Categories
Month: September 2015
A brief statement that well describes the System of instruction and research in the political sciences at Columbia by the founder of its School of Political Science at the dawn of formal graduate education in economics (as well as history and public law) in the United States. College through the Junior Year was regarded as equivalent to the Gymnasium training, i.e. pre-University, in the German system. The Senior year of undergraduate education marked the transition to University study. Cf. the informational brochure for the academic year 1882-83.
_____________________
THE STUDY OF THE POLITICAL SCIENCES IN COLUMBIA COLLEGE.
[1882]
John W. Burgess
During the last half decade an awakening of interest in the study of the political sciences has manifested itself throughout the public at large, such as no previous generation since the beginning of our national existence has experienced. The conviction is now already deep and general that, unless a sounder political wisdom and a better political practice be attained, the republican system may become but a form, and republican institutions but a deception. It is then hardly a question any more as to whether we need a higher political education. The common consciousness of the nation is already beyond that point, and is now occupied with the invention of the means and methods of its realization. Of course, chief among these means should stand our institutions of superior learning — our colleges and universities. The nation has a right to expect of and demand from these that the youth whom they undertake to train and develop shall be furnished at least with the elements of the political sciences with their literature and with the methods of a sound political logic. Many of them have long endeavored to accomplish something of this, with varying success, while some of them have recently put forth more than ordinary efforts to meet and fulfill in a higher degree this great public duty. In response to a most kindly and appreciative request from the editor of the “International,” we have undertaken to describe briefly the system of investigation and instruction in this sphere which New York’s oldest institution of learning — Columbia College — has established and is now essaying to perfect.
This system consists of four distinct and well-defined parts, viz.: The Undergraduate Department of History and Political Science, The School of Political Science, The Academy of the Political Sciences, and The Library of the Political Sciences.
I. The Undergraduate Department.
The key-note of our whole system is its historical groundwork and its historical method. It is in and through history that the State has taken its origin and passed through the different phases of its development down to its present form and relations. Therefore it is in and through a sound and comprehensive study of history alone that the foundations can be laid for a true and valuable public law and political science. Theory and speculation in politics must be regulated by historic fact — must be generalized most largely from historic fact; otherwise, they are always in danger of degenerating into the “will-o’-the-wisps” of individual fancy. We begin, therefore, with the study of history, and devote the two years assigned to the department in the undergraduate course to laying the historical groundwork. Here we employ the gymnastic method and seek the accomplishment of the gymnastic purpose, viz., the daily drill by recitation, question and answer from text-books of German, French and English history and of elementary political economy, with the purpose of fixing and classifying in the memory of the student the elements of political geography, the chronology and outward frame of historic events, the biographies of historic characters, and definitions of political and economic terms. The completion of the junior year in the undergraduate curriculum marks the close of gymnastic study and preparation. The senior year in all our colleges of the first rank has become a real university year, both in the character and method of the instruction there given and employed. We therefore draw the line in our system between the Gymnasium and the University at the termination of the junior year, making the senior year of the College in these studies to correspond with the first year in the School of Political Science, and admitting to this School as candidates for its degrees all persons who have completed successfully the work of the first three years in any collegiate institution of the first rank in the United States, or an equivalent course in any foreign college, lyceum or gymnasium, or who can pass successfully examination upon all the studies of the undergraduate curriculum of this institution to the end of the junior year.
II. The School of Political Science.
This is the collective name which we give to the graduate or university courses in history, philosophy, economy, public law, jurisprudence, diplomacy and sociology. The time prescribed for the accomplishment of the work here assigned is three years, and the courses are so distributed over this period as to occupy the first year with the history of the development of the political institutions of continental Europe, the special constitutional history of England and of the United States, the history of the philosophic theories of the State, and the history of economic systems and theories; the second with the comparative constitutional law of the principal States of Europe and the United States and of the Commonwealths of the United States, and with the Roman law and the comparative jurisprudence of the modern codes derived therefrom; and the third with the comparative administrative law of the principal States of Europe and the United States and of the Commonwealths of the United States, the history of diplomacy, public international law, private international law, and economic, statistical and social science.
It will thus be seen that we begin again with the historical groundwork in the School of Political Science; but this time it is the history of institutions, the origin and development of the State through its several phases of political organization down to the modern constitutional form; that we then advance through history to the existing actual and legal relations of the State, and that we seek finally through comprehensive comparison to generalize the ultimate principles of our political philosophy, aiming thus to escape the dangers of a barren empiricism on the one side, and of a baseless speculation on the other. With the change from the Gymnasium to the University, the method of instruction changes as well as the subjects. The text-book, with its assigned lessons and daily drill upon the same, is discarded, as both cramping to the student and narrowing to the professor. We must get here nearer to sources and original material. We must go back of the treatises to the earliest documents, and learn to form from these our opinions, and to make from these our own hand-books. The professor must no longer act merely the part of the drill-master upon a given text, but of the investigator gathering and classifying original evidence upon his subjects, and generalizing therefrom his view and system; and the student must no longer be the mere gymnast, carrying his library under his arm, but he must begin to learn and apply the processes of original study, and to compare authorities upon the points treated or suggested. In a word, the university professor must instruct for the most part by lecture, imparting the results of his own labor and experience, and developing his own view and system, and the university student must verify the statements and fill up the outline by constant and comprehensive reading in a great library which shall contain the principal sources of information upon all the subjects of the different courses of study to which his attention is directed. Individuality of view, independence of judgment, and comprehensive, all-sided knowledge are the ends here sought both for instructor and instructed. Lastly, the degree conferred upon the successful completion of the work assigned in this School is the university degree of Doctor of Philosophy. The examinations leading to the attainment of the same are two-fold. The first, at the close of the first year, does not differ in character from the usual college examination for the degree of Bachelor of Arts. If successfully passed, the candidate is made a Bachelor of Philosophy. The second, at the close of the third year, is, on the other hand, a matter of far more serious import. It consists of three parts: First, a direct oral examination of each candidate upon any or all the courses pursued in the presence of the entire Faculty and by each member of the same; second, two collateral examinations, one upon the Latin language and the other upon either the German or French languages, as the candidate may elect; and, third, the examination of an original dissertation prepared by the candidate upon a subject either assigned to him by the Faculty of the School or selected by himself under their approval at least six months before the date of the examination. The candidate must furnish each member of the Faculty with a copy of his dissertation at least one month before the date of the examination, and, at the time fixed, must appear before the assembled Faculty of the School and defend his facts, his reasoning and his conclusions against the criticisms of each member of the same. If he be fairly successful through all of these ordeals, the degree of Doctor of Philosophy will be conferred upon him. If he attain a high grade of excellence in all, the degree of Doctor of Philosophy cum laude, and, if the highest be reached, then the degree of Doctor of Philosophy magna cum laude, the highest university distinction, will be accorded him.
