WEBVTT NOTE 4. The Decline of the Ricardian System, 1820-48 (continued) 1 00:00:00.000 --> 00:00:08.040 5. Samuel Bailey and the Subjective Utility Theory of Value 2 00:00:08.040 --> 00:00:17.520 In 1825, Samuel Bailey, 1791-1870, a rising young merchant from Sheffield, published a 3 00:00:17.520 --> 00:00:24.880 thorough demolition of Ricardian value theory in his A Critical Dissertation on the Nature, 4 00:00:24.880 --> 00:00:28.440 Measures and Causes of Value. 5 00:00:28.440 --> 00:00:34.720 Bailey at last brought into English economics the subjective utility theory of the French 6 00:00:34.720 --> 00:00:35.720 tradition. 7 00:00:35.720 --> 00:00:40.640 Unfortunately, he was not gracious enough to acknowledge that fact. 8 00:00:40.640 --> 00:00:47.320 While his essay was clearly in the Say tradition, for example, his brief and brusque references 9 00:00:47.320 --> 00:00:52.940 to Say's treatise gave no hints of acknowledging his indebtedness. 10 00:00:52.940 --> 00:00:58.280 But in any case, Bailey's demolition of Ricardo was devastating. 11 00:00:58.280 --> 00:01:03.940 Beginning with Ricardo's definition of value as the relative price or purchasing power 12 00:01:03.940 --> 00:01:10.960 of particular goods, Bailey went on to show the absurdity and inner contradiction of Ricardo's 13 00:01:10.960 --> 00:01:18.240 claim that each good acquires an absolute and invariant value from the quantity of labor 14 00:01:18.240 --> 00:01:21.940 hours embodied in its production. 15 00:01:21.940 --> 00:01:29.540 For one thing, if the quantity of labor needed to produce good A remains the same, its value, 16 00:01:29.540 --> 00:01:35.940 contra ricardo, can scarcely be invariable, if the quantity of labor embodied in other 17 00:01:35.940 --> 00:01:41.720 goods B, C, D, etc. has changed. 18 00:01:41.720 --> 00:01:48.740 In short, value is strictly relational, a ranking among goods, and therefore cannot 19 00:01:48.740 --> 00:01:51.420 be absolute or invariant. 20 00:01:51.420 --> 00:01:58.460 Furthermore, Bailey demonstrates that value is not inherent in goods at all, but is rather 21 00:01:58.460 --> 00:02:05.220 always a process of subjective evaluation in the minds of individuals. 22 00:02:05.220 --> 00:02:12.240 Value, as Bailey pointed out, in its ultimate sense, appears to mean the esteem in which 23 00:02:12.240 --> 00:02:14.740 any object is held. 24 00:02:14.740 --> 00:02:20.860 denotes, strictly speaking, an effect produced on the mind. 25 00:02:20.860 --> 00:02:23.840 Value is purely a mental affection. 26 00:02:23.840 --> 00:02:30.860 Furthermore, he profoundly states that value is not only a subjective estimation, but also 27 00:02:30.860 --> 00:02:38.060 that valuation is necessarily relative among various goods or objects. 28 00:02:38.060 --> 00:02:41.020 Value is a matter of relative preference. 29 00:02:41.020 --> 00:02:49.180 Thus Bailey, When we consider objects in themselves without reference to each other, the emotion 30 00:02:49.180 --> 00:02:55.820 or pleasure or satisfaction with which we regard their utility or beauty can scarcely 31 00:02:55.820 --> 00:02:59.060 take the appellation of value. 32 00:02:59.060 --> 00:03:05.300 It is only when objects are considered as subjects of preference or exchange that the 33 00:03:05.300 --> 00:03:09.320 specific feeling of value can arise. 34 00:03:09.320 --> 00:03:15.620 When they are so considered, our esteem for one object, or our wish to possess it, may 35 00:03:15.620 --> 00:03:22.320 be equal to, or greater or less than, our esteem for another. 36 00:03:22.320 --> 00:03:29.240 But if value is subjective and relative, or relational valuation, it follows that it is 37 00:03:29.240 --> 00:03:35.920 absurd for Ricardo to hanker after an invariable measure of value. 38 00:03:35.920 --> 00:03:42.280 In a scintillating and telling passage, Bailey displays the inner contradictions and absurdities 39 00:03:42.280 --> 00:03:49.440 of any objective absolute theory of value, and specifically of the Ricardian quantity 40 00:03:49.440 --> 00:03:51.760 of labor variant. 41 00:03:51.760 --> 00:03:58.400 The Ricardians had lost sight of the relative nature of value and consider it as something 42 00:03:58.400 --> 00:04:04.680 positive and absolute, so that if there were only two commodities in the world and they 43 00:04:04.680 --> 00:04:10.580 They should both, from some circumstance or other, come to be produced by double the quantity 44 00:04:10.580 --> 00:04:11.960 of labor. 45 00:04:11.960 --> 00:04:19.720 They would both rise in real value, although their relation to each other would be undisturbed. 46 00:04:19.720 --> 00:04:25.500 According to this doctrine, everything might at once become more valuable by requiring 47 00:04:25.500 --> 00:04:32.660 at once more labor for its production, a position utterly at variance with the truth. 48 00:04:32.660 --> 00:04:40.580 Real value denotes the relation in which commodities stand to each other as articles of exchange. 49 00:04:40.580 --> 00:04:48.100 Real value, in a word, is on this theory considered as being the independent result of labor, 50 00:04:48.100 --> 00:04:54.300 and consequently, if under any circumstances the quantity of labor is increased, the real 51 00:04:54.300 --> 00:04:56.900 value is increased. 52 00:04:56.900 --> 00:05:03.820 Hence the paradox, quoting from the devoted Ricardian Thomas de Quincey, that it is possible 53 00:05:03.820 --> 00:05:12.440 for A continually to increase in value, in real value observe, and yet command a continually 54 00:05:12.440 --> 00:05:21.580 decreasing quantity of B, and this though they were the only commodities in existence. 55 00:05:21.580 --> 00:05:29.280 In sum, as Bayley pungently noted, the very term absolute value implies the same sort 56 00:05:29.280 --> 00:05:36.300 of absurdity as absolute distance. Bayley then enters into a penetrating discussion 57 00:05:36.300 --> 00:05:41.700 of the theory of measurement, showing the tremendous gulf between genuine measurement 58 00:05:41.700 --> 00:05:49.820 of real or physical objects and any concept of measuring something as subjective and relative 59 00:05:49.820 --> 00:05:52.460 as Human Valuation. 60 00:05:52.460 --> 00:05:58.740 In the case of physical objects, such concepts as length or weight are measured by fixing 61 00:05:58.740 --> 00:06:05.420 an invariant physical measure, such as a foot rule, and then comparing the length of other 62 00:06:05.420 --> 00:06:09.340 objects in question with such a rule. 63 00:06:09.340 --> 00:06:13.420 In human valuation, measurement is quite different. 64 00:06:13.420 --> 00:06:20.480 It is simply the expression of prices or relative purchasing powers of different goods in terms 65 00:06:20.480 --> 00:06:24.740 of one money or medium of exchange. 66 00:06:24.740 --> 00:06:30.760 Here there is no physical operation such as measurement of physical objects. 67 00:06:30.760 --> 00:06:37.520 In the case of money, there is a common expression or denominator of value in money rather than 68 00:06:37.520 --> 00:06:42.060 an invariable physical object of comparison. 69 00:06:42.060 --> 00:06:49.460 In fact, these prices or quantities are relative and variable, and there is no invariability 70 00:06:49.460 --> 00:06:50.460 involved. 