra readings: Heilbroner, pp. 113-7.
Present Ricardo’s theory of income distribution, namely: a) Define the natural and market price of labor and discuss how they relate both in the short- and the long-run; b) specify the procedure by which profit rates are formed in agriculture and under what assumptions of his model these profit rates affect industrial sectors; in addition, discuss the trend of profits in the long-run and whether this trend can be halted; c) present the entire argument with the aid of a carefully explained graph; d) describe the ultimate scenario regarding the future of capitalism emanating from the previous discussion and to what extent Ricardo considered its realization imminent; e) finally, use the previous discussion to explain the position of the two opposing parties in the Corn Laws controversy.
Extra readings: G. de Vivo on David Ricardo, vol. 4, pp. 183-98; Heilbroner, pp. 117-8; review also pp. 71-2 from the textbook.
Explain why it was critical for Ricardo to reject Smith’s cost-of-production theory of value. What were his views on the relationship between use- and exchange-value? Finally, present his labor theory of value and assess it in light of the differing capital-labor ratios across industries, and differences in the quality of labor.
Extra readings: de Vivo, as in (20).
In relation to Say’s law, describe briefly the socio-economic context at the time which led to the initiation of the debate and the positions taken by various thinkers on both sides of the argument. Next, describe the law itself and refer briefly to its impact on later generations of economists.
Extra readings: Thomas Sowell on Say’s law, vol. 4, pp. 249-51; review also pp. 154-6 from the textbook.
Refer briefly to Senior’s epistemological views, i.e., to the steps followed by economists in building up knowledge. In addition, refer to his distinction between, what we call today, positive and normative economics; in this context present his views and policy recommendations regarding the Poor Laws, unions, and the length of the working day but use these references to provide your own broad, critical assessment as to whether it is feasible to eliminate normative statements from Economics.
Extra readings: N. de Marchi on Nassau William Senior, vol. 4, pp. 303-5.
Provide a brief account of Senior’s views on the theory of value, paying special attention to his concept of abstinence. How was this concept treated by later economists?
Extra readings: de Marchi, as in (23); N. de Marchi on abstinence, vol. 1, p. 8.
Outline Bentham’s theory of human happiness and the role of legislature in guiding and placing restraints in its pursuit. In addition, provide your own views on the following two questions: 1. Do you think it is feasible to avoid a clash of interestsleading to a disruption of social cohesiveness and a propensity towards crimein the context of Bentham’s theory of individualism which denies the notion of social interest as a separate entity from those of individual interests, and emphasizes a strictly materialistic notion of utility, hence rejecting Smith’s attempt of defining bourgeois virtues in an ethical context? Present your argument by discussing contemporary issues such as gun control and abortion or others of your choice. 2. Assuming that social interest is a valid notion, would you go as far as advocating a form of “social engineering” when it comes to what some intellectuals may view as “unproductive” activities (e.g., various forms of vulgar entertainment) which, it may be argued, waste resources and lead to an absurd distribution of wealth unrelated to merit?
Extra readings: Ross Harrison on Jeremy Bentham, vol. 1, pp. 226-8; C. Welsh on Utilitarianism, vol. 4, pp. 770-5; Heilbroner, pp. 199-207.
John Stuart Mill
Present Mill’s theory of value by pointing out the modifications he brought to the Smithian approach and the distinctions he made about three different types of commodities.
Extra readings: none
Describe Mill’s theory of capitalist accumulation and growth by referring to his treatment of productive/unproductive labor and the amount of savings and investment. Did Mill consider an overproduction scenario likely? What are the long-term prospects of capitalism and the mechanism that produces the scenario he envisioned? Are there any mechanisms that may postpone the realization of this scenario?
Extra readings: Heilbroner, pp. 141-4.
Describe Mill’s views on socialism. In addition, describe his vision of the stationary state. Specifically, what is the methodological base he begins from in terms of the laws of distribution? What type of changes does he propose in terms of the distribution of income? Do you consider his ideas in this respect either desirable or feasible?
Extra readings: Heilbroner, pp. 131-41, 144-51.
Why does Mill reject the ideas of conventional democracy and benevolent despotism? Describe the type of political system he envisions (make also a reference to his views on women’s rights) and assess his theory from a critical perspective.
Extra readings: Alan Ryan on John Stuart Mill, vol. 3, pp. 466-71.
One may argue that Mill’s ideas can be encapsulated in the following five principles: a) The perfectibility of the human race; b) his methodology of secular humanism; c) the unity of Vision and technocracy; d) his distinct notion of Utilitarianism (ethical hedonism); e) Meritocracy through economic and political reforms. Use this list as a platform to provide an overall critical assessment of Mill’s ideas from whatever angle you choose to but make sure you contrast his views on Bourgeois Values with those of Bentham.
