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WAS NEO-CLASSICAL ECONOMICS COMPOSED BACKWARDS?

David A. Martin

The liberal creed demands organization of our economic life largely through individual participation in a game with definite rules. It calls upon the state to provide a stable framework of rules within which enterprise and competition may effectively control and direct the production and distribution of goods.

Henry C. Simons, 19361

Introduction

In response to the Kuhnian challenge that alternative paradigms may co-exist indefinitely, neo-classical economics has reasserted its claim as a progressively cumulative science. From error in the primitive past, to "truth" in the Nobel present is th~ accepted direction of the current "research program" methodology. But if orthodox economics is actually ONLY an ideology masquerading as a "positive" science, as critics have argued/ then the prof- fered approach of deriving the known from the unknown may also be an illusion. I believe Leontieff was correct in arguing tha~ in economic history it would be "more efficient to reverse this procedure," start in the present, and move "on backward." The purpose of this paper is to establish the "base of operations~ i.e., the principal store of factual information in the present, ''~ and to move on backward to understand how neo-classical economics (hereafter defined as the Chicago School, and its recent Offspring- Rational Expectations and the New Classical Economics) reached its current status.

The Hidden Agenda of Neo-Classical Economics

The ultimate objective of neo-classical economics, as a modern derivative of Utilitarian liberalism, was well stated by Peacock and Rowley. "Above all else," it is "concerned with minimizing restrictions on individual freedom, whether by private bodies or b~ the state even at a cost in terms of sacrificed material welfare." Pared down to its normative core, the underlying core, the under- lying purpose of neo-classical economics is to rationalize the virtual sovereignty of individual decision makers pursuing their own ends. However, virtual is not absolute sovereignty. Even the libertarian fringe recognizes that not all maximizing choices are warranted. Such freedom should not include, for example, freedom to kill, steal, or commit incest or sedition. The preferred freedom to be maximized is mental and/or creative activity. Freedom of thought and expression in virtually all spheres by creative people with well-developed mental faculties is especially

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important. These particularly worthy people should have maximum opportunity to pursue their own objectives, whatever they may be. They should have further the virtually unrestricted right to trans- form their thought into activity. Should they wish, for example, to exercise their minds and emotions by gambling in futures markets in order to maximize their current satisfaction, so be it. But their goal of profit maximization is only one path to the greater end of a society based on the individual maxim: "Free to choose."

The "major threat" to freedom of creative thought and imple- mentatio~ is concentrated power, political and economic, public or private. To insure maximum freedom of choice, individuals need protection for their creative activities from predatory behavior. One historic threat comes from the possessors of force. The "brawny," from feudal knights to the Mafia, have been able to use physical strength, force and violence, either on their own account or as hirelings of the rich, jealous, distraught, or whatever. The second major threat comes from the majority. The mass of the people, weak as individuals because they lack the intellectual and creative faculties to win the game, are potentially strong as a body and can change the rules to redistribute the attributes of success, whether they be income, wealth, status, or power.

Thus the "brainy," clever, imaginative and creative people who constitute the "natural elite" of liberal society need protection from those who might curtail their freedom to choose. Such defense is especially necessary for the vital few who are willing to take risks (versus accepting the status guo) in quest of rewards, both monetary and non-monetary. (Risk-averters may be well-regarded, ranging from merely eccentric to saints, but they are not the "heroes" of the liberal ethic). The needed security must be provided by a government of law, with sufficient force at hand to make its rules stick, without continuous recourse to violence. Adam Smith explained long ago how civil ggvernment became a necessity to protect the rights of this group.

While freedom of individual creative activity for ALL persons is the NOMINAL ultimate objective of neo-classical liberalism, the obvious reality is that at any given moment in time only a small portion of the population has the de facto ability and power to put their thoughts into serious play (the unequal distribution of income and especially wealth in virtually all societies is the best evidence of this skewed distribution of abilitieS). Thus the normative core of neo-classical ideology would likely be viewed correctly as an apology for the "brainy" elite unless it was buttressed by the critical allegation that freedom of individual action yields a positive externality increasing the greater good of all persons. Since society in the neo-classic~ tradition is merely the additive sum of the individuals therein/the creativity of the few ends up, however unexpectedly, promoting the self- interest of the many. As a result, state sanctioned self-interest- ed behavior results in the "good" society -- innovative, tolerant,

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"artsy," etc. -- with a higher standard of living for all.