71 00:06:50.460 --> 00:06:57.460 Indeed, Bailey would have done still better to abandon the term measure altogether and 72 00:06:57.460 --> 00:07:05.340 to confine it strictly to the invariant standards used to compare physical objects, simply confining 73 00:07:05.340 --> 00:07:27.580 In the course of demolishing the idea of an invariable measure of value, Bayley took deadly 74 00:07:27.580 --> 00:07:34.240 aim at the notion that the value of money is invariant over time and therefore can be 75 00:07:34.240 --> 00:07:38.920 Money used to compare general prices over time. 76 00:07:38.920 --> 00:07:45.720 While the money commodity is not more fixed in value than any other, one of its attributes, 77 00:07:45.720 --> 00:07:51.520 and one of the reasons it is chosen as money on the market, is its comparative steadiness 78 00:07:51.520 --> 00:07:58.200 of value, as Bailey sensibly termed it in a later work on Money and its Value, Money 79 00:07:58.200 --> 00:08:06.580 Money and its Vicissitudes in Value, 1837, but its value is not constant, and therefore 80 00:08:06.580 --> 00:08:11.320 there is no way of measuring value over time. 81 00:08:11.320 --> 00:08:17.600 But commodities only have value relations to each other at the same time. 82 00:08:17.600 --> 00:08:23.520 A commodity has no value relation to itself at different times. 83 00:08:23.520 --> 00:08:30.240 As Bailey puts it, we cannot ascertain the relation of cloth at one time to cloth at 84 00:08:30.240 --> 00:08:36.200 another as we ascertain the relation to cloth in the present day. 85 00:08:36.200 --> 00:08:43.120 All that we can do is to compare the relation in which cloth stood at each period to some 86 00:08:43.120 --> 00:08:45.240 other commodity. 87 00:08:45.240 --> 00:08:52.040 We cannot say that a pair of stockings in James I's reign would exchange for six-pair 88 00:08:52.040 --> 00:08:59.700 in our own day, and we therefore cannot say that a pair in James I's reign was equal in 89 00:08:59.700 --> 00:09:06.340 value to six pair now, without reference to some other article. 90 00:09:06.340 --> 00:09:13.740 Value is a relation between contemporary commodities, because such only admit of being exchanged 91 00:09:13.740 --> 00:09:20.400 for each other, and if we compare the value of a commodity at one time with its value 92 00:09:20.400 --> 00:09:26.920 You at Another, it is only a comparison of the relation in which it stood at these different 93 00:09:26.920 --> 00:09:31.200 times to some other commodity. 94 00:09:31.200 --> 00:09:37.320 Until recently, historians have believed that Bailey's work made no impact on the Ricardian 95 00:09:37.320 --> 00:09:44.760 world of British economics and fell into obscurity, only to be resurrected at the end of the 19th 96 00:09:44.760 --> 00:09:50.760 by economists looking for forerunners of the marginal utility theory. 97 00:09:50.760 --> 00:10:00.760 Actually, we now know that despite a vicious personal assault, probably by James Mill on Bailey and the Westminster Review, 98 00:10:00.760 --> 00:10:07.760 Bailey's critical dissertation was widely read among economists and virtually swept the field. 99 00:10:07.760 --> 00:10:15.760 In his January 1831 funeral rites for the Ricardian system before the Political Economy Club, 100 00:10:15.760 --> 00:10:23.760 Colonel Robert Torrens declared that, as to value, Bailey's dissertation has settled that question. 101 00:10:23.760 --> 00:10:31.760 Indeed, the year after Bailey's work was published, Torrens praised it highly in the third edition of his 102 00:10:31.760 --> 00:10:39.480 his essay on the external corn trade, calling it in his preface a masterly specimen of perspicuous 103 00:10:39.480 --> 00:10:46.520 and accurate logic, spearing that vague and ambiguous language in which some of our most 104 00:10:46.520 --> 00:10:50.080 eminent economists have indulged. 105 00:10:50.080 --> 00:10:56.080 And remarkably, the changeable torrent stuck to that estimate throughout his life. 106 00:10:56.080 --> 00:11:03.460 In the lengthy introduction to his The Budget, 1844, in which he revised and retracted many 107 00:11:03.460 --> 00:11:09.880 of his earlier views, Colonel Torrens went out of his way to affirm that the gifted author 108 00:11:09.880 --> 00:11:16.960 of a dissertation on the nature, causes and measures of value has set finally at rest 109 00:11:16.960 --> 00:11:24.480 the long agitated question whether value should be regarded as an absolute or positive quality 110 00:11:24.480 --> 00:11:31.120 in Hearing in Commodities or as a Relation Existing Between Them. 111 00:11:31.120 --> 00:11:37.180 Samuel Bailey wrote an effective reply to the Westminster Critic, a letter to a political 112 00:11:37.180 --> 00:11:40.320 economist, 1826. 113 00:11:40.320 --> 00:11:46.080 But apart from this and his money tract, most of his numerous writings dealt with philosophy 114 00:11:46.080 --> 00:11:49.040 and with political reform. 115 00:11:49.040 --> 00:11:55.360 For this prosperous Sheffield merchant, born into a mercantile family, founder and four-time 116 00:11:55.360 --> 00:12:02.440 president of the Sheffield Literary and Philosophical Society, was in intellectual matters an ardent 117 00:12:02.440 --> 00:12:04.080 Benthamite. 118 00:12:04.080 --> 00:12:10.320 He devoted the bulk of his intellectual resources to Benthamite writings on philosophy and on 119 00:12:10.320 --> 00:12:17.720 radical reform, and twice ran unsuccessfully on a reform ticket for parliament. 120 00:12:17.720 --> 00:12:24.040 Bailey made a considerable philosophical impact with his first book, his Essay on the Formation 121 00:12:24.040 --> 00:12:29.260 and Publication of Public Opinion, 1821. 122 00:12:29.260 --> 00:12:36.040 The essay's emphasis on the utilitarian value of free discussion greatly influenced James 123 00:12:36.040 --> 00:12:41.720 Mill, John Stuart Mills on liberty, and Francis Place. 124 00:12:41.720 --> 00:12:49.000 In Economic Matters, Bailey's essay grounded economic activity in subjective mental phenomena 125 00:12:49.000 --> 00:12:57.200 and explicitly rejected the emphasis of British classical economics on physical material objects. 126 00:12:57.200 --> 00:13:05.600 The methodology of economics, Bailey maintained, was introspective of one's empirical surroundings. 127 00:13:05.600 --> 00:13:13.120 Bailey saw economics as a science of mind rather than as technology. Clearly, his methodology 128 00:13:13.120 --> 00:13:20.300 and philosophy of economics were far more Austrian than has been realized. 129 00:13:20.300 --> 00:13:28.200 Bailey's later works were non-economic, including Essays on the Pursuit of Truth, 1844, The 130 00:13:28.200 --> 00:13:36.720 Theory of Reasoning, 1851 and 1852, and three series of Letters on the Philosophy of the 131 00:13:36.720 --> 00:13:42.160 Human Mind, 1855 to 1862. 132 00:13:42.160 --> 00:13:48.840 His final publication was a two-volume book using etymology to rearrange and reinterpret 133 00:13:48.840 --> 00:13:51.660 some of Shakespeare's plays. 134 00:13:51.660 --> 00:14:01.700 From the Received Text of Shakespeare's Dramatic Writings and Its Improvement, 1862-1866 135 00:14:01.700 --> 00:14:08.000 Samuel Bailey was the most important and influential subjective value theorist, but he was not 136 00:14:08.000 --> 00:14:13.820 the first to bring subjective utility theory to 19th century Britain. 137 00:14:13.820 --> 00:14:20.740 That honor belongs to the virtually unknown Scotsman John Craig, circa 1780 to circa 138 00:14:20.740 --> 00:14:27.880 1850. All that we know about Craig is that he was a citizen of Glasgow and was a member 139 00:14:27.880 --> 00:14:34.140 of the Fellowship of the Royal Society of Edinburgh, and yet nothing else is known about 140 00:14:34.140 --> 00:14:40.900 his occupation or background. After writing a three-volume work on the elements of political 141 00:14:40.900 --> 00:14:48.500 and Political Science, 1814, Craig made his striking, if unnoticed, contribution to economics 142 00:14:48.500 --> 00:14:56.620 in his Remarks on some Fundamental Doctrines of Political Economy, 1821. 