Extra readings: Welsh, as in (25); Ryan, as in (29).
The classical school: a review
Provide an overall assessment of the classical school. Feel free to approach the issue from any angle you wish but make sure you support your critique with specific references to its theories.
Extra readings: none.
Provide an etymological explanation of the word dialectic and state its three principal laws as the term is used in modern philosophy. Provide also a brief account of Hegel’s theory of historical change and expand it in terms of his account of how a communal code of behavior in feudalism clashes with the individualism brought by Lutheranism as well as by the explorations and commercial growth of the early modern period leading to the modern synthesis of the two elements in the form of capitalism. What was his belief in strengthening social bonds in modern capitalism and what was the role of the State in this regard?
Extra readings: R. P. Bellamy on Hegelianism, vol. 2, pp. 635-6; Roy Edgley on dialectical materialism, vol. 1, pp. 830-2; review also pp. 31-4 from the textbook.
Provide an account of Marx’s theory of historical materialism starting with analytical definitions of the forces and relations of production, and of the superstructure. What is the precise relationship of the superstructure with the economic base? How do these three elements interact in bringing historical change and what is the role of human volition? How does Marx describe the socialist and communist stages?
Extra readings: Edgley, as in (32); Ernest Gellner on economic interpretation of history, vol. 2, pp. 47-51; Ernest Mandel on Karl Heinrich Marx, vol. 3, pp. 367-83; Heilbroner, pp. 192-5.
Evaluate Marx’s theory of historical materialism. First, empirically by looking at the dynamics of feudalism and assessing whether the theory fits the facts well. Second, theoretically by addressing the following issues: a) Is his theory dialectical and/or teleological; if the latter, does the notion of having a telos in history make sense to you? (how do you visualize such a state?)?b) To what extent is his theory deterministic and what is your own sense of how important is the role of human volition in historical change? c) Assess his statement that a system has to reach its full potential before it collapses; does historical experience support or negate this statement?
Extra readings: Gellner, as in (33); review also pp. 3-20 from the textbook.
Provide a synthesis of the main ideas of the utopian socialists. Why did Marx call them utopian?
Extra readings: none; review also pp. 154-6, 176-7 from the textbook.
What does Marx mean by the term “primitive accumulation of capital?” What does he mean by the statement that feudalism was a system primarily concerned with the production of use-values, whereas in capitalism the primary objective is the creation of exchange-values?
Extra readings: Mandel, as in (33); review also pp. 3-20 from the textbook.
Present an account of Marx’s theory of value by tracing the following steps: a) The common elements he shares with Ricardo; b) an analytical account of the three components of a commodity’s value; c) his account of why workers are forced to accept the appropriation of surplus-value (refer to both the balance of power in the labor market and the role of the state).
Extra readings: Gellner, as in (33); Mandell, as in (33); Heilbroner, pp. 162-78.
Present Marx’s theory of exploitation by tracing the following steps: a) Is exploitation unique to capitalism? b) how does the appropriation of surplus-value lead to the creation of capital and in what sense does the latter becomes an instrument of subordination by establishing distinct social relations between the two classes? c) what is his formula for the rate of exploitation and what factors determine its value? d) how can you account, from a Marxist perspective, for the growth of real wages over time, given Marx’s theory of exploitation. e) finally, contrast Marx’s notion of exploitation with Smith’s “invisible hand” and modern neo-classical notions of income distribution.
Extra readings: Anwar Shaikh on capital as a social relation, vol. 1, pp. 333-6, and on exploitation, vol. 2, pp. 249-51; Mandel, as in (33); Heilbroner, pp. 179-82.
How does Marx deal with the problems of the different qualities of labor and the presence of industries with different organic compositions of capital (illustrate with a numerical example) in the context of his labor theory of value?
Extra readings: Andrew Glyn on Marxist economics, vol. 3, pp. 390-4; Mandel, as in (33).
Present Marx’s law of the tendency of the falling rate of profit and explain in the context of it the creation of the reserve army of unemployed. Explain also the countervailing tendencies which slow down the application of this law.
Extra readings: Glyn, as in (39); Mandel, as in (33); Heilbroner, pp. 183-92.
Provide a critical assessment of Marx’s contribution to Political Economy by addressing the issue from one or more perspectives (e.g., his theory of historical change, his theory of value, the laws of capitalist accumulation and falling profitability, etc.)
Extra readings: none.
