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Value and Capital: Fifty Years Later.

Edited by Lionel W. McKenzie and Stefano Zamagni. New York: New York University Press, 1991. Pp. xxxvi, 490. $95.00.

In his 1940 OJE review of the first edition of John Hick's Value and Capital, Abba Lerner (then at Columbia University) remarked:

To say that Professor Hicks' "Value and Capital" is the

most important publication for economic theory since

the appearance of Mr. Keynes' "General Theory of

Employment Interest and Money" does not quite do it

justice. For not only do some of the important "Keynesian"

results, reached independently and earlier by

Professor Hicks, appear in their final form in this volume,

but the elegance and precision with which

fundamental notions are presented and the astonishingly simple

way in which the intricate argument unfolds itself

make it certain that the book will remain a classic for

students to read and re-read long after Mr. Keynes'

book has been rendered obsolete. . . .

Other reviewers, most notably Oskar Morganstern in the 1941 JPE, were less kind (cf. the comment in the first paragraph of the editorial introduction to the present volume, p. xviii); but subsequent events show that Lerner's assessment was prescient. Indeed, as perusal of any modern economics text or treatise will reveal, no writer of this century has done more than John Hicks to shape contemporary modes of teaching and writing. So it is fitting that, nearly fifty years after publication of Hicks's great classic--the book that painlessly introduced English-speaking economists to the theretofore largely ignored general equilibrium writings of the Lausanne School--two former students of Hicks should organize a conference to celebrate its Fiftieth Anniversary.

The volume under review, a major product of that conference, consists of fifteen commissioned papers and eleven related comments, together with a short postscript by Hicks (who, at nearly 85 years of age, attended the conference and (so the editors inform us) sat through and commented on most of the presentations). The volume is thus a testimonial, or seems to have been so intended, to the "flowering of economic theory" (xvii) that followed post-World War II publication [1946] of the second edition of Value and Capital. On close inspection, however, one finds it difficult to regard the contributions in this volume as "testimonials" to ideas set forth in Value and Capital.

When Hicks originally wrote Value and Capital, it was still possible seriously to view general equilibrium theory as broadly descriptive of actual market economies. Indeed, Hicks originally conceived himself to be writing a book that would provide "a technique for studying the interrelations of markets." Not until some thirty years later (in lectures first delivered at the London School of Economics, later published in revised form as Critical Essays in Monetary Theory, 1967) did Hicks explicitly acknowledge [pp. 6 ff.] that the costless coordination presumptions underlying the Walrasian and related conceptual schemes precluded logical recognition of separate markets or of intermediaries of any other kind except the deus ex machina now usually referred to as the "auctioneer" (or, by analogy with Maxwell's famous thermodynamical "being", Walras' "demon") and so ruled out economic analysis of the logistics of exchange in ongoing systems. That message apparently had still to reach the organizers and contributors to this volume, for here one finds no evidence of critical understanding of any of the conceptual shortcomings of Value and Capital much less of related flaws in such subsequent offshoots as the Arrow-Debreu-Mckenzie, Patinkin, and Grandmont models.

The individual papers in the volume are concisely and accurately summarized in the editors "Introduction" [pp. xviii-xxix], which I strongly recommend to readers who are (understandably) averse to immersion in the main waters of the book. But neither in the introduction, nor elsewhere, is any attempt made to assign Value and Capital a place in the history of economic thought, to assess its influence on post-1950 writings, or to suggest where the general equilibrium tradition to which Value and Capital belongs may now be heading. So the book as a whole is a great disappointment. In a volume intended to celebrate the fiftieth anniversary of a classic book, and, more particularly, a book whose still living author was on hand to share the occasion, one would expect to find at least one paper that did Hicks the honor of treating his work as worthy of the kind of hard-hitting criticism that he himself often directed at it during the last forty years of his life.

The volume contains no such paper. Even the concluding, and outwardly critical papers on "Intertemporal General Equilibrium," one by Radner, the other by Duffie, are curiously stale and uninstructive. From these samples, and from similar evidence provided by other papers in the volume, one might suggest that what the editors in the Preface describe as a "flowering" of economic theory could more accurately be characterized as a "going to seed." But the plain truth is that the present volume cannot be regarded as a source of reliable evidence on this or any other deep issue of contemporary economics. So I do not recommend the book, or any of the individual papers in it, as desirable reading for students or professionals. At a price of $95.00, one may even question whether the book deserves shelf space in libraries other than those that make a virtue of "possessing everything." Robert W. Clower University of South Carolina
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Author:Clower, Robert W.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Apr 1, 1992
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