143 00:14:56.620 --> 00:15:03.020 Craig not only brought utility into a British economics dominated by discussions of cost 144 00:15:03.020 --> 00:15:09.780 and natural price, for the first time in Great Britain he brought value theory to the verge 145 00:15:09.780 --> 00:15:13.700 Research of the Concept of Marginal Utility 146 00:15:13.700 --> 00:15:19.700 Starting with the axiom that utility is the basis of all value, Craig proceeds to the 147 00:15:19.700 --> 00:15:22.780 influence of supply. 148 00:15:22.780 --> 00:15:28.460 Relative values of commodities may change, and those persons who happen to be possessed 149 00:15:28.460 --> 00:15:35.560 of articles which are produced in larger quantities than formerly, or which from other circumstances 150 00:16:05.560 --> 00:16:27.560 A truly notable passage that all of the broadcloth that in the estimation of purchasers was worth the former price had been formerly brought to market, and if more is now to be disposed of, it must be to those who did not reckon its utility equivalent to its former cost. 151 00:16:27.560 --> 00:16:34.320 New purchasers indeed will appear in proportion to the reduction of price, because at every 152 00:16:34.320 --> 00:16:39.960 step of the decline it is brought down to the estimate which an additional number of 153 00:16:39.960 --> 00:16:46.800 persons had formed of its power of producing gratification, or in other words to their 154 00:16:46.800 --> 00:16:51.320 estimate of its value in use. 155 00:16:51.320 --> 00:16:57.860 Thus John Craig not only explicitly refuted the dominant Smithian view of the separation 156 00:16:57.860 --> 00:17:06.560 of value in use from value in exchange, showing that the latter depended strictly on the former. 157 00:17:06.560 --> 00:17:12.640 Even more important, Craig had captured the essence of the marginal utility doctrine without 158 00:17:12.640 --> 00:17:20.000 the label, showing that as the quantity of a good increases, its price or value must 159 00:17:20.000 --> 00:17:27.120 fall in order to tap a new group of purchasers whose utility estimate of the good had been 160 00:17:27.120 --> 00:17:33.320 too low to allow them to purchase the good at the original higher price for the smaller 161 00:17:33.320 --> 00:17:35.120 product. 162 00:17:35.120 --> 00:17:42.680 In short, purchasers previously sub-marginal now become marginal for the additional product 163 00:17:42.680 --> 00:17:45.360 as the price falls. 164 00:17:45.360 --> 00:17:52.120 As Professor Thor Bruce declares, Craig appears on the very verge of expressing the idea of 165 00:17:52.120 --> 00:17:54.440 marginal utility. 166 00:17:54.440 --> 00:18:00.020 He broke away from the theory held by his contemporaries, which was based on the cost 167 00:18:00.020 --> 00:18:06.840 idea and became the first exponent of the idea of the connection between utility and 168 00:18:06.840 --> 00:18:08.420 value. 169 00:18:08.420 --> 00:18:13.800 In thus emphasizing the utility theory, he was the forerunner of the Austrian School 170 00:18:13.800 --> 00:18:20.680 of the Later Half of the Nineteenth Century Craig doesn't stop there. 171 00:18:20.680 --> 00:18:27.160 If more broadcloth, for example, has been produced and its price has therefore fallen, 172 00:18:27.160 --> 00:18:33.880 the previous purchasers now have surplus revenue which they will use to increase the demand 173 00:18:33.880 --> 00:18:37.560 and therefore the price of other products. 174 00:18:37.560 --> 00:18:43.840 Hence the fall in value of broadcloth will increase the demand and the price of other 175 00:18:43.840 --> 00:18:44.840 goods. 176 00:18:44.840 --> 00:18:52.120 Therefore, an increased supply of some goods does not necessarily lead to a fall in general 177 00:18:52.120 --> 00:19:01.800 values, but rather to a restructuring of prices and to additional real income to consumers. 178 00:19:01.800 --> 00:19:09.300 Craig concludes from his value analysis that exchange value not only depends on use value, 179 00:19:09.300 --> 00:19:13.640 but is also an accurate measure of that value. 180 00:19:13.640 --> 00:19:19.720 Craig points out in his introduction to the remarks that only after the body of his tract 181 00:19:19.720 --> 00:19:27.260 was written did he come across J.B. Say's treatise and see the similarity in approach. 182 00:19:27.260 --> 00:19:34.020 He adds, however, that Say's proper concentration on exchange value should have been amended 183 00:19:34.020 --> 00:19:41.420 to point out that it is also the embodiment or expression of value in use. 184 00:19:41.420 --> 00:19:47.900 Attacking the Ricardian labor or cost theory of value, Craig points out that the value 185 00:19:47.900 --> 00:19:55.740 of any good is determined not by its cost of production, but by its demand and supply. 186 00:19:55.740 --> 00:20:02.620 The demand varying continually in accordance with consumer desires, and the supply changing 187 00:20:02.620 --> 00:20:08.620 according to the scarcity or abundance of its factors of production, as well as the 188 00:20:08.620 --> 00:20:10.660 fertility of agriculture. 189 00:20:10.660 --> 00:20:18.840 Or, as Craig put it, even if the cost were ascertained, it would not enable us to judge 190 00:20:18.840 --> 00:20:22.140 of the exchangeable value. 191 00:20:22.140 --> 00:20:28.500 Page value depends entirely on the proportion in the market which the demand for an article 192 00:20:28.500 --> 00:20:35.500 may bear to the supply, a proportion ever varying on the one hand according to the plenty 193 00:20:35.500 --> 00:20:42.020 or scarcity of capital or labor, and the fertility of the season. 194 00:20:42.020 --> 00:20:49.940 If Samuel Bailey was preceded by John Craig, he was succeeded, six years after his dissertation, 195 00:20:49.940 --> 00:20:58.820 by Charles Foster Cotterill in his An Examination of the Doctrine of Value, 1831. Cotterill 196 00:20:58.820 --> 00:21:05.540 not only generally endorsed Bailey's subjective utility theory, he also pronounced the same 197 00:21:05.540 --> 00:21:12.100 year as Torren's The Demise of the Ricardian Movement, noting bemusedly that there are 198 00:21:12.100 --> 00:21:16.140 some Ricardians still remaining. 199 00:21:16.140 --> 00:21:25.660 6. Nassau Senior, The Waitley Connection and Utility Theory 200 00:21:25.660 --> 00:21:32.460 During the late 1820s, Nassau W. Senior delivered a series of lectures as Drummond Professor 201 00:21:32.460 --> 00:21:38.960 at Oxford, some of which were collected in Senior's only published book, his Outline 202 00:21:38.960 --> 00:21:44.320 of the Science of Political Economy, 1836. 203 00:21:44.320 --> 00:21:48.600 Senior carried forward Bailey's Subjective Utility Theory. 204 00:21:48.600 --> 00:21:54.920 How much he was influenced by Bailey is difficult to say, since, like all too many economists 205 00:21:54.920 --> 00:22:01.460 of his era, Senior acknowledged virtually no like-minded colleagues or influences upon 206 00:22:01.460 --> 00:22:04.040 his own work. 207 00:22:04.040 --> 00:22:10.920 Senior did acknowledge J.B. Say, however, and began his value analysis by stating that 208 00:22:10.920 --> 00:22:18.640 value depends on utility and scarcity, thus returning to the continental tradition. 