Explain the marginalist approach to the value theory by addressing the following issues: a) state the criticism of its proponents to the classical approaches; b) explain how marginalism makes the individual the starting point of its analysis by referring to Menger’s views on the conceptual usefulness of social aggregates; c) contrast Jevons’ straightforward, Benthamite definition of utility with Menger’s more sophisticated, historical approach; d) explain how the concept of marginal utility and its diminishing nature led to explaining the water/diamond paradox; e) does supply play any role in explaining values and prices in the marginalist approach and, if so, to what extent?
Extra readings: Karen I. Vaughn on Carl Menger, vol. 3, pp. 438-44; Antonietta Campus on marginalist economics, vol. 3, pp. 320-2; Heilbroner, pp. 208-14.
Describe the marginalist problematic relating to the measurement of utility by addressing the
following issues: a) Jevons’ account regarding the possibility of engaging in interpersonal
comparisons of utility and its cardinal measurement; b) explain the equimarginal rule as it was
formulated by Jevons and use Menger’s table (handout) to describe the process that leads to the
allocation of monetary resources among different goods with equal unit prices; how this monetary
allocation is affected when you drop the assumption of equal prices? c) use the equimarginal rule
to explain the imposition of excise taxes on products such as cigarettes and alcohol.
Extra readings: Terry Peach on Jevons as an economic theorist, vol. 2, pp. 1014-9.
Present the views of the first generation marginalists (Jevons, Menger, Walras) on the principle(s)
that determine input pricing and the incomes allocated to various factors of production (be more
analytical in regard to Menger’s imputation theory, the difficulties he encountered, and von Wieser’s revision). Did they view the ensuing distribution of wealth as morally fair and, if so, on what grounds?
Extra readings: Murray N. Rothbard on imputation, vol. 2, pp. 738-9.
Present Clark’s version of the marginal productivity theory by addressing the following issues: a)
the degree of his indebtedness to Ricardo; b) the assumptions of his model; c) describe his model with the aid of graphs; d) is marginal productivity the only factor that determines the level of wages, profits, and rents, according to Clark? e) what is his precise definition of profit and how does it relate to his views on monopolistic markets? f) what is the main conceptual weakness of Clark’s model which was eventually addressed by Marshall?
Extra readings: Robert Dorfman on marginal productivity theory, vol. 3, pp. 323-5.
The marginalist logic can be described with the following chain of causation: Preferences → Marginal utilities Spending patterns → Demand for inputs Prices of inputs → Rents, profits, wages. Provide an assessment of this conceptual framework on two accounts: a) whether it provides a realistic depiction of wealth distribution in a capitalist economy; and b) in relation to the argument that it promotes a pattern of wealth distribution which leads to spending patterns and allocation of resources on the production of goods and services that some classical economists would have deemed as unproductive.
Extra readings: none.
The emergence of marginalism has been described as an intellectual revolution within the
discipline of Economics. Argue for or against this thesis by contrasting the views of its members with those of the classicals by reviewing several subjects of your choice.
Extra readings: none.
Guidelines for writing good papers
A focused paper
Each one of the above questions is narrowly defined. Your first task is to decide on the topics you need to cover in relation to a particular question. Your class notes, primarily, should be the best guide in this regard. Make sure you do not diffuse in covering a topic, relating to the same intellectual. Each question is not asking you to write everything you know about Smith, Marx, etc., but about a very narrow aspect of their work.
Once you decide on the aspects of the topic you need to address, make sure you cover them analytically, as opposed to making short references, i.e., your papers should not resemble class notes. Each topic, obviously, requires a different level of analytical depth and therefore the length to which you have to go into it. The best guide in this respect is to pretend I am your student, being entirely ignorant on the subject, and you are the expert teaching me about it. Break down the logic into a simple, coherent argument and explain it well.
Originality of argument
Some of the questions in the list require you expressing original ideas. For these questions I am expecting you to go over and beyond my own thoughts expressed in class, i.e., do not simply copy your class notes. If you agree with an argument I made in class, make sure you provide a well-developed argument.
Your use of language has to be clear and to the point. One sentence has to follow logically from the previous one and make sense in relation to the next one. Make sure your choice of words is the right one and that you convey to your reader the intended meaning. For example, if you want to use the word “principle” do not confuse it with the word “principal”. Bear in mind that I have the exact same expectations from students for whom English is not their primary language; make sure you paper is read and corrected for linguistic mistakes by someone in the Writing Center (411 Lafayette, tel: 998-8866) or a friend of yours with a better command of the language. Please also remember that we do not abbreviate words in academic papers.
The citation style to be followed is described in the second page of the syllabus. Make sure you consult it before you write your first paper. Following another citation style than the one suggested is entirely acceptable as long as you use it correctly.