The alleged critical positive externality of individualism upon society was based originally on Adam Smith's metaphysical Invisible Hand theory. God was the ultimate, if inscrutable, cause of such a beneficent outcome. Only the omniscient Intelligent Author of the Universe could have created people with innately balanced qualities. Consequently, "good" people acted prudently, not selfishly. In this manner Providence achieved the social or common good indirectly via individual actions. As the Invisible Hand became invisible in neo-clas~cal economics, the positive externality thesis was secularized. -v The Deity may or may not be involved, who can actually tell? People simply maximize although few claim really to know why. Perhaps such behavior is natural or maybe people were only socialized to act that way. It doesn't really matter for as a result of each person seeking his/her own good, the force of COMPETITION insures that the common good is achieved. Competition disciplines people to produce cheaply and restrains their appetite to the share of the pie they deserve (what they get is defined as warranted because it is the measure of their productivity). Thus the secular version of the Invisible Hand turns out to be "nothing more than ,~bec_ automatic equilibriating mechanism of the competitive market.

With the wisdom of Providence superseded by the force of competition, a government of law becomes the key to protecting the freedom of the "brainy" elite. They do "good" for all, by doing "well" for themselves in the competitive marketplace. After the initial activist stage when the previous oligarchy was dispatched, the critical role of the liberal state is to promote, sanction, and insure freedom of creative choice. The brave new government of RULE must seem to be neutral by adopting a pose that it denies favors to all. Among the ritual slogans are: "equal pay for equal work," "one person, one vote," and "equal opportunity for all." Whereas in reality the government of so-called "neutral competence" favors one group of people -- clever, aggressive people (versus the historic preferences by race, sex, family, national origin, political or religious affiliation; and, of course, wealth and power). This liberal government of law is not a pansy state. It must be sufficiently strong to resist the likely efforts of the brawny types or the majority to employ government in their self- interest. Resist means that the first line of defense is an active effort to socialize the public to accept the status quo, while in reserve is whatever force is needed to punish any transgressors.

As Simons pointed out, the ideal government would operate via rules -- broad administrative principles. It would be competent to create, maintain, change, and enforce the rules. The specific meaning of the rules would be interpreted by kindred "brain workers," including mandarins in the judicial, academic, and other intellectual communities. Certainly neo-classical economists, who rationalize the regime by providing "evidence" that the status quo

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is akin to the competitive model, belong in this category.

The ideal liberal government should seek to minimize rule making or rule interference, especially by the brawny or by mass movements. Those "wayward" types who typically are trying to overturn the status quo, should not be allowed to alter the rules that provide the framework within which the "brainy" people win the game. Nowhere is this more important than with the rules for administration of the economy. While the government of rules needs principles for all major institutions, it especially needs rules for governing the institutions of production and distribution, which are arguably the most important component of society. The economy is critical because it is the primary source of the material and financial reward for individual creative activJty and is the main means to provide goods and services for the society.

The economic rules must extend the genera] liberal principle for social organization -- freedom to choose, for one and all. This allows the clever, risk-taking people to obtain the largest share of the pie, both in the form of income and wealth. This outcome is regarded meritoriously because they are asserted to be the most productive members of society (with the large reward received as the circular evidence of their superior productivity.) This outcome is unique to market economies, because in alternative economic systems the lion's share of the pie has typically gone to the possessors of force, such as feudal oligarchies, or the representatives of the masses, such as Communist parties in socialist countries.