209 00:22:18.640 --> 00:22:25.040 Senior added that utility is relative to human desires and to different persons, and is not 210 00:22:25.040 --> 00:22:27.520 intrinsic in objects. 211 00:22:27.520 --> 00:22:35.360 Utility, he pointed out, denotes no intrinsic quality in the things which we call useful. 212 00:22:35.360 --> 00:22:41.700 It merely expresses their relations to the pains and pleasures of mankind. 213 00:22:41.700 --> 00:22:48.700 And as the susceptibility of pain and pleasure from particular objects is created and modified 214 00:22:48.700 --> 00:22:55.860 by causes innumerable and constantly varying, we find an endless diversity in the relative 215 00:22:55.860 --> 00:23:02.140 Relative utility of different objects to different persons, a diversity which is the motive of 216 00:23:02.140 --> 00:23:04.340 all exchanges. 217 00:23:04.340 --> 00:23:12.380 Scarcity, or the natural limitation of supply, was, for Senior, the main influence on relative 218 00:23:12.380 --> 00:23:14.300 utility. 219 00:23:14.300 --> 00:23:20.220 In the course of his discussion, Senior virtually came to formulate the law of diminishing marginal 220 00:23:20.220 --> 00:23:22.600 utility. 221 00:23:22.600 --> 00:23:27.880 Not only are there limits to the pleasure which the commodities of any given class can 222 00:23:27.880 --> 00:23:35.240 afford, but the pleasure diminishes in a rapidly increasing ratio long before those limits 223 00:23:35.240 --> 00:23:37.100 are reached. 224 00:23:37.100 --> 00:23:43.040 Two articles of the same kind will seldom afford twice the pleasure of one, and still 225 00:23:43.040 --> 00:23:49.360 less will ten give five times the pleasure of two. 226 00:23:49.360 --> 00:23:55.460 While he was completing his studies at Oxford, young senior acquired as his tutor a young 227 00:23:55.460 --> 00:24:03.000 man only three years older than himself, recently appointed as a fellow at Oriel College, from 228 00:24:03.000 --> 00:24:06.820 which he had graduated several years earlier. 229 00:24:06.820 --> 00:24:16.860 The Rev. Richard Waitley, 1787-1863, philosopher and theologian and son of an Anglican minister, 230 00:24:16.860 --> 00:24:21.460 was to become Sr.'s close and lifelong friend. 231 00:24:21.460 --> 00:24:27.540 Even though Sr. became an attorney, he remained a central part of the Oriel College circle 232 00:24:27.540 --> 00:24:31.240 clustered around the charismatic Waitley. 233 00:24:31.240 --> 00:24:37.280 The circle engaged in literary studies and pursuits, with Sr. publishing several literary 234 00:24:37.280 --> 00:24:45.180 articles and launching a short-lived literary and intellectual quarterly, The London Review. 235 00:24:45.180 --> 00:24:51.740 Wheatley published what was to become the standard text on logic, The Elements of Logic, 236 00:24:51.740 --> 00:24:59.900 1826, in which Senior included an appendix on ambiguous terms used in political economy. 237 00:24:59.900 --> 00:25:06.820 Indeed, Wheatley was probably responsible for injecting an unfortunate tendency in Senior 238 00:25:06.820 --> 00:25:12.940 towards word-chopping and logomachy, which helped dampen the influence of the great Senior 239 00:25:12.940 --> 00:25:20.540 in the World of Economics. At any rate, Senior learned philosophy and theology from Wheatley, 240 00:25:20.540 --> 00:25:28.140 and the latter economics from Senior. In Oxford, the Oriel Circle was becoming a highly influential 241 00:25:28.140 --> 00:25:35.160 center for liberal and Whig views within the Anglican Church, a remarkable influence indeed 242 00:25:35.160 --> 00:25:42.420 in that traditionally high-Tory and high-church university. When the Drummond Professorship 243 00:25:42.420 --> 00:25:50.020 Open Political Economy opened up in 1825, Wheatley secured the post for Nassau Senior, 244 00:25:50.020 --> 00:25:56.020 and when Senior's term expired five years later, he recommended and obtained the position 245 00:25:56.020 --> 00:25:59.820 for Wheatley as his successor. 246 00:25:59.820 --> 00:26:06.620 Wheatley's Drummond Lectures, the introductory lectures on Political Economy, 1831, 2nd 247 00:26:06.620 --> 00:26:15.020 Edition, 1832, continued and expanded the senior tradition, particularly in value theory. 248 00:26:15.020 --> 00:26:22.500 Indeed, methodologically, Wheatley went further than senior. His linguistic and philosophical 249 00:26:22.500 --> 00:26:29.020 interests led Wheatley to see that the concept and terminology of political economy tended 250 00:26:29.020 --> 00:26:34.520 had to confuse and conflate these two distinct fields. 251 00:26:34.520 --> 00:26:39.460 This confusion hindered the scientific development of economics. 252 00:26:39.460 --> 00:26:46.280 Hence Waitley proposed substituting a new word, catallactics, the science of exchanges 253 00:26:46.280 --> 00:26:49.300 for political economy. 254 00:26:49.300 --> 00:26:55.580 Waitley defined man as an animal that makes exchanges, pointing out that even the animals 255 00:26:55.580 --> 00:27:01.540 Wheatley's nearest to human rationality did not have to all appearance the least notion 256 00:27:01.540 --> 00:27:08.180 of bartering or in any way exchanging one thing for another. 257 00:27:08.180 --> 00:27:14.700 Focusing on human acts of exchange rather than on the things being exchanged, Wheatley 258 00:27:14.700 --> 00:27:21.340 was led almost immediately to a subjective theory of value, since he saw that the same 259 00:27:21.340 --> 00:27:30.340 and that differences in subjective value are the foundation of all exchanges. 260 00:27:30.340 --> 00:27:49.340 Moreover, Waitley pointed out that labor is not essential to value, and noted that pearls do not fetch a high price because men have dived for them, but on the contrary, men dived for them because they fetch a high price. 261 00:27:49.340 --> 00:27:59.840 Waitley saw that the economic realm, and particularly exchange activity on the market, deserved its own sphere of analysis and inquiry. 262 00:27:59.840 --> 00:28:12.840 Even if integration later takes place, as analysis is applied to the political realm, there must first be a separation to allow the reasoning process its head. 263 00:28:12.840 --> 00:28:20.340 But after separation and analysis, integration, and Richard Wheatley understood that the very 264 00:28:20.340 --> 00:28:27.700 fact that a separate sphere was secured for catalactic analysis meant all the more that 265 00:28:27.700 --> 00:28:37.060 integration with moral and theological analysis was required in order to come to policy conclusions. 266 00:28:37.060 --> 00:28:44.820 In his Drummond lectures, Wheatley was concerned to show, first, that contrary to Oxford Tories, 267 00:28:44.820 --> 00:28:51.380 political economy was not sinful, materialistic or opposed to Christianity. 268 00:28:51.380 --> 00:28:58.060 In the first place, political economy is not to be considered, as had Smith and the Classicals, 269 00:28:58.060 --> 00:29:00.260 a study of wealth. 270 00:29:00.260 --> 00:29:04.420 It is instead a study of human exchanges. 271 00:29:04.420 --> 00:29:08.140 And even a study of wealth is not sinful. 272 00:29:08.140 --> 00:29:14.940 In the first place, it is not sinful per se to examine the means of increasing wealth. 273 00:29:14.940 --> 00:29:21.060 There is no need for the political economist to step beyond his role as a scientist or 274 00:29:21.060 --> 00:29:29.500 catallactician and advocate policy as a means of acquiring wealth or on any other grounds. 