III. The Academy of the Political Sciences.
This is a voluntary association composed of the President of the University, the Faculties of Law and Political Science, graduates of the School of Political Science and graduates of the School of Law, who have taken at least two years of the instruction in the School of Political Science or an equivalent course in some foreign university. It recruits itself annually from these same sources. Its purpose is the cultivation and development, in finest and most minute detail, of the different branches and topics of the political sciences. This organization is the central point of our whole system. Upon it depends for the most part the perpetuation and increasing usefulness of our work. Not being a transient body of students, who reach only a certain given point before they vanish from our control, but a permanent body of continually growing scholars, this association forms the productive, ever-advancing element in our system. Whatever we may be able to add to the existing stock of political knowledge will proceed from it. Each of its members assumes the obligation to produce at least one original work each year, and read the same before the association at its regular meetings, which production then becomes the property of the Academy, and may be published by it for the benefit of the public, provided a majority of the members deem it worthy of the same. From its labors the Library of the Political Sciences will receive its scientific classification by subjects, a journal of political science will be edited, and, above all, it will be the source of a true educational service, from which the Faculty of the Historical and Political Sciences may be recruited, thus providing for the continuity of our work in an ever-increasing degree of excellence, enabling us to perpetuate our own methods and traditions, to expand without limit our courses, and to diversify indefinitely our instruction without endangering its organic unity — in a word, to found a School of Political Thought in the truest and highest sense. This is the significance of the Academy — this is its office in our system.
IV. The Library of the Political Sciences.
A great library, scientifically classified and adequately served, is an indispensable part of a university. As well expect the architect merely with rule and pencil to rear a great structure as to demand of the scholar the production of literary monuments without this magazine of material. Neither will a collection merely of hand-books, textbooks, treatises and current literature suffice. These are necessary, indeed, as demonstrating how and how far authors have worked up original matter into logical form; the collection which stops there, however, may be a popular library indeed, or even a college library, but it is no university library. The prime purpose of the university library is, on the other hand, the assemblage and classification of original material in all branches of knowledge — such, for instance, in the domain of the political sciences, as the texts of constitutions, the statute books and ordinances of governments, the debates of legislative assemblies, the decisions of judicial bodies upon questions of public law, the papers of diplomatic intercourse, the texts of treaties, the reports of governmental commissions, statistical bureaus, chambers of commerce, boards of industry and agriculture and of the public health, the journals of international congresses, political conventions and academies and associations of political science, contemporary chronicles of historic facts, files of official gazettes, leading newspapers and magazines, etc., etc. It was this consideration which moved the trustees of this institution some four years since to authorize a special effort and a special appropriation of funds for the advancement of our Library of the Political Sciences. By their authority and with their aid exhaustive lists of original material in all the different branches of the political sciences were gathered from the leading publicists of the United States, England, France, Germany, Austria and Italy. A large portion of these works have already been placed within our Library, and we are steadily adding to the collection. It is with this material that we teach our students in the School of Political Science to acquaint themselves, and it is upon this material that the members of the Academy expend their labors, reducing it to scientific order and classification, and making it the basis of original work in the production of papers, monographs and treatises.
This, then, is the system of study in the political sciences at Columbia College which six years of reflection and experience have thus far matured; and, in giving this brief sketch of its main features to publication, those who have been most nearly concerned in its conception and development gladly avail themselves of the opportunity to make their most grateful acknowledgment for the support which they have felt from the sympathy of a generous and appreciative public.
Source: The International Review, Vol. XII, April 1882, pp. 346-351
Image Source: From the Columbia University, Department of History webpage: A Short History of the Department of History.
The Duke Economists’ Papers Project has a grab-bag of papers from the distinguished economic historian Earl J. Hamilton. A soul braver than myself might some day try to create order out of that chaos, but I was able to stumble upon the following early “remarks” by future Nobel-prize economist John R. Hicks, though lacking all context save the date. Perhaps a Hicks expert or an historian of economic history can identify where these remarks were given (or perhaps eventually published?). These remarks sound much like Schumpeter’s recipe for a good economist writ large to economic research. I can only say, “Hear, hear!”
________________________
RESEARCH IN ECONOMIC HISTORY
John R. Hicks
January 11, 1947
The following remarks about the desirability of encouraging research in economic history are written from the standpoint of the general economist, who is not primarily a historian. He is not interested in economic history as history, but he is interested in furthering the development of economic science in general. He is looking for the general principles governing economic behaviour, and his particular interest is the application of those principles to the modern world.
As compared with the situation in the natural sciences, the economist’s object of study is essentially a historical process, spread out in time. In practice his main preoccupation is with the advancing edge of that process (the present), and it is right and proper that this should be so, since the present is more likely than the past to have a bearing on the future, control over which is the ultimate practical object. But this preoccupation can easily go too far. The past, no less than the present, is part of the material available for study and out of which generalisations can be built up. Generalisations based upon the present alone, or the present and recent past alone, are necessarily insecure; no doubt all economic generalisations are insecure, but these are more insecure than they need be.
The relevance of economic history to economic science has greatly increased of late, in view of the recent tendencies to bring economic theory to earth and achieve a more effective marriage between theory and statistics. Econometric work based upon very short time series is statistically unsatisfactory, and cannot be used as a basis for prediction with any high degree or probability. There is thus a tendency on the part of economic statisticians to push further back into the past as a means of increasing the amount of analysable material. But such additional material cannot be securely used unless its reliability is evaluated by people who are accustomed to use historical evidence—collaboration between the trained statistician and the trained historian (a very awkward collaboration with our present academic background) is going to be urgently needed at the next stage of development of economics. Further, it is not only the material which needs checking—the use which is made of it needs checking too. As we push backwards into history, institutions change; the whole background, economic, semi-economic and non-economic, changes. One of the commonest sources of error in economic reasoning is a failure to recognise that an institutional change has made a profound difference to the working of some particular “mechanism” or standardised response pattern. We notice this most often in a failure to “keep up to date”—the “out of date” economist is he who has failed to realize that a change in institution had modified or even completely destroyed some of the reaction patterns which may have been valid enough when he was young. The opposite error has hitherto been of less importance, but there are indications that it is now becoming serious; although it will never have the practical importance of that just described, it may be a serious impediment to scientific progress. To read the events of the past against an institutional background which is not theirs, is just as wrong as to read the accounts of the present against a background which is not theirs. Unless the background is in good shape, historical statistical data cannot be used; they can only be misused.
The above is not only an argument, as might appear at first sight, for better training of economists and statisticians in economic history; it is also an argument for research in economic history. For the sorts of questions which economists and statisticians are beginning to ask of the historical material are different from the questions which the historians have been asking. The historical background which is needed is not there, to be had for the asking, in the textbooks—or the classics—of economic history; to a large extent, it is yet to be discovered by new work.
I have here one example mainly in mind, though I am sure it is not the only example—not by a long way. The “Keynesian revolution” has thrown a powerful new light on contemporary economics; just how far the light extends is an arguable matter, but that it extends some distance can hardly be questioned. Now it would be of great help in our evaluation of the current uses of the Keynesian hypotheses if we could tell how far back in history they go on being useful. If it can be shown that they are useful in the interpretation of the economic history of the nineteenth or even eighteenth centuries, it would strengthen their position as a “General Theory”; if on the other hand, it becomes apparent that we have to force the historical material to get it into a Keynesian mould, we should get an indication of the dependence of the theory on a particular institutional (and perhaps psychological) set-up, and this would hardly fail to affect our attitude towards the theory and even our use of it vis a vis the problems of to-day.
