Irwin Collier at Economics in the Rear-View Mirror continues to provide treasures from the archives. Recently he posted material from Milton Friedman's student days. It is fascinating to look at what Viner expected his students to read for his class.
[Handwritten notes by Milton Friedman]
Assignments given by Viner in 301, 1932
Marshall Bk III ch 3 + 4; Bk V ch 1 + 2
[Alfred Marshall, Principles of Economics (London: Macmillan and Co. 8th ed. 1920).
Book III: On wants and their satisfaction.
Chapter 3: Gradations of consumers’ demand;
Chapter 4: The elasticity of wants.
Book V: General relations of demand, supply and value.
Chapter 1: Introductory. On markets;
Chapter 2: Temporary equilibrium of demand and supply.]
Schultz Meaning of st[atistical] de[mand] cur[ves] pp 1-10; 25-41.
[Henry Schultz. Statistical Laws of Demand and Supply with Special Application to Sugar. Chicago: University of Chicago Press. 1928. 118 pages]
Mars[hall] Bk V ch 3, 4, 5, 12; App H
[Book V: General relations of demand, supply and value.
Chapter 3: Equilibrium of normal demand and supply;
Chapter 4: The investment and distribution of resources;
Chapter 5: Equilibrium of normal demand and supply, cont., with reference to long and short periods;
Chapter 12: Equilibrium of normal demand and supply, cont., with reference to the law of increasing returns.
Appendix H: Limitations of the use of statical assumptions in regard to increasing return.]
Viner Cost Curves […]
[…and Supply Curves, Zeitschrift für Nationalökonomie. Bd. 3, H. 1 (1931), pp. 23-46]
Cunynghame “Geometrical Political Economy”, ch. 3
[Henry H. Cunynghame. A Geometrical Political Economy: Being an Elementary Treatise on the Method of Explaining Some of the Theories of Pure Economic Science by Means of Diagrams, Oxford at the Clarendon Press. 1904.
Chapter 3: Demand curve.]
Smart, Introduction to theory of value pp. 64-83
[Smart, William (1891). An Introduction to the Theory of Value on the Lines of Menger, Wieser, and Böhm-Bawerk. London and New York, Macmillan and Co. 1891.
Chapter 12: Cost of production;
Chapter 13: From marginal products to cost of production;
Chapter 14: From cost of production to product;
“Ultimate standard of value”, Annals of Am[erican] Academy Sept. [sic] 1894
[Eugen von Böhm-Bawerk. The ultimate standard of value. American Academy of Political and Social Science, Philadelphia. Publications, no. 128. June, 1894, 60 p.]
“One word more on ult. st. of v. [ultimate standard of value] E.J. Dec. 1894
[Eugen von Böhm-Bawerk. One word more on the ultimate standard of value. Economic Journal, Vol. 4, No. 16 (Dec., 1894), pp. 719-725.]
Marshall Bk V, ch 6; Bk V, ch 14
[Book V, ch 6: Joint and composite demand. Joint and composite supply.
Book V, ch 14: The theory of monopolies.]
Viner JPE. 1925 pp 107-111 (objective test of comp.[etitive] price appl[ied] to cem[ent] ind[ustry])
[Jacob Viner, Objective tests of competitive price applied to the cement industry. Journal of Political Economy, Vol. 33, No. 1 (Feb., 1925), pp. 107-111.]
J.S.Mill “Outline of Pol. Economy” Bk II, Ch 11, sec 1; Bk I, ch VI, sec 1
[Note: Outline of Political Economy is the title of Nassau Senior’s book.
John Stuart Mill, The Collected Works of John Stuart Mill, Volume II – The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II), ed. John M. Robson, introduction by V.W. Bladen (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1965).
Book II, ch XI, sec. 1: Distribution. Of wages.
Book I, ch VI, sec. 1: Production. On circulating and fixed capital. ]
Henry George, “Progress + Poverty” Bk I, ch 1,3,4
[Henry George, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth, The Remedy (Garden City, NY: Doubleday, Page, & Co. 1912).
Book I: Wages and Capital.
Chapter 1: The current doctrine of wages–its insufficiency;
Chapter 3: Wages not drawn from capital, but produced by labor;
Chapter 4: The maintenance of laborers not drawn from capital.]
F.W. Taussig, Principles, vol II, ch 39, 51
[Frank W. Taussig, Principles of Economics. 2nd revised edition. 2 vols. (New York: Macmillan). 1915. Note: a later 3rd revised edition from 1921 has a chapter 51 “Great fortunes” that does not appear as good a fit to this course’s content, so I conclude the reference is to the second edition.