275 00:29:29.500 --> 00:29:38.700 Indeed, once he does so, he advocates public policy, not as a political economist, but in some other capacity. 276 00:29:38.700 --> 00:29:51.500 Waitley also denounced, in their turn, the attempt to monopolize economics by the aggressively atheistic, secular and anti-Christian Ricardian circle. 277 00:29:51.500 --> 00:29:59.500 Certainly, the latter adjective would not be excessive for people like James Mill and the Benthamite radicals. 278 00:29:59.500 --> 00:30:15.500 Wakely also believed Ricardian teachings to be dangerous and anti-Christian in the sense that they implied inherent class conflict between capital and labor, and between landlords and everyone else, 279 00:30:15.500 --> 00:30:27.500 and, therefore, denied the essential laissez-faire insight of a harmonious social order, an order that testifies to the existence of divine wisdom. 280 00:30:27.500 --> 00:30:38.500 In short, for weightily, laissez-faire harmony and Christian insight into a divine order meet on a broad integrative level. 281 00:30:38.500 --> 00:30:45.940 Thus, while economic analysis is scientific and value-free, and cannot directly imply 282 00:30:45.940 --> 00:30:52.700 political conclusions, such analysis will lead to laissez-faire conclusions, and as 283 00:30:52.700 --> 00:31:00.140 such is perfectly consistent with Christian insight into a beneficent divine order. 284 00:31:00.140 --> 00:31:06.380 In addition to his subtle exposition on the nature of and distinctions among positive 285 00:31:06.380 --> 00:31:13.640 and Normative Economics, Wheatley denounced the naive fact-gathering methodology of the 286 00:31:13.640 --> 00:31:20.260 Baconian Cambridge inductivists led by Richard Jones and William Hewell. 287 00:31:20.260 --> 00:31:27.220 The role of fact-gathering, Wheatley perceptibly pointed out, was not in framing theory but 288 00:31:27.220 --> 00:31:31.200 in applying it to specific conditions. 289 00:31:31.200 --> 00:31:38.280 Looking at facts without the guidance of theory in their selection is virtually impossible. 290 00:31:38.280 --> 00:31:44.520 Scientific advances, Waitley correctly noted, come not from gathering more data, but from 291 00:31:44.520 --> 00:31:48.040 looking at old facts in new ways. 292 00:31:48.040 --> 00:31:54.460 An example was modern insight into the nature of the circulation of the blood. 293 00:31:54.460 --> 00:32:02.100 In 1832, Richard Waitley left his Drummond chair prematurely on getting a surprise appointment 294 00:32:02.100 --> 00:32:08.420 to the high post of Anglican Archbishop of Dublin, where he scandalized the Evangelical 295 00:32:08.420 --> 00:32:16.540 faithful by refusing to be anti-Catholic and by insisting on being joyous on the Sabbath. 296 00:32:16.540 --> 00:32:22.380 The position of Archbishop carried with it being one of the two visitors of Trinity College 297 00:32:22.380 --> 00:32:30.460 College Dublin, the two who formed the ultimate appeals court for all intra-college disputes. 298 00:32:30.460 --> 00:32:36.540 Waitley used his clout at Trinity to drive through, over fierce opposition, the establishment 299 00:32:36.540 --> 00:32:43.100 of a new chair of political economy at Trinity, under terms closely modeled on the Drummond 300 00:32:43.100 --> 00:32:44.780 chair. 301 00:32:44.780 --> 00:32:50.980 For the rest of his life, Waitley examined and selected candidates for the post himself 302 00:32:50.980 --> 00:32:54.900 and Paid the Salary of the Professors. 303 00:32:54.900 --> 00:33:00.820 The opposition from the Board and the Provost of Dublin University was based on a fear of 304 00:33:00.820 --> 00:33:04.860 the alleged radicalism of political economy. 305 00:33:04.860 --> 00:33:10.260 The Provost wanted weightily to guarantee that the holders of the new chair would have 306 00:33:10.260 --> 00:33:16.800 sound and safe conservative views, to which the Archbishop indignantly replied that he 307 00:33:16.800 --> 00:33:23.360 He was appalled at such a suggestion, involving, as it did, the introduction of party politics 308 00:33:23.360 --> 00:33:27.560 into the subject of abstract science. 309 00:33:27.560 --> 00:33:33.400 It was a subtle but important distinction that Waitley was trying to convey on an issue 310 00:33:33.400 --> 00:33:36.980 that plagues academia to this day. 311 00:33:36.980 --> 00:33:43.340 He was saying that it was proper, indeed important, to select a professor with the correct view 312 00:33:43.340 --> 00:33:50.340 are two of the broader implications of his subject, as well as of its strictly scientific aspects. 313 00:33:50.340 --> 00:34:00.340 Yet, it was decidedly not proper to judge the professoriate on the basis of their direct positions on narrow political issues, 314 00:34:00.340 --> 00:34:05.340 which Waitley lumped together as party politics. 315 00:34:05.340 --> 00:34:11.340 Thus, in gaining agreement on the Waitley chair, the Archbishop closely quizzed 316 00:34:11.340 --> 00:34:30.340 He selected the professors on the basis of their commitment to the Christian liberal view of the harmony of the universe in general and of the free market in particular, and to the senior subjective utility theory of value as against the Ricardian labor theory. 317 00:34:30.340 --> 00:34:53.340 Wheatley himself wrote a bit more on economics, reiterating his ideas in his Easy Lessons on Money Matters for the Use of Young People, 1833, an enormously popular work for children that went into 15 editions in the next 20 years and was translated into many languages. 318 00:34:53.340 --> 00:35:01.100 Remarkably, in this primer, Wheatley hinted at another huge theoretical advance, generalizing 319 00:35:01.100 --> 00:35:06.180 the theory of pricing for all factors of production. 320 00:35:06.180 --> 00:35:12.380 If you consider attentively what is meant by the words rent, hire and interest, you 321 00:35:12.380 --> 00:35:19.180 will perceive that they all in reality signify the same sort of payment. 322 00:35:19.180 --> 00:35:25.220 But unfortunately, Wheatley did not apply himself further to economics, and insights 323 00:35:25.220 --> 00:35:30.940 into value or distribution theory became scattered and fragmentary. 324 00:35:30.940 --> 00:35:37.680 From now on, he would have to rely on Wheatley chair holders to pursue the subjective tradition 325 00:35:37.680 --> 00:35:40.540 more systematically. 326 00:35:40.540 --> 00:35:46.460 The first holder of the Wheatley chair suited the Archbishop's requirements admirably. 327 00:35:46.460 --> 00:35:56.500 Samuel Mountaford Longfield, 1802-1884, the son of an Anglican vicar in County Cork, Ireland, 328 00:35:56.500 --> 00:36:02.340 had graduated from Trinity College a decade earlier and had won a gold medal in science 329 00:36:02.340 --> 00:36:07.100 for particular excellence in mathematics and physics. 330 00:36:07.100 --> 00:36:13.300 Longfield later won a coveted fellowship at Trinity, a post-concentrating on mathematics 331 00:36:13.300 --> 00:36:19.780 Science and Sciences, areas in which Trinity was far stronger than Oxford and Cambridge, 332 00:36:19.780 --> 00:36:27.540 which were just now enlarging their exclusively classical curriculum to enter the modern world. 333 00:36:27.540 --> 00:36:33.300 While serving as fellow of the college, Longfield entered Dublin Law School and, graduating 334 00:36:33.300 --> 00:36:40.380 in 1831, became assistant to the Dublin Professor of Feudal and English Law. 335 00:36:40.380 --> 00:36:45.900 Not only that, Longfield delivered a series of public lectures on the common law that 336 00:36:45.900 --> 00:36:49.820 was highly favorably received. 