The economic rules for the market system should be consistent over considerable time periods. Consistent does not mean rigid, but that there should not be periodic radical changes, or continu- ous revolutionary alterations. With reasonable stability, the clever, aggressive decision makers will have sufficient time to make wise choices and to obtain payoffs (or to minimize losses). To insure consistency, the economic rules must be nurtured. They must be carefully taught to all potential players as SOCIAL NORMS. The whole social system must inculcate the rules via the process of acculturation. Herein enters the especially critical role of the educational system.

The wisdom of the economic rules must be implanted via the socialization process, and must be backed up with the threat of punishment. Ideally, all the potential players must accept that the winners in the marketplace deserve to win because of their "superior" qualities, and that their victory is also "good" for society as a whole. Most critically, the losers in the economic game have to agree to lose quietly. The losers must be taught to accept blame for failure as their own fault. They need to accept that the outcome is "fair," and not seek to change the rules by force, such as strikes, or by mass movements, such as Populism. Thus the economic rules need an aura to lend respect. All the

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players need to accept them as "natural" -- perhaps due to Providence or Nature -- or at least of fine lineage, traceable to august sources such as Adam Smith. To provide this mantle of respectability Neo-classical economics had to create a dominating canon that would rationalize the liberal objective.

The Neo-Classical Economic Stability Axiom

Because the rules for economic organization are a keystone for the liberal society, a "myth" -- an axiom to be told as a self- evident truth -- about the economy was required. The myth would be inculcated in all of the new players, as well as continuously reinforced in the minds of those already in the game -- both the winners whose activity must be reassured lest they waver and the losers who need to be promised "pie in the sky." The axiomatic story should dominate other plausible alternatives, or at minimum co-exist with them remaining in a suspect underdog role not able to interfere seriously with the dominant line.

The central tenet of the neo-classical economic myth, without which its hold would probably collapse, is that a competitive market economy (as delineated by the orthodox micro model of competition) is INHERENTLY STABLE. It is alleged to b~2quickly self-healing when "mistakes" are made by the players. As a result, it supposedly will remain indefinitely on an optimal growth path, while more recently also forestalling the physical environ- ment from serious and/or irreversible ruin. Thus the consistent rules of the competitive economic game are claimed to channel individual decisions to secure the common good. As each of the individual players uses his/her creative faculties in a lawful manner, the market economy delivers the goods (and increasingly services), while remaining in the "groove" for long term success.

The winnings of individual players, monetary or otherwise, are asserted to be in the general interest because they result from the most efficient production and distribution of the goods and services desired by the public. Any errors of individual judgment are quickly "corrected" by the "better" decisions of other players. For example, faulty or expensive products are soon replaced with superior items via relentless entrepreneurial activity. Led by its most creative members, the market follows an optimum long run path. This outcome is not only "good" for society, as defined in the model, but is consistent with the primary liberal normative objective of maximizing individual creative activity.

The central tenet of inherent stability is more than an assumption in neo-classical economics. It is an article of faith to distinguish truth from heresy. It is the centerpiece of the social myth, without which the elaborate deductive logical construct would not be sustainable. For if the market economy was inherently unstable, then it might be likely to destroy itself and perhaps along with it the rest of the liberal social institutions.

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It certainly would not be plausible to leave it alone~3 within consistent rules, in order to achieve the social good. This insight explains why neo-classical economics has conducted an inquisition against the original heretical argument of Keynes, as distinct from only vitriolic ridicule of textbook equilibrium Keynesianism.

According to the neo-classical myth, the inherently stable competitive market economy could only go astray if subverted by EXTERNAL activity. Thus what cannot be allowed is threats of brawn or threats of mass action. Individuals, or small groups should not be allowed to use force, or threats of force, to upset the rules. For example, relatively trivial acts such as strikes to raise wages, must be constrained. More critically, efforts of the majority to change their individual weakness to collective strength, must be resisted. Social legislation such as minimum wage laws, designed however overtly to redistribute the fruits of the economic pie, must be scorned and countered by the feigned prospects of impending doom. Most importantly, governments should not be given discretionary powers to manage the economy, because these actions would undermine the alleged stability of the economic mechanism. These potential interventions must be prevented by enacting instead a network of rules to forestall external interven- tion. This is the underlying rationale for a balanced budget amendment and a money stock rule.

