Jacob Viner & Price Theory

There’s no doubt that Chicago was distinctive, and has been ever since. The real distinction was not making price theory the focal point of the graduate curriculum. That isn’t the real distinction at all. The fundamental distinction is treating economics as a serious subject versus treating it as a branch of

mathematics, and treating it as a scientific subject as opposed to an aesthetic subject, if I might put it that way (Milton Friedman, 1988).

Jacob Viner

Born May 3, 1892, Montreal

B.A., McGill University, 1914

Ph.D., Harvard University, 1922

Canada’s Balance of International Indebtedness, 1900-1913 under direction of Frank W. Taussig

UChicago Instructor to Professor of Economics, 1916-17 & 1919-1946

Princeton Professor of Economics, 1946-1960

Died September 12, 1970, PrincetonIn his UChicago office, 1944

Jacob Viner watching the Maroon, Big Ten power? Jacob Viner & Theodore Schultz

Viner was recruited to UChicago by J. Laurence Laughlin, the first chair of the Department of Economics. His “primary” field was international trade, but he made major scholarly contributions in price theory and history of economic thought.

He is best known as a teacher for his graduate course Price and Distribution Theory, ECN 301, which he taught from the 1920s until his departure in 1946. He also taught Modern Tendencies in Economics, ECN 303, and International Trade and Finance, ECN 370.

Citation for the AEA Francis A. Walker Medal, 1962

He represents the greatest combination of theoretical keenness (with no need for fancy techniques), alertness to policy issues, and historical scholarship in both economic institutions and economic ideas. In all fields to which he has contributed, including his specialty, international economics, his name will survive brightly as a deflator of pretentious nonsense as well as an original creator.

What students learned from Jacob Viner …

… that they should be scholars:* that they should take ideas seriously* that they should take history seriously* that they should be humble about what and how much they know

“A Modest Proposal for Some Stress on Scholarship in Graduate Training,” Brown University Graduate Convocation, June 3,1950

My proposal is both sincere and modest. I give also only an old-fashioned and modest meaning to the term “scholarship.” I mean by it nothing more than the pursuit of broad and exact knowledge of the history of the working of the human mind as revealed in written records. … What I shall propose, stated briefly and simply, is that our graduate schools shall assume more responsibility than they ordinarily do, so that the philosophers, economists, mathematicians, physicists, and theologians they turn out as finished teachers, technicians, and practitioners shall have been put under some pressure or seduction to be also scholars. Scholarship is a commitment to the pursuit of knowledge and understanding, but it can never provide guarantees that these have been attained. A great part of true learning, in fact, takes the form of negative knowledge, of increasing awareness of the range and depth of our unconquered ignorance … . Learned ignorance, therefore, is often praiseworthy, although ignorant learning, about which I will say something later, never is.

M. Friedman and G. Stigler in J. Viner’s Courses

Friedman

301, Price and Distribution Theory, Autumn 1932, S

370, International Trade and Finance, Winter 1933, S

303, Modern Tendencies in Economics, Spring 1933, S

Stigler

301, Price and Distribution Theory, Autumn 1933, S

301, Price and Distribution Theory, Winter 1935, R

303, Modern Tendencies in Economics, Spring 1934, S

370, International Trade and Finance, Winter 1936, A

Milton Friedman’s class notes, ECN 301, fall qtr 1932

Milton Friedman’s class notes, ECN 301, fall qtr 1932

J. Viner, ECN 301, fall qtr 1932

M. Friedman, ECN UB-171, Structure of Neo-classical Econ, Columbia, 1939-40

M. Friedman’s Notebooks, ECN 370 & ECN 303

J. Viner’s ECN 303 Exams, Spring 1933

Viner’s Commentary in ECN 303

Lionel Robbins’s definition – Economics is the relationship between ends and scarce means with alternatives uses.

Viner thinks that if you changed this to – studying economizing of means to obtain ends where they have a market phase.

Distinguish between technology and economics. How about law of diminishing returns. Purely technological but is in economic discipline because economists discovered it.

Viner would say economics social study = study of mass social phenomena. V doesn’t think it would apply to individual men (Rob Crusoe) (Robbins does)

MF to GS, Aug. 12, 1946 – As you know, I have been reading Stigler to prepare tor teaching: I have also been reading Marshall. And this noontime I was comparing what Marshall and Stigler had to say on the law of diminishing returns. … Stigler says, in effect, that Marshall is guilty of “question-begging,” that his “and similar proofs are essentially tautological”; yet Marshall sounds anything but tautological, he sounds realistic and as if he were basing his results on sound observation.

GS to MF, Aug. 19, 1946 – My dear collaborator:… You say that economic empirical evidence is intellectually far more satisfying than technological evidence. I cannot claim even an intuitive understanding of this statement. Diminishing returns is technological, so you prefer an indirect proof to a direct proof [-- Because?]

Viner’s Commentary in ECN 303

On Classical Economics and Its Critics

Very few of the critics of the classical theory understand it. They aren’t interested in it since they think it is no good; but they often are prejudiced before they have learned the classical tradition. No sharp break at all between classical and neo-classical economics. Better use of statistical and mathematical methods developed. Less emphasis placed on labor-pain in value theory and better discussion of marginalism on cost and utility sides by neo-classical writers.

General impression most economists of today have about economics of 19th century is based largely on a general treatise of some sort. Characteristic of treatise is that it generalizes more rapidly and makes fewer qualifications. Should read their other writings.

Laissez-Faire in Classical Economics

Not so easy to find example in leading writers of 19th century of this doctrine stated universally. Have to go to Continental liberals (rather reactionary) to get bold statement. Doctrine of complete natural harmony not the doctrine of any leading economists in classical tradition, even Smith. Dominant attitude of major writers toward laissez-faire is not of natural harmony, but that, bad as laissez-faire may be, gov’t interference would be still worse.

Institutionalist Critiques of Neo-Classical Economics

To Walton H. Hamilton value theory – economic theory. Says V. this is partly an historical accident. Another reason is that value theory has had more survival value. Also, value problems are more pervasive. Finally, in sense in which Ham[ilton] thinks of value theory, it isn’t true. Certainly not job of economist to deal with everything that has economic significance – because what phenomena don’t have economic significance?

Scholarship

* take ideas seriously

* take history seriously

* be humble about what and how much one knows

There’s no doubt that Chicago was distinctive, and has been ever since. The real distinction was not making price theory the focal point of the graduate curriculum. That isn’t the real distinction at all. The fundamental distinction is treating economics as a serious subject versus treating it as a branch of mathematics, and treating it as a scientific subject as opposed to an aesthetic subject, if I might put it that way (Milton Friedman, 1988).