337 00:36:49.820 --> 00:36:54.820 Mountaford Longfield more than fulfilled Waitley's expectations. 338 00:36:54.820 --> 00:37:00.900 Not only did he use the leisure and the stimulus of the chair to hammer out a remarkably complete 339 00:37:00.900 --> 00:37:07.620 subjective and even marginalist theory of value and distribution, a genuine alternative 340 00:37:07.620 --> 00:37:14.340 to Ricardianism. He also imparted his stamp and the tradition of a subjective value theory 341 00:37:14.340 --> 00:37:21.300 alternative on Dublin University, leaving worthy successors to his chair. 342 00:37:21.300 --> 00:37:27.220 The brunt of Longfield's system was presented in his first published series of lectures, 343 00:37:27.220 --> 00:37:34.440 Lectures on Political Economy, 1834. During the rest of his term, Longfield published 344 00:37:34.440 --> 00:37:36.960 and two more sets of lectures. 345 00:37:36.960 --> 00:37:43.620 In 1836 he left the Wheatley Chair to resume his legal career, becoming Regis Professor 346 00:37:43.620 --> 00:37:48.640 of Feudal and English Law at Dublin University. 347 00:37:48.640 --> 00:37:52.520 Later he became a member of the Queen's Council. 348 00:37:52.520 --> 00:37:58.440 Longfield was an expert in real estate law, and in 1849 he was appointed as one of the 349 00:37:58.440 --> 00:38:01.120 three land commissioners in Ireland. 350 00:38:01.120 --> 00:38:08.040 A decade later, he became the prestigious judge of the landed estates court in Ireland. 351 00:38:08.040 --> 00:38:13.640 From then on, he was known widely in Great Britain as Judge Longfield for his efforts 352 00:38:13.640 --> 00:38:17.320 on behalf of land reform in Ireland. 353 00:38:17.320 --> 00:38:23.080 Aside from a few articles on banking, Longfield had no further leisure to pursue economic 354 00:38:23.080 --> 00:38:29.580 studies and so his remarkable contributions to economics were crammed into his four years 355 00:38:29.580 --> 00:38:31.860 in the Wheatley Chair. 356 00:38:31.860 --> 00:38:37.600 At the end of his life, Longfield returned to his early interest in mathematics, publishing 357 00:38:37.600 --> 00:38:45.980 a mathematical text, an elementary treatise on series, in 1872. 358 00:38:45.980 --> 00:38:51.380 Longfield's broad perspective of market harmony was quite similar to Wheatley's. 359 00:38:51.380 --> 00:38:57.260 In his lectures, he wrote that the laws according to which wealth is created, distributed and 360 00:38:57.260 --> 00:39:04.100 Consumed have been framed by the great author of Our Being with the same regard to our happiness 361 00:39:04.100 --> 00:39:08.780 which is manifested by the laws that govern the material world. 362 00:39:08.780 --> 00:39:15.420 Furthermore, Longfield was disturbed by Ricardo's pessimistic theory of distribution and his 363 00:39:15.420 --> 00:39:22.240 portrayal of inherent class conflict between workers, capitalists and landlords, with the 364 00:39:22.240 --> 00:39:28.700 The former two being doomed by an inevitable rising lion's share of the product accruing 365 00:39:28.700 --> 00:39:33.340 to the unproductive class of landlords. 366 00:39:33.340 --> 00:39:39.120 In value theory, Longfield worked out the subjective theory of value and price more 367 00:39:39.120 --> 00:39:43.140 fully than had been accomplished before in Great Britain. 368 00:39:43.140 --> 00:39:49.440 He concentrated firmly on market price as the important consideration rather than long-run 369 00:39:49.440 --> 00:39:57.440 and Price, and also showed that both are in any case determined by supply and demand. 370 00:39:57.440 --> 00:40:03.400 Longfield broke important new ground in his detailed marginal analysis of demand. 371 00:40:03.400 --> 00:40:10.600 Here he worked out the concept of consumer demand as a schedule related to sets of prices, 372 00:40:10.600 --> 00:40:16.360 and even developed the idea of individual falling demand schedules as the fundamental 373 00:40:16.360 --> 00:40:20.240 Basis of Aggregate Market Demand. 374 00:40:20.240 --> 00:40:26.480 Even more fully than John Craig, Longfield showed that market demand curves are constituted 375 00:40:26.480 --> 00:40:34.080 by a spectrum of supramarginal, marginal and submarginal buyers, each with different intensities 376 00:40:34.080 --> 00:40:35.800 of demand. 377 00:40:35.800 --> 00:40:42.160 Furthermore, the measure of the intensity of any person's demand for any commodity is 378 00:40:42.160 --> 00:40:47.920 is the amount which he would be willing and able to give for it, rather than remain without 379 00:40:47.920 --> 00:40:53.320 it, or forgo the gratification which it is calculated to afford him. 380 00:40:53.320 --> 00:41:00.560 Yet, of course, despite the different intensities of demand, all exchanges will be at the same 381 00:41:00.560 --> 00:41:02.600 market price. 382 00:41:02.600 --> 00:41:09.320 If then the price is attempted to be raised one degree beyond this sum, the demanders, 383 00:41:09.320 --> 00:41:15.640 Who by the change cease to be purchasers, must be those the intensity of whose demand 384 00:41:15.640 --> 00:41:19.920 was precisely measured by the former price. 385 00:41:19.920 --> 00:41:26.840 Thus the market price is measured by the demand, which being of the least intensity, yet leads 386 00:41:26.840 --> 00:41:29.560 to actual purchases. 387 00:41:29.560 --> 00:41:36.760 In short, the marginal demand becomes a key to the determination of price. 388 00:41:36.760 --> 00:41:42.920 In his analysis of supply, Longfield showed that the supply relevant to the real day-to-day 389 00:41:42.920 --> 00:41:50.440 market price is a previously produced stock of a good now fixed for the immediate present 390 00:41:50.440 --> 00:41:51.880 period. 391 00:41:51.880 --> 00:41:58.680 In short, what would now be called a vertical supply curve for the immediate market period. 392 00:41:58.680 --> 00:42:05.820 Furthermore, Longfield saw clearly, in contrast to Ricardo, that cost of production in no 393 00:42:05.820 --> 00:42:13.900 No sense determines price. At most, it contributes indirectly to that determination by affecting 394 00:42:13.900 --> 00:42:21.580 the extent of supply. His analysis comes close to the later Austrian theory by brilliantly 395 00:42:21.580 --> 00:42:28.560 pointing out that the effect of cost on supply comes from the expectations of producers in 396 00:42:28.560 --> 00:42:35.380 deciding how much of a good to make and put on the market. Thus the cost of production 397 00:42:35.380 --> 00:42:42.540 Man acts by its influence on the supply, since men will not produce commodities unless with 398 00:42:42.540 --> 00:42:50.060 the reasonable expectation of selling them for more than the cost of producing them. 399 00:42:50.060 --> 00:42:55.920 Professor Lawrence Moss, a biographer of Longfield, has deprecated the latter's contribution to 400 00:42:55.920 --> 00:43:00.860 value theory as not a marginal utility theory. 401 00:43:00.860 --> 00:43:07.260 Mises complains that while Longfield realized that utility was the source of all demand, 402 00:43:07.260 --> 00:43:14.140 he did not analyze utility beyond that, and stuck merely to an analysis of marginal demands 403 00:43:14.140 --> 00:43:16.900 and the demand schedule. 404 00:43:16.900 --> 00:43:21.540 This revisionist view seems merely to quibble over terms. 