I pass on to a much wider consideration. The ascertainment of economic principles or generalisations is only a step towards the understanding of events; one may say that the object of all economic inquiry—the penultimate object, perhaps, short of the ultimate object of increasing our control over the future—is to give an intelligible and analytical account of economic and economico-social processes, both the completed processes of the past and the uncompleted processes of the present. Now in some important ways the processes of the present are more difficult to study; they are more difficult because the sheer mass of material drives us to excessive specialisation, and also because their lack of completion deprives us in another way of the advantage of seeing the processes as a whole. In historical work it is at least in principle easier to take a synoptic view; and one cannot help feeling that if a rather larger proportion of economic research was devoted to historical problems it would help to maintain better standards of “all-roundness” in the sector—undoubtedly the more important sector from a practical point of view—which is concerned with the problems of the contemporary world.
This, in my view, is the case for encouraging research in economic history But I am well aware of the main difficulty which stands in the way of such research, if it is to be the kind of research which really meets the ends which I have set down. The number of people who have the equipment. to do the work—equipment in history and economics and probably statistics as well—is at present extremely limited. Work of this sort needs a bigger equipment than more specialised work, and therefore involves a longer preparation. At present there is little incentive to undergo this long preparation, and even for those people who have strong personal inclinations for it, there are strong incentives to turn aside on the way. In all the universities of the British Isles (I speak of what I know) there are at present only five chairs of economic history—two in London, one each at Oxford, Cambridge and Manchester. Apart from these, the subject offers very few openings indeed. Thus if greater encouragement were offered, one could not expect that supply would adjust itself to demand at once; it would take time before the number of suitable people could be much increased. If however one looks round at the people who have been diverted into teaching or research in “straight” economics or “straight” history, one can not doubt that the potential supply of first-rate economic historians is quite considerable; it would take time to show itself, but it would show itself in time.
Source: Duke University. Rubenstein Library. Earl J. Hamilton papers. Box 2, Folder “Correspondence—Misc. 1930’s-1950’s and n.d.”
Here is an item to file away under the cost of computing. Henry Schultz, the young hot-shot professor for mathematical economics and statistics wanted a fully-automatic Monroe calculator with an electric motor drive (pictured above). With discounts, the calculator and stand cost $631. To get a relative price (in a hurry), I note that the nine month salary for Henry C. Simons at the rank of Lecturer was $2790, i.e. $310 per month. Thus figure that calculator-with-stand ran roughly two months of (approximately) instructor rank pay today.
Recommendation to appoint Henry C. Simons May 20, 1927: University of Chicago Archives. Office of the President, Mason Administration. Box 24, Folder 2.
_______________________
[carbon copy]
January 8, 1928
Mr. J. C. Dinsmore [Purchasing Agent]
Faculty Exchange
My dear Mr. Dinsmore:
I am enclosing a requisition against the instruction fund of the Department of Economics for $652.13 [sic] which is to cover the purchase of the following material:
1 Monroe Machine – KAA 203…$825.00
less 15% and 10%…….$631.13
1 Fowler Manson Sherman Stand (low)… 21.00
Total $651.13
Professor Henry Schultz is anxious to have these articles delivered as promptly as possible. Will you please telephone me when they arrive so that I can tell you to what room they should be delivered.
So that there will be no delay in the attached requisition being approved promptly, I quote a paragraph taken from a letter of September 24 from Mr. Woodward to me:
“I have arranged with Mr. Plimpton for you to draw on the instruction budget of the Department of Economics for the sum of $2600 in order to provide Mr. Schultz with equipment, supplies, and clerical assistance. It should be clearly understood that this arrangement is for the present year only.”
Yours very sincerely,
L. C. Marshall [chairman of the department]
LCM: GS
Source: University of Chicago Archives. Economics Department. Records & Addenda. Box 6, Folder 2.
_______________________
About the KAA model:
“Model KA from 1922 was the first Monroe calculator with an electric motor drive. The machine has an AC induction motor of about 5″ diameter mounted externally on a cast-iron bracket at the left-hand rear. The motor occupies the dead area under the extended carriage, and so requires no additional desk space. The motor rotates in one direction only at 1500RPM. The mechanism is driven through a planetary gearset, with two dog clutches operated by the Add and Subtract bars to select forward or reverse rotation. The case has been widened by an inch and a half to accommodate the control mechanisms on the left-hand side. The winding handle has been replaced with a knurled brass knob, but the crank can easily be re-fitted to operate the machine by hand.
The carriage has glass windows above the numerals, but carriage shift and register clearing are still manual. The item count knob is at the lower left of the keyboard, with an additional control lever at the upper left to silence the overflow bell.
…[The] Monroe’s head office, which was in New York City until the mid-1920s.
A fully-automatic variant (the Model KAA) was built during the mid to late 1920s. The KAA is wider again than the KA, and has a single column of “on-the-fly” multiplier keys to the left of the main keyboard.”
Source: John Wolff’s Web Museum. The Monroe Calculating Machine Company
Image Source: KAA-203 photo attributed to contribution by Helmut Siebel. See the link above.
_______________________
For a history of the company.
_______________________
An image of a representative typewriter stand made by a Chicago company (note: a bicycle manufacturer) from the antique dealer Urban Remains of Chicago.
When compared to the list of Milton Friedman’s reading assignments for Economics 300 A&B for 1948, we note that the following handwritten list of readings taken from the student notes of Norman M. Kaplan who attended both 300A and 300B during the Winter Quarter 1947 do not include the 1947 items found in the 1948 list:
Pigou, A. C., “Economic Progress in a Stable Environment,” Economica, 1947, pp. 180-90.
*Dennison, S. R., “The Problem of Bigness,” Cambridge Journal, Nov. 1947.
This leads me to conclude that we indeed have the assigned Winter Quarter readings for Friedman’s second iteration of Economics 300A and his first iteration of Economics 300B. There is much more in Kaplan’s student notes, but this is enough for one posting.
______________________________
[undated, handwritten copy by Norman M. Kaplan]
Friedman’s readings 300 A&B
F. H. Knight, “Social Econ. Organization”; “The Price System & the Econ. Process” (in The Economic Organization, pp. 1-37)
Bk III, ch. 2, 3, 4,5
Bk V, ch. 1,2,3,4,5,12, Appendix H
Bk IV, ch. 1, 2, 3
Bk V, ch 6
Bk VI, ch. 1-5 (ch. 1,2 done)
H. Schultz, Meaning of Statistical Demand Curves, pp. 1-10
E.J. Working, “What do Statistical ‘Demand Curves’ Show?”
Knight, Risk, Uncertainty, and Profit, ch 3
Hicks, J. R., Value and Capital, Part I (pp 11-37)
W. A. Wallis & M. Friedman, “Empirical Derivation of Indifference Functions” (in Lange, Studies in Math. Econ. & Econometrics, U of C Press)
A. L. Myers, Elements of Modern Economics, ch 5, 7, 8, 9
J. Robinson, Econ. of Imperfect Competition, ch 2 (in 209 notes)
J. M. Clark, Econ. of Overhead Costs, ch 9
J. Viner, “Cost Curves and Supply Curves”
E. Chamberlin, Theory of Monopolistic Competition, ch 3, secs. 1, 4, 5, 6; ch 5
R. F. Harrod, “Doctrines of Imperfect Competition”, QJE, May 1934, esp. sec. 1, pp. 442-61
J. B. Clark, Distr. of Wealth, Preface, ch 1, 7, 8, 11, 12 (in 209 notes), 13, 23
J. S. Mill, Prin of Pol Econ, Book II, ch 14
Hicks, Theory of Wages, ch 1-6 (in 209 notes)
Smith, Wealth of Nations, Bk I, ch 10
Friedman and Kuznets, Income from Independent Professional Practice,
Preface, pp. v to x,
ch 3, sec 3, pp. 81-95,
ch 4, sect 2, pp. 118-137,
app to ch. 4, sec 1 & 3, pp 142-151, 155-61
F.H. Knight, “Interest” in Ethics of Competition
Keynes, GT [General Theory], ch 11-14
Cassell, Fundamental Thoughts in Econ, ch. 1, 2,3
[____], The Theory of Social Economy, ch 4
Hicks, “Keynes & the Classics”, Econometrica, Apr 1937, pp. 147-159
Modigliani, “Liquidity Preference & the Theory of Interest & Money,” Econometrica, Jan 1944, esp. Part I, sec. 1 through 9, sec 11 through 17, part II, sec 21
Pigou, “Classical Stationary State,” Econ Journal, Dec 1943, pp. 343-51
Source: Kaplan, Norman Maurice. Papers, Box 1, Folder 8, Special Collections Research Center, University of Chicago Library
Image Source: The Mont Pelerin Society webpage “About MPS”.