Chapter 39: Interest, cont. The equilibrium of demand and supply;
Chapter 51: General wages.]
J.B. Clark “Dist[ribution] of Wealth”, ch 1, 7, 8, + Preface
[John Bates Clark, The Distribution of Wealth: A Theory of Wages, Interest and Profits (New York: Macmillan). 1899.
Chapter I: Issues That depend on Distribution;
Chapter VII: Wages in a Static State, the Specific Product of Labor;
Chapter VIII: How the Specific Product of Labor may be Distinguished.]
F.A. Walker, Political Economy P[reface] + IV, ch 4,5,8 + V [sic, should be VI], sec 5
[Francis Amasa Walker, Political Economy (London: Macmillan) 3rd revised and enlarged edition. 1892.
Part IV: Distribution.
Chapter 4: Profits;
Chapter 5: Wages;
Chapter 8: The reaction of distribution upon production.
Part VI: Some applications of economic principles.
Section V: The doctrine of the wage-fund.]
A. Smith Bk I, ch 10
[Adam Smith An Inquiry into the Naature and Causes of the Wealth of Nations, Edwin Cannan, 3d. London: Methuen & Co., Ltd. 5th edition, 1904.
Book I, Chapter X: Of wages and profit in the different employments of labour and stock.]
J.S. Mill Bk II, ch 14
[Book II, ch 14: Distribution. Of the differences of wages in different employments.]
Cairnes “Polit. Econ”, P[reface] + I, ch 3 [art.] 4,5
[J.E. Cairnes. Some Leading Principles of Political Economy Newly Expounded. New York: Harper & Brothers, Publishers. 1874.
Part I: Value.
Chapter 3: Normal value]
Taussig Principles, ch 47
[Chapter 47: Differences of wages. Social stratification.]
J. B. Clark Ch 9, 13
[Chapter IX: Capital and Capital-Goods Contrasted;
Chapter XIII: The Products of Labor and Capital, as Measured by the Formula of Rent]
Böhm Bawerk Bk 2, ch 1-5; Bk 5, ch 1-4; Bk 6, ch 1,2,4,5,6; Bk 7, ch 1,2
[Book II: Capital as instrument of production.
Chapter 1: Introductory;
Chapter 2: Capitalist production;
Chapter 3: Historical development of the conception;
Chapter 4: The true conception of capital;
Chapter 5: The competing conceptions of capital.
Book V: Present and future.
Chapter 1: Present and future in economic life;
Chapter 2: Differences in want and provision for want;
Chapter 3: Unerestimate of the future;
Chapter 4: The technical superiority of present goods.
Book VI: The source of interest.
Chapter 1: The loan and loan interest
Chapter 2: The profit of capitalist undertaking. Principles of explanation.
Chapter 4: The profit of capitalist undertaking. The labour market;
Chapter 5: The profit of capitalist undertaking. The general subsistence market;
Chapter 6: The profit of capitalist undertaking. The general subsistence market (continued).
Book VII: The rate of interest.
Chapter 1: The rate in isolated exchange;
Chapter 2: The rate in market transactions.]
Marshall Bk VI, ch IX
[Book VI: The distribution of the national income.
Chapter 9: Rent of land.]
Ogilvie Marshall on Rent Econ J. 1930
[F.W. Ogilvie. Marshall on Rent. Economic Journal 40 (March) 1930: 1-24]
J.B. Clark ch 23
[Chapter XXIII: The Relation of All Rents to Value and Thus to Group Distribution]
Source: Hoover Institution Archives, Milton Friedman Papers Box 5, Folder 12 (Student years)
[typed list of reading assignments]
Assignments in Viner’s Economics 301
(In order of assignment)
Marshall, Bk III, ch. 3, 4; Bk V, ch. 1, 2
Böhm-Bawerk, Positive Theory of Capital, Bk IV, ch. 4
Schultz, Meaning of Statistical Demand Curves, pp. 1-10, 25-41.