A comprehensive set of rules to thwart the constant threats of external intervention only makes logical sense if the basic economic relationships are, in fact, inherently stable. The rules would merely recognize and protect the stability of the underlying economic relationships. However, much evidence from the real world, from the Great Depression to the latest stock market panic, suggests that real world market economies are prone to continuous cyclical instability. Herein enters the vital role of neo- classical economists who can be counted on to "torture the data until it confesses," and reveals important invariant relationships. It is no secret that economists of all stripes normally find what they set out to discover. (As I have often remarked to students: "Tell me the subject; then tell me the author, or the author's position and graduate school, and especially the journal in which the article is published, and I will tell you the likely conclu- sion.) The orthodox economists thus serve the needs of the "brainy" ruling class. They are the academic "experts" who provide legitimization for the liberal ideology by generating "proof" of economic stability. In this rationalization process, they also furnish "scientific" rebuttals to critics who claim the need to intervene aotively to manage the market economy. These "cranks" can thus be dismissed as misguided and potentially dangerous ideologues who would, however inadvertently, subvert the innate equilibrium of the market economy and perhaps with it the entire liberal social order.

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The inherent stability or instability of the competitive market economy is the major historic schism in economics between orthodoxy and heresy. From Ricardo and Walras to the Chicago School and its recent spinoffs, inherent economic stability is an article of faith. From Mathus to Keynes (~o announced in 1935 that: "Now I range myself with the heretics"'~, to Post-Keynesian Institutionalism, the market economy is viewed as inherently unstable due to internal factors such as the effect of uncertainty on investors, both financial and real. The central tenet of this paradigm is that uncertainty will result in instability due to uncoordinated individual decision making. It follows that to preserve most of the democratic political and social system from being destroyed by economic disorder, it is necessary for govern- ment to exert management over the economy by at minimum "tinkering" with monetary and fiscal policy, and perhaps even exercising an incomes and/or industrial policy.

Since neither of these economic "visions" is apparently subject to a definitive test (meaning a test that would convince the other side of the error of its ways), choosing one "faith" is primarily ~ matter of earlier disposition and/or graduate school education. The neo-classical axiom of stability was reached by working backwards, a la'Leontieff. The starting point was the liberal-Utilitarian goal of maximizing nominal freedom of choice by all individuals, thus allowing the "brainy" people to exercise fully their advantage over the other historic attributes for power and success. As a means to this covert end, it was necessary to posit a naturally stable economic mechanism that would only be upset by external intervention. Thus the particularly distinct role of neo-classical economics came to be exaltation of public policy rules to exclude the allegedly destabilizing prospects of external intervention by government.

The Rules

Since the neo-classical rules are both the product and the foundation of the economic stability axiom, they follow directly from the assumption of invariant relationships. The two primary public policy rules of neo-classical economics are macroeconomic: the money stock rule and the balanced budget rule. It is important to stress that they are predicated upon a prior micro condition of flexible prices. As expressed by Milton Friedman, government should make n~zrestriction preventing an individual from cutting his/her price. This principle is a prerequisite for competitive market pricing rather than a discretionary policy for government.

The money stock rule, popularly known as the "Auto Pilot," is really an attempt to specify the rate of inflation. According to Friedman, "the most important lesson" from economic history about discretionary monetary policy is that it can be "a major source of disturbance." To prevent such error, a proper monetary policy should "provide a stable background for the economy" by insuring

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that "the average level of prices ... will be highly stable." Thus the monetarist prescription is "that the monetary authority go all the way in avoiding such swings by adopting publicly the policy o achieving a steady rate of growth in a specified monetary total. ''~ This formula continues the orthodox argument, expressed early by Henry Simons, that "stabilization of t~ value of money ... is the only rule" for a proper public policy.

