I review changes over time in the meaning that economists in the US attributed to the phrase “statistical inference,” as well as changes in how inference was conducted. Prior to WWII, leading statistical economists rejected probability theory as a source of measures and procedures to be used in statistical inference. Trygve Haavelmo and the early Cowles Commission econometricians developed an approach to statistical inference based on probability theory, but the arguments they offered in defense of this approach were not always responsive to the concerns of earlier empirical economists that the data available to economists did not satisfy the assumptions required for such an approach. Despite this, after a period of about twenty-five years, a consensus developed that methods of inference derived from probability theory were an almost essential part of empirical research in economics. I conclude with some speculation on possible reasons for this transformation in thinking about statistical inference.

Liberal economists’ attitudes towards the welfare state are examined to see how clearly neoliberalism can be distinguished from other forms of liberalism. Three questions are asked. First, how could Friedrich Hayek believe he could accommodate elements of the welfare state agenda set by William Beveridge and John Maynard Keynes into his thinking? Second, why did Hayek become increasingly critical of the welfare state? Third, how far did Lionel Robbins, John Jewkes, and Alan Peacock agree with him? All three might be regarded as neoliberals according to the litmus test set by Philip Mirowski and Dieter Plehwe: that is, membership of the Mont Pèlerin Society or a think tank associated with the Atlas Economic Research Foundation. Yet, Robbins, Jewkes, and Peacock are on a spectrum between Mirowski’s definition of neoliberalism as a belief that freedom is to be found in the unfettered market, and classical and democratic liberals’ belief that people have to be nurtured to become effective citizens and have to be protected from the market’s disruptive effects. It is suggested that a nuanced approach is required in explaining why liberal economists came to believe the welfare state should make more use of markets and pricing systems for registering preferences and apportioning resources.

John Maurice Clark (1936) described original institutional economics (OIE) as an “elusive movement” and observed, “doubt has arisen whether it has any definable meaning at all” (p. 426). Many subsequent books and articles, with Malcolm Rutherford (2011) being the latest, have addressed this conundrum and sought to identify and describe the animating ideas behind OIE, the people who were the key contributors, and the extent to which they developed a common paradigm vision and theoretical statement. However, widely divergent narratives and non-commensurable interpretations remain. This paper, using a new research strategy, provides another examination of the early OIE story. Rather than beginning with Thorstein Veblen about 1900 (the traditional approach), the paper starts with the founding of OIE in 1918 and examines what the four leading OIE scholars—Walton Hamilton, Clark, Wesley Mitchell, and John Commons—say on OIE’s origins, paradigm vision, and role of Veblen. The conclusions are considerably revisionist.

According to Alfred Marshall, the element of time is the most important and difficult aspect to deal with in the economic analysis. Accordingly, he has placed the concept of time at the core of his economic reasoning, and he has developed a number of analytical tools that allow including time in his analytical framework: most notably, the cœteris paribus pound, the representative firm, and the distinction between short and long periods. However, he encountered an insurmountable impasse when dealing with the real elapsing of time in his static framework: the solution proposed in his Principles of Economics remained, for him, highly unsatisfactory, problematic, and incomplete. The real elapsing of time—unavoidable in his reflections—copes very badly indeed with his analytical construction based on equilibrium. The continuity of time is the element of the Marshallian analysis most quickly criticized and rejected. After him, in the economic analysis, time gradation was rigorously divided into “short” and “long” periods, whereas Marshall’s concerns for the continuity of real time were banished from what was considered a “rigorous” analysis. The main aims of this paper are to frame Marshall’s distinction between short and long periods and to underline those aspects of his contribution that were lost or were substantially simplified in later literature.

This paper addresses a long-running debate in the economics literature—the debate over Adam Smith’s theory of money and banking—and argues that recent reinterpretations of Smith’s monetary theory have erroneously diverted historians of monetary thought from the correct, but briefly articulated, initial interpretations of Henry Thornton (1802) and Jacob Viner (1937). Smith did not present either the real-bills theory or a price-specie-flow theory of banknote regulation, as is now generally presumed, but rather a reflux theory based upon the premise that the demand for money is fixed at a particular nominal quantity. Smith’s theory denies that an excess supply of money can ordinarily make it into the domestic nominal income stream or influence prices or employment.