Milton Friedman wasn’t the only person teaching graduate price theory at the University of Chicago in the postwar years. During the academic year 1948-49 both the Harvard-trained Lloyd A. Metzler and Milton Friedman offered parallel sessions of Economics 300 A&B during the same quarters. Both taught the course going into the early 1950s. While the overlap is significant to be sure, the differences of the two approaches, Chicago vs. Harvard, are fairly clear.
One of the advantages of consulting multiple archives is that I was able to find this Autumn 1948 reading list for Economics 300A, not in Lloyd A. Metzler’s papers at Duke but in Milton Friedman’s papers at Hoover. This list of readings does not square with Friedman’s course organization but also has no name and the course catalogue for 1948-49 does not identify Metzler. Since it matches the later years’ reading lists found in the Metzler papers, we know the nameless Economics 300A for the Autumn Quarter at the University of Chicago was taught by Metzler too.
____________________________
Economics 300A
Autumn 1948
I. The Theory of Consumer’s Choice
A. Marshall, Principles of Economics, Book III.
J. R. Hicks, Value and Capital, Chapters I – V, and appendices to these chapters.
W. S. Jevons, Theory of Political Economy, Chapters I – IV.
P. A. Samuelson, Foundations of Economic Analysis, Chapters III, V, VII.
M. Friedman [& L. J. Savage], “The Utility Analysis of Choices Involving Risk,” Journal of Political Economy, LVI (August, 1948) 279-304.
I. Fisher, “Measuring Marginal Utility,” in Economic Essays in Honor of John B. Clark (1927).
II. Production Functions and Cost Schedules
J. M. Cassels, “On the Law of Variable Proportions,” in Explorations in Economics (1936).
J. R. Hicks, Value and Capital, Chapter VI, VII, VIII, and appendices to those chapters.
J. Robinson, The Economics of Imperfect Competition, Chapter II.
P. A. Samuelson, Foundations, Chapter IV.
G. J. Stigler, The Theory of Price, Chapters VII, VIII.
III. Market Price under Perfect Competition.
J. Robinson, Economics of Imperfect Competition, Book III.
A. Marshall, Principles, Book V.
G. J. Stigler, The Theory of Price, Chapters IX, X.
IV. Monopoly and Monopolistic Competition.
J. Robinson, Economics of Imperfect Competition, Books II, IV, V, and X.
E. Chamberlin, Theory of Monopolistic Competition, IV, V, VI, VII.
V. Duopoly, Oligopoly, Bilateral Monopoly.
J. Marschak, “Neumann’s and Morgenstern’s New Approach to Static Economics,” Journal of Political Economy, LIV, (April 1946).
E. Chamberlin, Theory of Monopolistic Competition, Chapter III.
H. G. Lewis, “Some Observations on Duopoly Theory.” American Economic Review, XXXVIII (May 1948, supplement) 1-9.
O. Morgenstern, “Oligopoly, Monopolistic Competition, and the Theory of Games,” American Economic Review, XXXVIII (May 1948, supplement) 10-18.
VI. Modern Price Theory and Welfare Economics.
A. Burk (Bergson), “A Reformulation of Certain Aspects of Welfare Economics,” Quarterly Journal of Economics (1937-38).
A. C. Pigou, The Economics of Welfare (4th Edition), Part II, Chapters I – XI.
A. P. Lerner, The Economics of Control, Chapters I – XIX.
P. A. Samuelson, Foundations, Chapter VIII.
J. R. Hicks, “The Foundations of Welfare Economics,” Economic Journal XLIX (1939).
G. J. Stigler, “The New Welfare Economics,” American Economic Review, XXXIII (1943), 355-359.
Source: Hoover Institution, Milton Friedman Papers. Box 76, Folder 9 “University of Chicago Econ. 300 A”.
____________________________
Economics 300B
Major Topics and Selected Readings
Winter, 1949
Lloyd A. Metzler
The principal books to be used are as follows:
A. Marshall, Principles of Economics, eighth edition, reprinted 1947.
J. R. Hicks, Value and Capital, second edition, 1946.
B. Haley and W. Fellner, editors, Readings in the Theory of Income Distribution, reprinted 1947.
G. J. Stigler, Production and Distribution Theories, 1941.
I. Production Functions and the Doctrine of Marginal Productivity
B. Haley and W. Fellner, Readings, Chapters 5, 6, 7, 11.
Stigler, Production and Distribution Theories.
P. H. Douglas, “Are There Laws of Production?”, American Economic Review, XXXVIII (1948) 1-41.
II. The Theory of Wages
B. Haley and W. Fellner, Readings, Chapters 13, 14, 16, 17, 19.
J. R. Hicks, The Theory of Wages, 1932.
R. A. Lester, “Shortcomings of Marginal Analysis for Wage-Employment Problems”, American Economic Review, 1946.
F. Machlup, “Marginal Analysis and Empirical Research”, American Economic Review, 1946.
G. J. Stigler, “The Economics of Minimum Wage Legislation,” American Economic Review, 1946.
III. Capital and Interest
E. Böhm-Bawerk, The Positive Theory of Capital, 1891.
I. Fisher, The Theory of Interest, 1930.
W. Fellner and B. Haley, Readings, Chapters 20, 21, 22, 23,24, 26.
J. M. Keynes, General Theory of Employment, Interest and Money, Book IV.
A. Marshall, Principles, the relevant chapters in Books IV and VI.
J. R. Hicks, Value and Capital, Parts III and IV.
IV. Inter-relations of Wages, Interest, and Profits.
F. H. Knight, Risk, Uncertainty and Profits.
J. A. Schumpeter, The Theory of Economic Development.
O. Lange, Price Flexibility and Employment.
K. Wicksell, Interest and Prices.
K. Wicksell, Lectures on Political Economy, Vol. I, Part 2.
Source: Duke University David M. Rubenstein Rare Book & Manuscript Library. Lloyd Appleton Metzler Papers, Box 9, Folder: “Reading Lists 300 A & B — 302”.
Source Image: “From family album, taken while Lloyd Metzler was a student at Harvard.”
“Lloyd A. Metzler” by Margiemetz – Own work. Licensed under CC BY-SA 3.0 via Commons.
In the previous posting I provided transcriptions of Milton Friedman’s handwritten record of classes for the first time he offered the first quarter of a two-quarter sequence in price theory together with a handout and examination questions. Unfortunately I was unable to find a comparable record of classes for the second quarter of the sequence, Economics 300B for the Winter Quarter 1947. Below we have a draft of assigned and recommended readings for the following year. This can be compared to the readings for the price theory course Friedman taught at Columbia in 1939-40.