Causing some definition of the money supply to grow at a constant rate to prevent economic destabilization and resultant inflation (or deflation), is based on the proposition that the turnover rate of money is a near constant in the long run. The consistency of velocity rests, in turn, upon the alleged stability of the demand for money, which is functionally related to income, wealth, and institutional factors. The demand for money is firm because people's spending decisions are generally consistent and not subject to erratic shifts. The proof of this contention is the Permanent Income Hypothesis; which asserts a long run constancy to the ratio of consumption (and saving) to income due to the rational behavior of individuals and households seeking to maximize utility over their lifetimes. Thus neo-classlcal economics works backwards to the most basic presumption of invariance: human behavior is consistent over time and space. Human behavior in neo-classical economics reduces to a "relationship between ends and scarce means which have alternative uses." Accordingly, "when time and the means for achieving ends are limited and capable of alternative application, and the ends are capable of being distinguished in order of importance, then behavior necessarily assumes the form of choice. Every act ... has an economic aspect. ''~ Orthodox economics is therefore not the study of mankind in general, but of rational econom~ man who is "the self-seeking individualist of utility theory."- Becker has characteristically claimed that this approach "is applicable to all human behavior, be it behavior involving money prices, or imputed shadow prices, repeated or infrequent decisions, large or minor decisions, emotional or mechanical ends, rich or poor persons, adults or children, brilliant or stupid persons, patien~ or therapists, businessmen or politicians, teachers or students." Not only in the present, but whenever as Vernon Smith asserted in his explanation of how Paleolithic hunters, lacking property rights, caused "megafauna extinction some i0,000 years ago." Moreover the same predatory results are attributed to contemporary student behavior in Texas A&M experiments.

The presumed reason why human behavior (as well as "nonhuman workers, at least at Texas A&~) is consistent is the "Hobbesian state of nature" which makes mg~imization "the basic law of life" for survival of each species. Thus after considerable smoke, bedrock is revealed. People really are selfish. They calculate everything and sudden leaps are not characteristic of their behavior. Consequently they only need a certain quantity of additional new money, equivalent to the growth of real goods and

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services. If that is what they are given, they will spend most of it and prices will be stable. And if prices are stable, one major potential disturbance to market stability will be removed. In this manner, the freedom of the "brainy" people to win the game is enhanced.

The second major macroeconomic rule is the balanced budget. By making government pay its own way throughout, government can be prevented from trying to use discretionary fiscal policy to manage the actual level of economic activity. Since the competitive market economy naturally tends toward maximum real output over time, periodic deficits or surpluses could not permanently alter the fundamental variables such as growth of the labor force and/or labor productivity. According to neo-classical economic dictum, there exists continuously a "natural" rate of unemployment th~ cannot be altered for long via discretionary fiscal policy. Moreover, fiscal instability might provide a destabilizing influence on the economy and2~ven result in serious dislocations such as the Great Depression. However, this traditional view is now offset by the rational expectations approach that claims little or no influence for fiscal policy, which i S anticipated by the well-informed players who dominate the game. From this perspec- tive, the core of the neo-classical argument is again revealed. Human behavior is the ultimate invariant. Since calculating people act consistently, the economy will be stable if left to operate within the rules. Therefore discretionary fiscal policy is either useless or destabilizing. Consequently, it must be eliminated~ a mandate to balance the budget.

CONCLUSION

John Roemer correctly noted that neo-classical "economic theory has succeeded in factoring the political rights of private ownership into economic variables." With given "preferences of the agents, the technologies available, and the pattern of ownership rights," orthodoxy will "predict the outcome will be a Walrasian equilibrium."-- But what if real world outcomes -- inflations, depressions, trade imbalances, continued economic backwardness, etc. -- do not confirm the predictions of the model? Since the neo-classical axioms are beyond question, any probl~ms must be due to failures of the real world to conform to the model. It is true by definition that the competitive marketplace is naturally stable because it rests upon invariant behavior. It will produce the best possible world (versus the best of possible worlds) if the "brainy" natural elite are allowed to "do their own thing." Anyone who doubts this outcome is simply not an economist, but a crank. As Buchanan put it succinctly: "When non-individualistic norms are introduced, the domain of economics, as I define the discipline, is abandoned. ''31 According to the orthodox establishment, there simply is no other valid point of view. D. C. North is an able exponent: "To abandon neo-classical theory is to abandon economics as a science."