In the Bretton Woods era the controversy over cross-border use of national monies turned on how to create ‘symmetries’ and avoid significant ‘asymmetries’ in the way national currencies shared specific international currency functions. We examine the twentieth-century work of prominent economists on the nature, choice, and functions of international currencies. Prescriptive approaches to international currency formation are considered, beginning with the discussion of the Bretton Woods plans, followed by doctrinal developments stimulated by the collapse of the Bretton Woods system. Why are those developments instructive, given recent revisitation of the currency internationalization question in modern international monetary thought and policy? The modern revival of this question resembles a rehabilitation and restatement of earlier controversies, though it underestimates the gradual encroachment of the idea of international currency competition. This idea came to dominate other doctrines from the 1970s; it accommodates the ongoing adaptation of national currencies to the full range of international currency functions.

The Econometric Society was founded in December 1930. Invitations for a meeting to establish “an international society for the advancement of economic theory in its relation to statistics and mathematics” had been distributed by Irving Fisher, Ragnar Frisch, and Charles F. Roos, together with a draft constitution. In June 1930, the same instigators had sent a form letter to a list of thirty-one scholars from ten different countries to solicit advice on establishing an international association “to help in gradually converting economics into a genuine and recognized science.” The hitherto unpublished responses are set out in the paper. The impact of the solicited advice, not least from François Divisia and Joseph Schumpeter, on the formation of the Econometric Society is discussed in some detail.

Ever since the French Revolution, Abbé de Mably has been portrayed as a forerunner of utopian communism and common ownership, and, more recently still, as a “classical republican” in the Age of Enlightenment. This article aims to reappraise Mably’s position. We attempt to show that he proposed a science of commerce in his Droit public de l’Europe (1746), and that his economic ideas displayed continuity and consistency throughout his lifetime. Far from being an enemy of trade, Mably sought a realpolitik in an attempt to strike a balance between the race for the enrichment of nations of the Moderns and the virtues and equality of the Ancients that he never thought possible to restore. The paper also examines his place in the history of economics. In particular, the similarities and differences between Mably’s ideas and those of the Gournay circle are studied, the issue of inequalities being the dividing line between them.

In the current recession, the proposal of negative nominal interest has received widespread attention, not only in the academic world. The negative interest rate issue was originally developed by Silvio Gesell (1862–1930), a German merchant, self-taught economist, and social reformer. In his main work, The Natural Economic Order, Gesell offered a theoretical basis for the practical implementation of the negative interest rate. This proposal, generally known as the “stamped money plan,” was favorably commented upon by two outstanding twentieth-century economists, Irving Fisher and John Maynard Keynes, and put into practice during the Great Depression. In this paper I propose a reading of Gesell’s theory of money from the point of view of quantity theory, giving prominence to elements of affinity with Fisher’s monetary theory. This re-examination entails revision of the opinion on the analytical contribution made by Gesell, who was generally tagged as a typical monetary crank, and proves that his place in the history of economic thought is less marginal than previously thought, reinforcing critical appreciation of him.

Joseph A. Schumpeter’s theory of economic development analyzes how growth and cycle dynamics intertwine. The process of creative destruction plays an essential role in those dynamics: embodying a cleansing effect, it has a clear, beneficial impact on long-run development. For that reason, and also for some of his famous (and provocative) non-interventionist statements, Schumpeter is generally interpreted as a pure liquidationist. This paper contests this rather simplistic view and shows that Schumpeter not only expressed much more nuanced positions as far as practical economic issues were concerned, but also that his views on economic policy were rooted in his earlier contributions before the Great Depression, attesting that Schumpeter’s view on economic policy was consistent over time.

The aim of this article is to describe the rise and fall of the workhouse system in connection with the developments that took place in economic thought in the transition from mercantilism to the Classical tradition. By examining the economic debate about wages, efficiency, labor market, workers’ mobility, and unemployment, we discuss whether the social policy shift epitomized by institutional reforms like the Gilbert Act (1782), the Rose Act (1793), and the Speenhamland system (1795) was accompanied and eventually inspired by a change in the perception of major political economy issues. In doing so, we review the writings of Jacob Vanderlint (d. 1740), George Berkeley (1685–1753), Malachy Postlethwayt (1707?–1767), Josiah Tucker (1713–1799), David Hume (1711–1776), and Adam Smith (1723-1790), among others. Although a direct influence by these writers cannot be proven, the originality of the present work rests on the effort to put into perspective the arguments elaborated by economic thinkers and the proposals made by social reformers so as to identify possible connections between economic theorizing and social legislation.