405 00:43:21.540 --> 00:43:28.620 While Longfield did not use the term marginal utility, or break utility down into individuals 406 00:43:28.620 --> 00:43:35.700 or Groups. His doing so for demand and the degrees of demand goes most of the way towards 407 00:43:35.700 --> 00:43:42.860 a complete utility theory. Professor Moss is in danger of mistaking the term for the 408 00:43:42.860 --> 00:43:50.780 substance. It is true, however, that an unfortunate lingering Ricardianism led Longfield to endorse 409 00:43:50.780 --> 00:43:57.240 labor as a measure of value, a concept which is every bit as fallacious as the labor theory 410 00:43:57.240 --> 00:44:00.120 of Value itself. 411 00:44:00.120 --> 00:44:06.820 In Ireland, as we shall see, Mountafort Longfield, aided by Wheatley, left an important legacy 412 00:44:06.820 --> 00:44:13.780 of subjective value theory and anti-Ricardianism to his successors in the Wheatley chair at 413 00:44:13.780 --> 00:44:15.280 Dublin. 414 00:44:15.280 --> 00:44:20.780 But unfortunately, he had no influence in England, where he was ironically well known 415 00:44:20.780 --> 00:44:27.540 Known as Judge Longfield, the Irish land reformer, and unknown as an important and challenging 416 00:44:27.540 --> 00:44:34.940 economist, Senior, though closest in doctrine, knew of Longfield, but only referred to him 417 00:44:34.940 --> 00:44:41.340 once on a trivial point and displayed no signs of being influenced by him. 418 00:44:41.340 --> 00:44:46.740 This neglect was intensified by the extreme provinciality of English economics in the 419 00:44:46.740 --> 00:44:52.980 of the 19th Century. Generally, they would not deign to notice foreign writers, especially 420 00:44:52.980 --> 00:45:00.020 colonials, like Irishmen and Americans, from whom they might have profited. 421 00:45:00.020 --> 00:45:06.420 But Mountafort Longfield did succeed, at least, in establishing a utility value tradition 422 00:45:06.420 --> 00:45:16.140 in Ireland. His successor in the Wheatley Chair, Isaac Butt, 1813-1879, proudly called 423 00:45:16.140 --> 00:45:22.100 He called himself a disciple of Longfield, and advised his students to read, above all 424 00:45:22.100 --> 00:45:29.200 in economics, Longfield, Say and Senior, a worthy trio indeed. 425 00:45:29.200 --> 00:45:34.800 Like Longfield, and even more so, Butte's economic contributions were confined to the 426 00:45:34.800 --> 00:45:43.280 1836 to 1840 term of his weighty chair, his most important publications, Introductory 427 00:45:43.280 --> 00:45:52.040 Theory Lecture, 1837, and Rent, Profits and Labor, 1838, consisting of lectures delivered 428 00:45:52.040 --> 00:45:54.000 at Trinity. 429 00:45:54.000 --> 00:46:00.640 As we shall see below, Butt's main contribution was generalizing Longfield's marginal productivity 430 00:46:00.640 --> 00:46:08.520 theory of factor pricing and integrating Say's utility analysis with that theory. 431 00:46:08.520 --> 00:46:16.080 in utility theory proper, but corrected Longfield's Smith-like error in referring to consumption 432 00:46:16.080 --> 00:46:23.720 per se as unproductive, but also noted that the labor theory of value might be in a sense 433 00:46:23.720 --> 00:46:31.520 applicable if labor were the only scarce resource, and if, moreover, it were homogeneous and 434 00:46:31.520 --> 00:46:39.880 costlessly mobile between industries. But such conditions are, of course, impossible. 435 00:46:39.880 --> 00:46:46.640 Isaac Butt began as a precocious classical scholar and translator of Virgil. He was named 436 00:46:46.640 --> 00:46:52.400 to the Wheatley Chair at the early age of twenty-three, and while teaching there he took 437 00:46:52.400 --> 00:46:59.680 his bar examinations. After his term was over, Butt became an eminent attorney and soon became 438 00:46:59.680 --> 00:47:12.680 Isaac Butt denounced British policy during the Irish Famine and went on to become a famous and hard-hitting advocate of Irish Home Rule. 439 00:47:12.680 --> 00:47:21.680 Butt defended leaders of the Irish Rising of 1848 in court, as he did the Fenian rebels in the late 1860s. 440 00:47:21.680 --> 00:47:28.680 in the 1960s. Butt was also the founder, leader and chief organizer of the Home Rule Party, 441 00:47:28.680 --> 00:47:34.920 serving for a while in Parliament. His published writings after his Trinity period dealt with 442 00:47:34.920 --> 00:47:42.480 the Irish land question, where Butt advocated land reform on behalf of the Irish tenentry. 443 00:47:42.480 --> 00:47:48.360 As a tenants advocate, Butt took the poorly paid side of these legal disputes, and hence 444 00:47:48.360 --> 00:47:55.640 was never well off and was often deeply in debt. His main publications on the Irish question were 445 00:47:55.640 --> 00:48:02.920 A Voice for Ireland, The Famine in the Land, What Has Been Done and What Is to Be Done, 1847, 446 00:48:03.480 --> 00:48:07.880 and The Irish People and the Irish Land, 1867. 447 00:48:09.720 --> 00:48:17.480 Isaac Butt's successor in the Wheatley Chair, James Anthony Lawson, 1817-1887, 448 00:48:17.480 --> 00:48:23.200 Lawson was also an attorney involved with the Irish Question, but he took the opposing route 449 00:48:23.200 --> 00:48:30.040 to but, becoming a stern advocate of British law and order and suppression of his rebellious 450 00:48:30.040 --> 00:48:32.040 countrymen. 451 00:48:32.040 --> 00:48:38.920 Lawson also became the holder of the political economy chair at a remarkably early age, 24, 452 00:48:38.920 --> 00:48:44.520 serving the full term from 1841 to 1846. 453 00:48:44.520 --> 00:48:49.780 Lawson entered parliament and rose to become solicitor general and then attorney general 454 00:48:49.780 --> 00:48:56.120 for Ireland, becoming a judge of the common pleas in 1868. 455 00:48:56.120 --> 00:49:00.520 There he meted out punishment for land rebels and Fenians. 456 00:49:00.520 --> 00:49:06.640 While Richard Cantillon remains as the only possibly murdered man in history of economic 457 00:49:06.640 --> 00:49:22.200 Lawson's productivity in economics followed the same restricted path as that of his predecessors. 458 00:49:22.200 --> 00:49:29.400 His only published book was his Five Lectures on Political Economy, 1844, consisting of 459 00:49:29.400 --> 00:49:32.120 some of his Trinity lectures. 460 00:49:32.120 --> 00:49:37.500 In later years he occasionally printed some of his lectures on legal topics, the best 461 00:49:37.500 --> 00:49:43.280 known being on mercantile law in 1855. 462 00:49:43.280 --> 00:49:49.380 Unfortunately the series of Lawson's lectures on value have been lost, his only published 463 00:49:49.380 --> 00:49:55.420 reference to them being contained in a brief appendix to his five lectures. 464 00:49:55.420 --> 00:50:01.840 We know enough, however, to see that Lawson was decidedly in the Trinity utility tradition, 465 00:50:01.840 --> 00:50:06.280 and even made a distinguished contribution to that doctrine. 466 00:50:06.280 --> 00:50:13.080 Thus Lawson declared that it was subjective utility and utility alone that determined 467 00:50:13.080 --> 00:50:16.120 the price of all goods. 468 00:50:16.120 --> 00:50:22.680 Lawson declared that it is a proposition always true and of universal application that the 469 00:50:22.680 --> 00:50:30.420 exchangeable value of all articles depends upon their utility, that is, upon their power 470 00:50:30.420 --> 00:50:34.900 or to gratify the wants and wishes of man. 471 00:50:34.900 --> 00:50:41.020 All other attempted explanations of value he saw as only partial. 472 00:50:41.020 --> 00:50:48.340 Demand and supply, for example, can only influence price by way of their effect on utility. 