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But that is precisely the point. Neo-classical economics is less a science than a supporting pillar of a larger political ideology of individualism derived from Utilitarian ethics. Orthodox economics offers no moral justification for "do your own thing." It provides an exculpation: the common good will be served. It merely asserts that selfish apparently anti-social acts, will result in a pro-social outcome. The axiom that market economies are naturally stable is a cover to sanction the underly- ing objective that clever, aggressive people should be able to do as they please.

This is another equally, if not more plausible, view. Market economics are inherently unstable due to the uncoordinated efforts of people seeking their own advantage. The normally resulting economic instability is a critical, probably the critical, element in the periodic undermining of political and social institutions. Consequently, the "brainy" creative people need to be restrained in the public interest (including their own). Lacking an "Impartial Spectator" causing prudent behavior, the state must limit and/or channel the dynamic activities of the natural elite in order to insure the welfare of the whole.

As Tawney wrote: "The fundamental idea of Libert~ is Power. Power to control the condition of one's own life."-- In neo- classical economics all are afforded the same nominal freedom to choose, whereas only a minority has the de facto ability to do so. When the "brainy" elite win the game, the majority do not necessar- ily win as well. Thus it should be recognized that neo-classical economics, which rationalizes the successes of the few in terms of the interests of the many, is really an ideology composed backwards to support the liberal political agenda. Its major contribution is to refute the case for economic management by asserting evidence of inherent economic stability. The important theoretical components of this argument were created ex post by the need to refute the heresy of instability.

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EN'DNOTES

IHenry C. Simons, "Rules Versus Authorities in Monetary Policy," Journal of Political Economy, 44, 1 (February, 1936), p. I.

2Richard X. Chase, "The Popperian Legacy in Economics: A Review Article," Journal of Economic Issues, XXIII, #4 (December, 1989), p. 1152.

3Wallace Peterson, "Growth, Profits, and Property: A Review Article." Journal of Post Keynesian Economics, IV, #3 (Spring, 1982), p. 425; Warren J. Samuels, "Galraith on Economics as Belief," Journal of Post Keynesian Economics, VII, #i (Fall, 1989), pp. 62-63; Robert L. Heilbroner, "Economics and Political Economy," Journal of Economic Issues, XVIII, #3 (September, 1984), pp. 692- 693.

4Wassily Leontieff, "When Should History Be Written Backwards?," Economic History Review, XVI, #i, 1963, p. 4.

5Alan T. Peacock and Charles K. Rowley, "Pareto Optimality and the Political Economy of Liberalism," Journal of Political Economy, 80, #3 (May/June, 1972), Part I, pp. 479-480. See also, Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), Chapter i.

6Ibid., p. 480.

7Warren J. Samuels, "Adam Smith and the Economy as a System of Power," Review of Social Economy, XXXI, #2 (October, 1973), p. 132.

8Abram Bergson, "Income Inequality Under Soviet Socialism," Journal of Economic Literature, XXII, #3 (September, 1984), p. 1070; John Coder, Lee Rainwater, Timothy Smeeding, "Inequality Among Children and Elderly in Ten Modern Nations: The United States in an Inter- national Context," American Economic Review, 79, #2 (May, 1989), p. 322.

9Milton Friedman, "The Social Responsibility of Business is to Increase Its Profits," New York Times Magazine (September 12, 1970); James M. Buchanan, "Contraction Political Economy and Constitutional Interpretation," American Economic Review, 78, #2 (May, 1988), p. 136.

1~ A. Martin, "Economics as Ideology: On Making the 'Invisible Hand' Invisible," Review of Social Economy, XLVIII, #3 (Fall, 1990), pp. 51-66.

11Mark Blaug, Economic Theory in Retrospect (Cambridge: Cambridge University Press, 1983), p. 59.