This paper re-examines Dennis Robertson’s ‘real’ business cycle (RBC) theory outlined in his 1915 A Study in Industrial Fluctuation. Even if, for Robertson, cycles find their origin and respond to oscillations in entrepreneurs’ “rational inducement” to invest, in opposition to RBC models in which every outcome is by construction an equilibrium outcome, Robertson discusses in a traditional way the short-run consequences of such exogenous technological shocks. There are no intertemporal equilibrium phenomena in the sense of the RBC approach; cycle theory is organized, for Robertson, around a Marshallian-defined center of gravity (or long-run equilibrium state of rest). For him, the real forces are represented by the gestation period of investment, but also by investment’s durability, its imperfect divisibility, and, allied with these, its intractability. These features of investment lead to excessive outlays upon capital investment, which ultimately depresses their marginal productivity. The inevitable and rational result is a downturn in the capital goods industries and the onset of a cycle.

This paper reconstructs an important and little-known part of the activity of Richard Kahn in the 1950s, both as researcher and as policy advisor, which centered on the drafting of a book for the FAO (Food and Agriculture Organization of the United Nations). Never actually published by the FAO for reasons clarified in this paper, the book dealt with fluctuations in the prices of primary products and how best to curb them. Offering a novel development of an idea first proposed by John Maynard Keynes, Kahn advocates the creation of buffer stocks managed by a supranational authority endowed with ample discretionary powers. The paper presents a complete reconstruction of Kahn’s views on the advantages of buffer stocks as an instrument to stabilize commodity prices, of the context in which these views took shape, and of the way they tied in with other parts of his economic theory and were reflected in his assessment of the commodity international agreements of the time to limit fluctuations in the prices of primary products. It thus fills a significant gap in our knowledge of one of the great economists of the twentieth century.

This article investigates John Maynard Keynes’s understanding and use of the concept of ‘animal spirits’ by tracing how he conceived of related ideas such as human nature, instinct, and intuition, and how they connect to the rational economic agent usually assumed by mainstream economic theory. It also considers the notion of Money-of-Account as proposed in A Treatise on Money in relation to the concept of reciprocal altruism as developed in the field of evolutionary biology, and documents Keynes’s knowledge of Charles Darwin on natural selection and sexual selection. It then uses these threads of analysis to evaluate how Keynes conceived of mental reasoning processes more widely, and deduces his own answer to the question of whether the human mind is formed as a ‘blank slate.’ It concludes by suggesting that Keynes should be regarded as one of the first contributors to the field of evolutionary economic psychology.

There is a subset of scholarly literature that asserts that the title of Adam Smith’s famous work, The Wealth of Nations, is an allusion to passages from the Bible, such as Isaiah 60:5. Strong forms of the claim of this relationship between Smith and Scripture argue for a direct reliance of the former upon the latter. Weaker forms of the claim merely raise the possibility of the relationship or point more broadly to the significance and relevance of scriptural passages. This article sets these claims against the historical context of Smith and his work, finding that the relationship among “the wealth of nations,” Adam Smith, and English translations of the Bible demonstrates that Smith did not, in fact, allude to the passages in Isaiah. Thus, the rise of political economy itself, of which Smith’s work was an important element, was part of the background for, and preceded the appearance of, the phrase in English bibles.

Despite the transnational character of the Great Depression, there are few works in the interwar literature that deal with the propagation of business cycles across national borders and systemic risks of depression in the world economy. Two notable exceptions are Hans Neisser’s Some International Aspects of the Business Cycle (1936) and chapter 12 in Gottfried Haberler’s Prosperity and Depression ([1937] 1964), which carries the heading “International Aspects of Business Cycles.” Both works differ substantially from each other and from the modern way of thinking about international business cycles in open economy macroeconomics. Haberler’s and Neisser’s approaches help to identify relevant issues that have been lost from sight in modern open economy macroeconomics.

It is noted that Harry G. Johnson was widely admired for his broad knowledge of economics, and particularly for the excellence and synthesizing quality of much of his writing. His discussions of the Phillips curve and related matters are considered. It is found that they are brief, inaccurate, and inconsistent. It is clear that, despite his reputation, they should not be treated as authoritative. It is further suggested that rather than supposing that Johnson’s knowledge and capabilities have been grossly exaggerated, it may be better to conclude that the Phillips curve was not nearly so important in the literature of the 1960s and 1970s as has been supposed.

Charles Coquelin and Jules Dupuit both advocated free banking, but they articulated different views on credit, the note-issuing mechanism, and the role of banking in economic crises. For Coquelin, credit allowed producers to enhance their productive capacities. There was no need to restrict the issuing of banknotes to the quantity of metallic reserves. Coquelin emphasized the role that privileged banks played in the emergence of economic crises. For his part, Dupuit did not believe that credit could create more capital, and warned against the excessive issuing of banknotes. Dupuit considered economic crises to be caused by real factors. I argue that Coquelin’s ideas reflected a credit theory of money while Dupuit’s views were characteristic of a monetary theory of credit.