Interesting to note is the double appearance of Keynesian economics, something one might have not expected in a price theory course, once for the determination of interest rates (after dealing with the theory of wages) and later (apparently) to illustrate general equilibrium.
The October 1951 version of the Reading Assignments for Economics 300A and B is printed as an appendix to J. Daniel Hammond’s “The development of post-war Chicago price theory” in The Elgar Companion to Chicago School Economics, edited by Ross B. Emmett, pp. 7-24. It is nearly identical to the handwritten draft of reading assignments I have transcribed here from 1948. This Hammond article offers much context and is very much worth consulting.
______________________________
September, 1948
Economics 300 A&B
Reading Assignments by M. Friedman
(Notes:
- It is assumed students are familiar with material equivalent to that contained in George Stigler, Theory of Price, or Kenneth Boulding, Economic Analysis.
- Readings marked with asterisk (*) are recommended, not required.)
Knight, F. H., The Economic Organization, esp. pp. 1-37.
Keynes, J. N., The Scope and Method of Political Economy, ch. I and II, pp. 1-83.
Marshall, Alfred, Principles of Economics, Bk III, ch 2, 3, 4; Bk V, ch 1,2.
Schultz, Henry, The Meaning of Statistical Demand Curves, pp. 1-10.
Working, E. J. “What do Statistical ‘Demand Curves’ Show?”
Knight, F. H. Risk, Uncertainty, and Profit, ch 3.
*Lange, O., “On the Determinateness of the Utility Function”, Review of Economic Studies, Vol I (1933-34), pp. 218 ff.
*Allen, R.G.D., “The Nature of Indifference Curves,” Ibid, pp 110 ff.
Hicks, J. R., Value and Capital, Part I (pp 11-52).
*Wallis, W. A., and Friedman, Milton, “The Empirical Derivation of Indifference Functions”, in Lange et al, Studies in Mathematical Economics and Econometrics
*Friedman, Milton and Savage, L. J., “The Utility Analysis of Choices Involving Risk,” Journal of Political Economy LVI (August 1948) pp. 279-304.
Marshall, Book V, ch 3, 4, 5, 12, Appendix H.
Meyers, A. L. Elements of Modern Economics, ch 5, 7, 8, 9.
Robinson, Joan, Economics of Imperfect Competition, ch 2.
Clark, J. M., The Economics of Overhead Costs, ch 9
Viner, Jacob, “Cost Curves and Supply Curves”, Zeitschrift fuer Nationaloekonomie, Bd III (Sept, 1931), pp 23-46.
Chamberlin, Edward, The Theory of Monopolistic Competition, ch 3, sec. 1, 4, 5, 6; ch 5.
Harrod, R. F. “Doctrines of Imperfect Competition”, Quarterly Journal of Economics, May 1934, sec. 1, pp. 442-61.
*Triffin, Robert, Monopolistic Competition and General Equilibrium Theory, esp. Part II.
*Robinson, E. A. G., The Structure of Competitive Industry.
*___________________, Monopoly.
*Plant, Arnold, “The Economic Theory Concerning Patents for Inventions,” Economica, Feb, 1934.
*Dennison, S. R., “The Problem of Bigness,” Cambridge Journal, Nov. 1947.
Marshall, Book IV, ch 1, 2, 3; Bk V, ch 6.
Clark, J. B., The Distribution of Wealth, Preface, ch 1, 7, 8, 11, 12, 13, 23.
Mill, John Stuart, Principles of Political Economy, Book II, ch 14.
Hicks, J. R., The Theory of Wages, ch 1-6.
Smith, Adam, The Wealth of Nations, Bk I, ch 10.
Marshall, Bk VI, ch 1-5.
Friedman, Milton, and Kuznets, Simon, Income from Independent Professional Practice, Preface, pp. v to x; ch 3, Sec 3, pp. 81-95, ch 4, Sect 2, pp. 118-137, App, Sec 1 & 3, pp 142-151, 155-61.
Knight, F. H. “Interest” in Encyclopaedia of the Social Sciences, also in Ethics of Competition.
Keynes, J. M. The General Theory of Employment, Interest, and Money, ch 11-14.
Cassell, Gustav, Fundamental Thoughts in Economics, ch. 1, 2,3.
_________________, The Theory of Social Economy, ch 4.
J. R. Hicks, “Mr. Keynes and the ‘Classics’; A Suggested Interpretation”, Econometrica, vol 5, April 1937, pp. 147-159.
Franco Modigliani, “Liquidity Preference and the Theory of Interest and Money,” Econometrica, vol 12, No. 1 (Jan 1944) esp. Part I, sec. 1 through 9, sec 11 through 17, Part II, sec 21.
A. C. Pigou, “The Classical Stationary State,” Economic Journal, vol 53, December, 1943, pp. 343-51.
____________, “Economic Progress in a Stable Environment,” Economica, 1947, pp. 180-90.
Source: Hoover Institution Archive, Milton Friedman Papers, Box 77, Folder 1 “University of Chicago, Economics 300 A & B”.
The first cohort of students to receive their graduate price theory training from Milton Friedman during the autumn quarter of 1946 at the University of Chicago (Economics 300A ) included a future Nobel prize winner (James Buchanan), a future labor economist and Chicago/Princeton professor (Albert Rees), a future textbook author (Richard Leftwich, whose text incidentally was the text used in the early concentration freshman economics course I took at Yale in the Fall semester of 1969), and Army Air Corps Silver-Star recipient and the future head of C.I.A. Soviet economics research (Rush V. Greenslade).
Interestingly enough, Milton Friedman is listed as a member of the faculty in the Announcement for the Sessions of 1946-1947 but the courses 300A, B were not yet in included in the May 15, 1946 Announcements. The readings and basic structure of the course were slightly modified from the course he offered at Columbia in 1939-40.
_________________________________
[Course Description]
300A,B. Price Theory. A systematic study of the pricing of final products and factors of production under essentially stationary conditions. Covers both perfect competition and such imperfectly competitive conditions as monopolistic competition, oligopoly, and monopoly. 300A deals primarily with the pricing of final products; 300B, with the pricing of factors of production. Prereq: Econ 209 or equiv. and Econ 213 or equiv or consent of instructor.
300A. Aut: MWF 9:30; Win: MWF 10:30; Friedman.
300B. Win: MWF 9:30; Spr: MWF 9:30; Friedman.
Source: University of Chicago, Announcements. Vol. XLVII, No. 4 (May 15, 1947), The College and the Divisions. Sessions of 1947-1948, p. 224.