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12As expressed in popular form without the usual academic hedges: There is a "contest of ideas between two rival schools." One position is Keynesian, "a~ idea" that a market economy "can stagnate at ... less than full utilization of all its productive resources -- unless the government does something... The rival ideas conclude "that an economy that is based on private property and that relies on market forces to allocate its resources is inherently resilient and it naturally gravitates toward full utilization of its productive resources following any shock to the system." Jerry L. Jordan, "The National Economic Policy-Making Process," Intalco Distinguished Lecture, Western Washington University, May 20, 1985, p. 3.

13Wallace C. Peterson, "Macroeconomics: Where Are We?," Review of Social Economy, XLV, #I (April, 1987), pp. 64-65; Charles P. Kindleberger, "Keynesianism vs. Monetarism in Eighteenth-and- Nineteenth-Century France," History of Political Economy, 12:4 (Winter, 1980), p. 499.

14Kevin D. Hoover, "Two Types of Monetarism," Journal of Economic Literature, XXII (March, 1984), p. 59; Michael Dotsey and Robert G. King, "Rational Expectations Business Cycle Models: A Survey," Federal Reserve Bank of Richmond, Economic Review (March/April, 1988), pp. 3-15.

15John Maynard Keynes, "A Self-Adjusting Economic System?," The New Republic (February 20, 1935), p. 36.

16David Colander and Arjo Klamer, "The Making of an Economist," Journal of Economic Perspectives, i, #i (Fall, 1987), pp. 95, 104- 105.

IZMilton & Rose Friedman, Free to Choose (New York: Harcourt Brace Jovanovich, 1980), p. 305.

18Milton Friedman, "The Role of Monetary Policy," American Economic Review, LVIII, #I (March, 1968), pp. 12-16.

19Henry C. Simons, "On Debt Policy," American Economic Association, Readinqs in Fiscal Policy (Homewood, IL: Richard D. Irwin, 1955), p. 226.

2~ Robbins, An Essay on the Nature and Significance of Economic Science (London: MacMillan & Co., 1952), pp. 14, 16.

21Martin Hollis and Edward J. Nell, Rational Economic Man, a Phil- osophical Critique of Neo-Classical Economics (New York: Cambridge University Press, 1975), pp. 53-54.

22Gary S. Becker, The Economic Approach to Human Behavior (Chicago: University of Chicago Press, 1976), p. 8.

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23Vernon L. Smith, "The Primitive Hunter Culture, Pleistocene Extinction, and the Rise of Agriculture," Journal of Political Economy, 83, #4, (August, 1975), pp. 727, 733.

24Wall Street Journal, November 25, 1986; December 4, 1986.

25Raymond C. Battalio, Leonard Green, and John H. Kagel, "Income- Leisure Tradeoffs of Animal Workers," American Economic Review, 71, #4, (September, 1981), p. 621.

26j. Hirshleifer, "Competition, Cooperation, and Conflict in Economics and Biology," American Economic Review, 68, #2, (May, 1978), pp. 238-240.

27Stuart E. Weiner, "The Natural Rate of Unemployment: Concepts and Issues," Federal Reserve Bank of Kansas City, Economic Review (January, 1986), p. 17.

28Murray Rothband, America's Greatest Depression (Kansas City: Sheed and Ward, Inc., 1975), Introduction to Third Edition.

~gK. Alec Chrystal and Daniel L. Thornton, "The Macroeconomic Effects of Deficit Spending: A Review," Federal Reserve Bank of St. Louis, Review (November/December, 1988), pp. 48, 57.

3~ E. Roemer, "Marxism and Contemporary Social Science," Review of Social Economy, XLVII, #4 (Winter, 1989), p. 387.

31james M. Buchanan, "What Kind of Redistribution Do We Want," Economica 35 (May, 1968), p. 190.

32Douglass C. North, "Structure and Performance: The Task of Economic History," Journal of Economic Literature, XVI, 3 (Septem- ber, 1978), p. 974.

33j. M. Winter and D. M. Joslin, R. H. Tawney's Commonplace Book (Cambridge: Cambridge University Press, 1972), p. 22.