473 00:50:48.340 --> 00:50:54.500 In dealing with the effect of an increase of supply, Lawson arrived flatly and notably 474 00:50:54.500 --> 00:50:57.780 at the law of diminishing marginal utility. 475 00:50:57.780 --> 00:51:24.780 Thus, if someone's supply of a good increased, this will generally diminish its utility to him, or the degree in which he desires its possession, for as our particular desires are capable of being satisfied, it is obvious that we may have more of an article than we wish to use, therefore retaining the possession of that surplus is less desirable to us. 476 00:51:24.780 --> 00:51:37.780 When coming to the cost of production theory of value, Lawson pointed out that the utility of a product and not its cost determines how much anyone will pay for it. 477 00:51:37.780 --> 00:51:45.780 While price may sometimes equal cost of production, this does not mean that cost determines the price. 478 00:51:45.780 --> 00:51:46.780 Studies. 479 00:51:46.780 --> 00:51:53.740 On the contrary, the coinciding of cost and price, Lawson added, can only come about through 480 00:51:53.740 --> 00:51:59.980 the medium of a change in supply, and when this cannot be brought about, there is no 481 00:51:59.980 --> 00:52:04.140 such coincidence and no tendency toward it. 482 00:52:04.140 --> 00:52:09.100 In that way, Lawson arrived at Stanley Jevons' newly hacked book. 483 00:52:09.100 --> 00:52:16.020 In his five lectures Lawson also developed the Wakelian idea of economics as catallactics, 484 00:52:16.020 --> 00:52:19.100 as the study of exchanging man. 485 00:52:19.100 --> 00:52:24.600 In his first lecture Lawson declared that economics views man in connection with his 486 00:52:24.600 --> 00:52:30.700 fellow man, having reference solely to those relations which are the consequences of a 487 00:52:30.700 --> 00:52:38.740 particular act to which his nature leads him, namely the act of making exchange. 488 00:52:38.740 --> 00:52:46.220 In his second lecture, Lawson fails of political economy as the study of wealth. 489 00:52:46.220 --> 00:52:54.460 The next holder of the Wheatley Chair, William Nielsen Hancock, 1820-1888, a student of Wheatley 490 00:52:54.460 --> 00:53:02.780 at Oxford, taught at Trinity from 1846 to 1851 and was also an attorney. 491 00:53:02.780 --> 00:53:08.880 He was a particularly scholarly lawyer, and in the last two years of his trinity term, 492 00:53:08.880 --> 00:53:16.780 he simultaneously held the chairs of Jurisprudence and Political Economy at the new Queen's College, 493 00:53:16.780 --> 00:53:22.880 Belfast. Afterwards, Hancock was a secretary to many government commissions on land and 494 00:53:22.880 --> 00:53:29.780 education matters, and held posts as court clerk, ending his career as clerk of the Crown 495 00:53:29.780 --> 00:53:32.620 in Dublin. 496 00:53:32.620 --> 00:53:39.420 He was the principal founder of the Statistical Society of Ireland in 1847 and the Social 497 00:53:39.420 --> 00:53:44.460 Inquiry Society of Belfast four years later. 498 00:53:44.460 --> 00:53:50.060 In contrast to the other Trinity chairholders, Hancock was interested in statistics and 499 00:53:50.060 --> 00:53:53.620 impurity too, with a first in mathematics. 500 00:53:53.620 --> 00:53:59.060 He published a host of articles and pamphlets on empirical questions. 501 00:53:59.060 --> 00:54:05.060 Lawell dealt, almost inevitably, with the Irish land question, where, like Longfield 502 00:54:05.060 --> 00:54:11.420 and Butt, but unlike Lawson, he championed the rights of the Irish tenantry and deplored 503 00:54:11.420 --> 00:54:17.620 the effect upon their condition of the British imposed system of land tenure. 504 00:54:17.620 --> 00:54:25.860 For example, the Tenant Right of Ulster, 1845, Impediments to the Prosperity of Ireland, 505 00:54:25.860 --> 00:54:32.620 1850 and Two Reports for the Irish Government on the History of the Landlord and Tenant 506 00:54:32.620 --> 00:54:38.780 Question in Ireland, 1859 and 1866. 507 00:54:38.780 --> 00:54:44.260 Other pamphlets dealt with taxation and local government, in which he advocated a single 508 00:54:44.260 --> 00:54:49.140 tax on income, including the inheritance of wealth. 509 00:54:49.140 --> 00:54:55.820 A third group of articles advocated stricter control and supervision of the savings banks. 510 00:54:55.820 --> 00:55:01.780 Hancock's statistical work was done under the influence and guidance of Thomas Larkham, 511 00:55:01.780 --> 00:55:08.480 a land surveyor and statistician who filled many government posts, becoming undersecretary 512 00:55:08.480 --> 00:55:12.100 for Ireland in the 1850s. 513 00:55:12.100 --> 00:55:17.980 While better known for applied economics, Hancock did publish a valuable theoretical 514 00:55:17.980 --> 00:55:47.980 Work, 1848-1849 515 00:55:47.980 --> 00:55:50.700 where the exchange takes place. 516 00:55:50.700 --> 00:55:58.060 He proposed then to use the word price exclusively instead of exchange value. 517 00:55:58.060 --> 00:56:04.780 Price furthermore can change either from the side of things or from the side of money. 518 00:56:04.780 --> 00:56:10.980 Treating the former, he notes that such changes can only take place as a result of one or 519 00:56:10.980 --> 00:56:14.180 both of the following causes. 520 00:56:14.180 --> 00:56:21.300 Whether a change in the degree in which its possession is desired, or in its desirability, 521 00:56:21.300 --> 00:56:28.020 or a change in the force of the causes by which its supply is limited, or in other words, 522 00:56:28.020 --> 00:56:34.980 by which it is made scarce, turning to demand, Hancock added that the degree in which the 523 00:56:34.980 --> 00:56:41.560 possession of a commodity is desired is measured by the number of persons able and willing 524 00:56:41.560 --> 00:56:46.080 Banking to Purchase at Each Amount of Price. 525 00:56:46.080 --> 00:56:53.360 Hancock's utility or quasi-marginal utility analysis emphasized a slightly different aspect 526 00:56:53.360 --> 00:56:59.680 than did that of his predecessors, namely another aspect of what we would now call the 527 00:56:59.680 --> 00:57:06.760 falling demand curve, for he noted that it is observed that for commodities in general 528 00:57:06.760 --> 00:57:13.080 Their desirability increases very rapidly as their prices fall. 529 00:57:13.080 --> 00:57:21.120 On supply Hancock again stressed limitations of supply rather than cost, and the limitations 530 00:57:21.120 --> 00:57:28.900 or scarcities of supply are dependent on the scarcities of the various factors of production. 531 00:57:28.900 --> 00:57:35.120 He implied that the returns to these factors is a question of their prices, and that any 532 00:57:35.120 --> 00:57:41.600 Any explanation of the prices of the factors must treat them uniformly, in accordance with 533 00:57:41.600 --> 00:57:48.880 the influences upon their demand and supply, that is, by the application of the laws already 534 00:57:48.880 --> 00:57:53.160 stated with regard to other prices. 535 00:57:53.160 --> 00:57:59.720 But while Hancock was clearly in the Trinity utility tradition, we see already a falling 536 00:57:59.720 --> 00:58:06.600 Going Back, a Loss of Interest and a Greater Vagueness in the Discussion of Value, or indeed 537 00:58:06.600 --> 00:58:09.120 of Theory in General. 538 00:58:09.120 --> 00:58:15.440 And indeed, William Nielsen Hancock was destined to be the last of the distinguished line of 539 00:58:15.440 --> 00:58:19.840 Irish Subjective Utility Theorists at Trinity College.