_________________________________
Econ 300 A. Autumn Quarter [1946]
Record of Meetings
[Handwritten notes by Milton Friedman]
| Wed | Oct 2 | Qualifying exam. |
| Fri | Oct 4 | a) Marshall a la Memorials, pp. 47, 86. |
| b) Defn of the economic problem[,] Economics | ||
| c) Distnctn betw. positive & normative | ||
| Mon | Oct 7 | Knight[‘]s fcns of econ organization |
| Wed | Oct 9 | [ditto] completed |
| Fri | Oct 11 | Reln betw wants & activities |
| Mon | Oct 14 | a) Initial discussion of d. c. |
| Wed | Oct 16 | [ditto] completed |
| b) [Initial discussn ] of s. c. | ||
| Fri | Oct 18 | No meeting (to be held later |
| Mon | Oct 21 | Equil of d & s. |
| Wed | Oct 23 | Elast. of Dem |
| Fri | Oct 25 | Elast completed & assumptns ind. demand |
| Mon | Oct 28 | Ass. and dem. c. completed; stat. d.c. |
| Wed | Oct 30 | Complete statistical demand curves |
| Fri | Nov 1 | Stochastic dem. curve. d.c. of ind cons. throu m. u. |
| Mon | Nov 4 | Eqn of ind cons; math & graph. demontratn |
| Wed | Nov 6 | Dervatn of d & eng curves |
| Fri | Nov 8 | Diff with utility theory |
| Mon | Nov 11 | Indiff curve theory |
| Wed | Nov 13 | [ditto] |
| Fri | Nov 15 | Examination |
| Mon | Nov 18 | Discussion of exam: Income vs. substitution effects |
| Wed | Nov 20 | Diff with indifference theory; dem curve for prod of an indiv prod. |
| Fri | Nov 22 | Dem curve for prod of ind prod; Econ of Ind firm |
| Mon | Nov 25 | Relat of cost curves of ind foirm to supply curve of industry |
| Wed | Nov 27 | (extra meeting to make up for Oct. 18) |
| Reading period | ||
| Mon | Dec 9 | Diff kinds of monopolistic conditions |
| Wed | Dec 11 | |
| Fri | Dec 13 | |
| Mon | Dec 16 | |
| Wed | Dec 18 | examination |
| Fri | Dec 20 | examination |
_________________________________
Qualifying Examination, Economics 300A
Autumn Quarter, 1946
1. Comment briefly on the following two sentences, taken from newspaper stories:
a. “Demand went up and therefore price went up.”
b. “Price went up and therefore demand declined.”
2. Indicate which of the following statements are true (T) and which false (F):
[T] If a one per cent increase in price will cause more than a one per cent reduction in amount demanded, the demand for the commodity is elastic.
[F] Cost of production affects price only through its effect on the rate of production.
[F] If production of a commodity is completely monopolized, and if the monopolist takes full advantage of his position, no changes in the cost of production will have any effect upon price.
[F] A fixed tax (say, a license tax of $10,000) would operate to increase the price at which a monopolist would make the largest net return (or largest net earnings).
[blank] An individual firm will undertake to equalize marginal revenue and marginal cost.
[F] An excise tax is likely to increase the price of a competitively produced commodity by the full amount of the tax.
[T] If price exceeds the competitive producer’s average expense it will therefore be advantageous for him to increase his rate of production.
[T] A monopoly will never operate at a price at which the demand of its product is inelastic.
_________________________________
[undated copy of a class handout, ca. 1946-47]
An arithmetical example of the effects of changes in tastes and the distribution of income on the distribution of commodities.
1. Descriptive data:
a. Population. There are three classes in the community—rich, middle-class, and poor. Their numbers are fixed throughout the example, but their incomes vary. The numbers and original family incomes are:
Rich: 1,000 families, $10,000 income
Middle-class: 10,000 families, $3,000 income
Poor: 1,000 families, $1,000 income
b. Commodities. There are two commodities: housing; and all other, which will be treated as a single commodity.
c. Tastes. In the original position the tastes of all income classes are identical. The tastes are described by the following schedules of marginal utilities, which, it will be noticed, follow the Bernoulli hypothesis. (It will be observed also that the analysis is independent of the measurability of utility. Marginal utilities are used only for simplicity of exposition. If the student will triple the marginal utilities for one income class and carry through the analysis, he will reach the same answers, assuming he does not make arithmetical mistakes.)
|
Housing |
Other |
||
|
Quantity |
Marginal Utility | Quantity |
Marginal Utility |
|
1 |
1.00 | 1 |
1.00 |
|
2 |
0.50 | 2 |
0.50 |
|
3 |
0.33 | 3 |
0.33 |
|
4 |
0.25 | 4 |
0.25 |
|
5 |
0.20 | 5 |
0.20 |
Additional values can be found for either schedule from the formula, marginal utility = 1/quantity.
2. The Original Distribution of Goods.
a. Each family will seek maximum utility, and this entails buying housing and other commodities in such quantities that
marginal utility of housing = marginal utility of other
price of housing price of other
In addition each family is faced by the budget limitation that the amount spent on housing plus the amount spent on other equal income.
b. We can construct a demand curve for (say) housing by (say) the poor, using arithmetical procedures.
i. First divide the marginal utilities of housing and other by their unit prices. Let these prices be $2 per unit and $1 per unit, respectively. We secure schedules:
|
Housing |
Other |
||
|
Quantity |
Marginal Utility Per Dollar |
Quantity |
Marginal Utility |
|
1 |
0.500 | 1 |
1.00 |
|
2 |
0.250 | 2 |
0.50 |
|
3 |
0.167 | 3 |
0.33 |
|
4 |
0.125 | 4 |
0.25 |
|
5 |
0.100 | 5 |
0.20 |
ii. Then find the combinations such that the marginal utility per dollar is equal. For example, 1 housing unit and 2 other units; 2 housing units and 4 other units. Only one of these many combinations meets our budget limitation, that the poor family spend $1,000. Continuing the table or the logic, the family will buy 250 housing units if the prices are as given.
iii. Carry this procedure through for all possible prices of housing and other, for each income class.
iv. Add the demand schedules so secured, compare with the given supplies, read off prices, and then the quantities received by each type of family.
v. Since steps iii and iv will require several years, it is more economical to take a course in sub-freshman algebra and proceed as follows:
c. Our two conditions of proportionality of marginal utilities to prices and the budget limitation can be written as
1/(q1p1) = 1/(q2p2)
q1p1 + q2p2 = R,
where q1 is the quantity of housing, p1 its price, the corresponding symbols with subscript 2 refer to other, and R is income.
We then proceed deftly as follows:
i. The demand curve for housing by a family is the quantity that will be purchased at various prices, so we wish to find how q1 varies with p1. If we substitute the proportionality-of-marginal-utilities equation into the budget equation, we secure
q1p1 + q1p1 = R,
or q1=R/(2p1).
By symmetry the same demand curve holds for other, using subscript 2.
ii. We now add up the demand curves of all families. The aggregate demand of the 1,000 rich families is
1,000 x 10,000/(2p1) = 5,000,000/p1
that of the middle class,
10,000 x 3,000/(2p1) = 15,000,000/p1
and that of the poor, starving families is
1,000 x 1,000/(2p1) = 500,000/p1.
iii. The fixed supply of both housing other is 205,000 units. The price is set where quantity supplied equals quantity demanded, i.e.,
205,000 = 20,500,000/ p1
so the price of housing (and of other) will be $100.
iv. And now by going back to demand curves, in i above, we can find the quantity each family secures of each commodity.
d. The final answers are:
i. The rich family secures $10,000/(2x$100) = 50 units of housing and 50 units of other.
ii. The middle class family secures $3,000/(2x$100) = 15 units of housing and 15 units of other.
iii. The poor family secures $1,000/(2x$100) = 5 units of housing and 5 units of other.