Marshall, Bk. V, ch 3, 4, 5, 12; App. H
Viner, Cost Curves [and Supply Curves, Zeitschrift für Nationalökonomie. Bd. 3, H. 1 (1931), pp. 23-46]
Cunynghame, Geometrical Political Economy, Ch. 3
Smart, Introduction to the Theory of Val., pp. 64-83
B. B. [Böhm-Bawerk], Ultim. Stand. of Val., Ann. of Am. Ac., Sept. 1894
One word More on Ult. S. of V., Econ. Jour., Dec 1894
Marshall, Bk. V, ch. 6; Bk. V, ch. 14
Viner, Objective Tests of Comp. Pr. appl. to the Cem. Ind. JPE, ‘25
J.S. Mill, Outline of Pol Ec. [sic, Principles of Political Economy], Bk II, ch. 11, sec. 1; Bk I, ch. 6 sec. 1
Henry George, Progress and Poverty, Bk I, ch. 1, 3, 4.
F. W. Taussig, Principles, Vol II, ch 39, 51.
J. B. Clark, Distr. of Wealth, ch. 1, 7, 8, preface.
F. A. Walker, Pol. Ec., Part IV, ch. 4, 5. Part VI, Sec. 5
Adam Smith, Bk. I, ch 10
J.S. Mill, Bk II, ch. 14
Cairnes, Pol. Ec., Part I, ch. 3, arts. 4, 5.
Taussig, ch. 47
J. B. Clark, ch. 9, 13
B.B. [Böhm Bawerk], Bk II, ch 1-5; Bk V, ch 1-4; Bk. VI, ch. 1, 2,4,5,6; Bk. VII, ch. 1,2.
Marshall, Bk. VI, ch. 9
Ogilvie, Marshall on Rent, Econ. Journ., March, 1930
J. B. Clark, ch. 23
Source: Hoover Institution Archives, Milton Friedman Papers Box 115, Folder 13 (Class Exams circa 1932-1938)
Image Source: University of Chicago Photographic Archive, apf1-08490, Special Collections Research Center, University of Chicago Library.
Look how much Bohm-Bawerk was on that reading list. In the Buchanan archives, one can find a similar set of notes -- from 1946 -- by Buchanan and the typed reading list that was expected of all PhD students at Chicago. Not only is Bohm-Bawerk still a presence in the common core of theory, but so was Wicksell, Wicksteed, Mises and Hayek.
Given the exposure to these ideas that Friedman had as a student, and Buchanan had as a student, it is puzzling as to the opposite reaction both had to grappling with Austrian ideas about subjectivism, the economic interaction process, the price system and even industrial fluctuations. Friedman as a diligent student was required to read through Bohm-Bawerk's capital and interest theory as well as Bohm-Bawerk's value and price theory presentations. So how could Hayek's presentation of array of relative prices impinging on the arrangement of productive assets in an economy present any sort of mystery to him? As Buchanan pointed out in his essay "On Hayek", which was written in 1979, but we are publishing in a forthcoming issue of the RAE, Hayek's theory of the trade cycle was a microeconomic theory, a price theoretic theory, an economic theory worthy of that name. There are of course points of agreement and disagreement, but there is no denying it is a relative price theory story, and it should not be mysterious to any trained Chicago price theory economist. It makes much more sense that the theory should be viewed as mystical to a Keynesian economist --- if the price system is broken, then you cannot look to the price system for the explanation or the solution. Thus, as Keynes put it, Hayek's Prices and Production was "an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam ..." Compare that to Armen Alchian's discussion of Prices and Production in his interview with Hayek, and how important Alchian thought the emphasis on relative prices was for economic understanding.
So why would Friedman seem to be more in-line with Keynes than with Alchian and Buchanan? I think one possible explanation is that Friedman's framework of analysis shifted from his student days and from his teaching of price theory to his work as a macroeconomists and monetary theorist. In short, during the critical decades of his development as the major intellectual opponent to the Keynesian dominance in the economics profession, Friedman was a critic from the inside of that system. He was for all practical purposes a Keynesian, but one that argued that the system had different underlying empirical relationships with regard to consumption behavior, public and private investment, and monetary policy. In a document recently uncovered at the Buchanan archives, there is a letter from Hayek to Arthur Seldon at IEA dated May 13, 1985 in which Hayek bemoans the fact once again that he didn't review Keynes's General Theory, but then also adds that he regrets not having gone on the offense attack of Friedman. "Milton," Hayek writes, "was for a time a Keynesian" and was one of the primary reasons why the "whole macroeconomic nonsense" grew rather than was abandoned as it should have been. He hesitated to write up his critique because he didn't want to see MPS divided into a Hayekian wing and a Friedmanite wing, and thus he avoided stating his views too bluntly, but that a "good detailed critical analysis of macroeconomics would be very desirable" and then he mentions Lachmann and Hutt as potential go-to sources, but fears their advancing age might not be conducive to such an endeavor.
Food for thought for sure.