3. After the War: Larger Money Incomes and a More Equal Distribution of these Incomes.
a. Let us assume that after a highly successful war, this community now has the following income structure:
Rich: 1,000 families, $18,000 income
Middle-class: 10,000 families, $6,000 income
Poor: 1,000 families, $4,000 income
Thus the aggregate money income of the community has doubled, but is now more equally distributed by any reasonable measure.
b. We proceed to the solution exactly as before. Indeed nothing has changed but the incomes of individual families so we may use the same demand equations.
c. The final answers are:
i. The rich family secures 45 units of housing and 15 units of other.
ii. The middle-class family secures 15 units of housing and 15 units of other.
iii. The poor family secures 10 units of housing and 10 units of other.
The price per unit of either commodity has risen to $200.
4. Still After the War: The Rich get House-Conscious
a. For various reasons best left unexplored, the rich acquire a greater desire for housing. In terms of our example, the marginal utility of any quantity of housing doubles for them (so marginal utility = 2/q). We proceed as usual.
b. The final results are:
The price of a unit of housing soars to $214.63; that of a unit of other commodities crashes to $185.37.
i. The rich family secures 55.91 units of housing and 32.37 units of other commodities.
ii. The middle-class family secures 13.98 units of housing and 16.18 units of other commodities.
iii. The poor family secures 9.32 units of housing and 10.79 units of other commodities.
5. The Final Comparison
|
Original |
Greater Equality |
||
|
Same Tastes |
Rich-roof-ravenous |
||
|
Housing |
|||
|
Rich |
50,000 | 45,000 |
55,000 |
|
Middle-class |
150,000 | 150,000 |
139,800 |
|
Poor |
5,000 | 10,000 |
9,300 |
|
Other Commodities |
|||
|
Rich |
50,000 | 45,000 |
32,400 |
|
Middle-class |
150,000 | 150,000 |
161,800 |
|
Poor |
5,000 | 10,000 |
10,800 |
_________________________________
MIDQUARTER EXAMINATION IN ECONOMICS 300A
Autumn, 1946
1. Descriptive data:
a. Population: a community consists of three classes—rich, middle-class, and poor. The numbers and family incomes are:
Rich: 1,000 families, $10,000 income per family.
Middle-class: 10,000 families, $3,000 income per family.
Poor: 1,000 families, $1,000 income per family.
b. Commodities: There are two commodities: housing and food, considered as single composite commodities.
c. Demand curves: All individuals in the community have the following demand curves:
h = I/(2 ph)
f = I/(2 pf)
where
h= number of housing units per time unit.
ph = price per housing unit.
f = number of food units per time unit.
pf = price per food unit.
I = income of the family per time unit.
d. Supplies available.
There are available 205,000 housing units, and 205,000 food units. These amounts are available regardless of price and cannot be increased in the period considered.
Questions:
Determine:
a. The aggregate demand curve for the entire community for (1) housing, (2) food.
b. The prices that will prevail, assuming a free market.
c. The quantity of food and housing consumed by a family of each class.
d. The elasticity of the market demand curve for each product at a quantity of 205,000 units.
2. Appraise the following quotation from A. C. Pigou: “Since elasticity measures variations in quantity (demanded or offered) divided by variations in a price, the elasticity of demand for anything will be seven times as large for seven similar demanders as it is for one.”
3. “As Sir R. Giffen has pointed out, rise in the price of bread makes so large a drain on the resources of the poorer laboring families and raises so much the marginal utility of money to them, that they are forced to curtail their consumption of meat and the more expensive farinaceous foods: and, bread being still the cheapest food which they can get and will take, they consume more, and not less of it.” Marshall, p. 132.
a. Give your own verbal explanation of how such a positively sloping demand schedule can arise.
b. Draw an indifference curve diagram that will display this phenomenon.
_________________________________
Final Examination for Economics 300A
Autumn, 1946
Part I
1. Define briefly the following terms:
a. Income elasticity of demand
b. Demand curve for the product of an individual firm
c. Supply curve
d. Marginal revenue
e. Cross elasticity of demand
f. Oligopoly
2. Discuss critically the following quotation from Stigler:
“The principle of an increasing Syx [the marginal rate of substitution of y for x] corresponds to the older theory of diminishing marginal utility of a commodity as its quantity increases. More precisely: if Syx is increasing, then the marginal utilities of y and x must be decreasing; if the marginal utilities of y and x are decreasing, then Syx is probably, but not necessarily, increasing.”
3. Assume that the demand curve for complete flashlights of a standardized type is known; that the case and bulb are produced separately from the batteries; that the cost of putting the batteries in the case can be neglected; that the number and type of batteries put in each flashlight is fixed and unchangeable; that the supply curves of (1) case and bulb assembly and (2) batteries are known; and that the markets for complete flashlights, case and bulb assemblies, and batteries are reasonably competitive.
a. Indicate how to derive the demand curve for batteries alone. Under what assumptions is this demand curve valid; and for what kinds of problems is it relevant?
b. Suppose the supply curve of case and bulb assembly shifts to the right (i.e., supply increases). What effect will this have on the price of batteries?
c. Under what conditions would you expect the derived demand curve for batteries to be extremely inelastic?
_________________________________
Final Examination for Economics 300A
Autumn, 1946
Part II
4. Statistical demand curves for fluid milk are derived by two different procedures.
(1) Data for a particular year for the 48 states of the United States are used to obtain a correlation equation expressing (a) the price of fluid milk in a state as a function of (b) per capita consumption of fluid milk in that state and (c) per capita income in that state.
(2) Data for a period of years for the United States are used to obtain a correlation equation expressing (a) the price of milk in the United States as a function of (b) the per capita consumption of fluid milk in the United States and (c) the per capita income in the United States.
Under what conditions, if any, would you expect the results to be identical? If the results are not identical, discuss the relative advantages and disadvantages of each. Indicate the conditions under which you would expect (1) to give a better estimate of “the” demand curve for milk and, the conditions under which you would expect (2) to give a better estimate. How, if at all, could one determine which set of conditions prevails.
5. “In conversations with gold mining engineers a phrase glibly and frequently repeated is ‘sweetening the ore.’ By this phrase reference is made to the practice of diverting production in profitable periods to the poorer ores and perhaps restricting output in the richer fields. Under this practice the better ores are preserved for periods in which mining costs have risen so that over a long period of time output can be held more steady. Contributing also to a policy of sweetening the ores is the reluctance of producers to install capital equipment in a period in which the tendency is for mining expenses to increase with the general advance of wages and living costs. By the time the equipment is installed it might be expected that wages and price levels would be adjusted to the increased price of gold.”
Discuss the wisdom of the policy described in this quotation from the point of view of the individual producer. Assume that the individual producer seeks to maximize the present net capital value of his mining properties. Discuss separately (a) the alleged policy of “diverting production in profitable periods to the poorer ores and perhaps restricting output in the richer fields”; (b) the alleged policy of postponing the installation of capital equipment.
6. Assume a change in the laws so that less stringent conditions are imposed for bankruptcy and reorganization in a particular field (say the production of steel). As a consequence, a number of steel firms reorganize, wiping out a large part of their bonded debt. What would you expect to be the short- and long-run effects of these events on (a) the output and prices of the reorganized firms; (b) the amount of investment in the industry; (c) the rate of interest paid by the industry for new loans; (d) the output and prices of the industry? In each case, give the basis for your answer.
_________________________________
Source: Hoover Institution Archive. Milton Friedman Papers, Box 76, Folder 9 University of Chicago Econ. 300A.
Image Source: Columbia University, Columbia 250 Celebrates Columbians Ahead of Their Time.
This is the third of a series of items related to the University of Chicago Department of Economics’ Committee on Ph. D. Outlines and Requirements chaired by Milton Friedman (1949-50). The first installment and second installment were previously posted. A fourth installment was published after this post originally appeared.
Two seminar appearances, first as prospective candidates for the Ph.D. and ultimately to provide a definitive report of findings, are seen to constitute book-ends for thesis writers. Scope and quality of a thesis to be “comparable to [a] first-rate journal article” with quality control enforced through essentially an iterated process of revise-and-resubmit under the direction of the thesis committee.
___________________________
[MEMO #6, 13 June 1949]
[Carbon copy]
THE UNIVERSITY OF CHICAGO
[Date] June 13, 1949
[To] T. W. Schultz [Department] Economics
[From] R. Blough, M. Friedman, D. G. Johnson [Department] Economics
and J. Marschak
[In re:] Report of committee on Ph. D. outlines and requirements.
Your note of December 10 establishing this committee asks us to “prepare a memorandum setting forth the problem of students’ Ph.D. outlines and the procedure to be followed by the Department in appraising and approving Ph.D. thesis projects, including the type of outlines and supporting materials that a student should submit to the Department for its use when it passes upon the petition for admission to candidacy.”
We have interpreted this assignment rather broadly, in the belief that an appropriate procedure for admission to candidacy could be formulated only as part of an integrated program for handling the entire thesis requirement. Accordingly, section 1 below presents our conclusions about the standards to be applied to a thesis, and section 2, about the methods for getting more effective supervision, direction, and criticism of a thesis. Section 3 restates and extends our conclusions in the form of specific proposals for action.
- Standards to be applied to a thesis.
It is our feeling that the existing (implicit) standards for a thesis are both too high and too low: too high ex ante and too low ex post. In our opinion, we should seek to stimulate shorter, better organized, and better written theses than those ordinarily submitted. The problems here are first, to avoid simply reducing length without improving quality; second, to enforce the standard and make it part of the mores of the Department.
In order to accomplish these purposes we recommend (a) that a statement on the role of the thesis should be prepared for distribution to candidates; (b) that every thesis should be required to have a central core not to exceed roughly 15,000 words.
(a) Role of the thesis
The thesis, in our view, is to be viewed primarily as part of the training of the economist, not as a means of securing additions to knowledge. Any addition to knowledge is a welcome by-product, not a major objective. Up to the point at which he writes a thesis, the student has been concerned primarily with absorbing substantive material, acquiring tools, and becoming familiar with techniques of analysis. He has only incidentally applied these techniques. Equally important, he has had little occasion to acquire absolute standards of quality; most of his written work has been of a “one-shot” variety involving doing his best once and then being through with it. He has not had the experience of re-doing a thing again and again until it is satisfactory in an absolute sense and not merely the best he can do in an hour or a week.
The role of the thesis is to round out the student’s education by remedying these deficiencies. More specifically it should:
(1) give the student training in research by “doing” and instill in him absolute standards of quality in research.
(2) Deepen the student’s knowledge of the technique and subject matter he has acquired in course work by requiring him to apply what he has learned to a particular problem. In the process, he should think through the material he has been subjected to and make it his own.
These objectives affect both the choice of topic and the character of the thesis. The topic should be chosen less from the point of view of novelty or importance than of the contribution it can make to the student’s education—the opportunity it offers for improving and expanding his capacities. As a general matter, this suggests topics sufficiently narrow and specific to permit the student to do a thorough and exhaustive piece of work in the time available. It argues against broad general topics in which maturity and judgment are the prime requisites.
To accomplish these objectives, the final thesis should satisfy exceedingly high standards of quality; this is far more important than quantity. As a regular matter, it should be expected that a thesis will undergo several substantive revisions before final acceptance, that an absolute standard of excellence rather than a labor-theory of value will be applied. This means that at least the central core of the thesis must be relatively brief. The standard should be a first-rate journal article, no a full-length book.
(b) The scale of the thesis
We recommend that every thesis should be required to contain a central core of not more than roughly 15,000 words. This central core is to be self contained. It may, however, be supplemented by additional chapters or appendices containing more detailed material, expansions of points in the central core, etc.
The central core should, in general, not give much space to the general character of the problem [handwritten note: “suggest to insert ‘methodological’ before ‘character’ or otherwise indicate that while we do want to have the problem stated at the beginning (the 3 lines further below) we don’t want vague methodological discussions on its place in the universe of science.”], earlier work on the problem, and the like; those belong in supporting appendices if anywhere. It should concentrate on the original material developed by the writer. It must contain a precise statement of the problem and its economic analysis, not simply summarize data, report views, or describe events. In this context, of course, economic analysis is to be interpreted broadly, not as synonymous with technical economic theory.
It should be emphasized that the restriction of the central core to 15,000 words is not intended in any way to reduce the quantity or quality of performance expected from the student. Its main objective is to improve quality. One further reason for keeping theses to this scale is the desirability of having every member of the faculty read every thesis and vote for or against its approval. This is not at present feasible but might become so if the scale of the thesis were restricted.
- Methods for getting more effective supervision, direction, and criticism of theses.
Our chief recommendation on this topic is that there be established a thesis seminar. This seminar should be attended as a regular matter by all students writing theses in residence. By as many faculty members as can find it possible to attend, and, in any event, by the faculty members on the thesis committee of the student reporting at a particular session. Ideally, some one or more faculty members should have direct responsibility for the seminar as part of his teaching load.
The student scheduled to report at any meeting should prepare a written report sufficiently in advance of the meeting to permit duplication and circulation among all faculty members and all student participants in the seminar. He might then begin the discussion with an introductory summary taking not more than, say, five minutes. The rest of the time would be devoted to critical discussion.
It might be expected that a student would ordinarily appear before the seminar twice: once early in his work for a discussion of the topic and its possibilities on the basis of a brief circulated report (on the scale of a term paper); once, toward the end, for a discussion of his results, on the basis of a more detailed report and possibly a draft of the “central core” of the thesis itself.
We recommend that this thesis seminar be integrated with two other steps in the thesis procedure with which there is at present some dissatisfaction: (a) admission to candidacy, (b) the final examination.
The first appearance of the student before the seminar, and the paper prepared for that purpose, should also be used as a basis for deciding on admission to candidacy. At present, it is the general feeling that we have inadequate evidence on which to judge suggested theses. The suggested change in the scale of the thesis opens up the possibility that more time can be spent in the preparatory stages and more can be asked for from the student in the way of supporting evidence. Something of the scale of a term paper is perhaps not too much to ask. In order to insure faculty participation, a tentative faculty committee should be established prior to the student’s first appearance and those named to it should be expected to attend for the department in addition to as many others as can do so.
Dissatisfaction with the final examination arises from a different source. The exam is in fact a pure formality, in view of the stage at which it comes. Candidates are in practice almost never failed at that stage. Yet the candidate is not told that it is a pure formality; he regards it as a crucial and important test.
In place of dispensing with the final exam, the second appearance of a candidate before the thesis seminar might take its place, not in the sense of an occasion for final approval of the candidate, but in the sense of a public exhibition, as it were, testifying to the candidate’s stage of development. Final approval of the thesis would be based on the decision of the thesis committee plus a poll of the entire faculty.
- Summary of specific recommendations
To implement the general recommendations outlined above, it is proposed that the department approve the following actions and rules:
(1) Every Ph.D. thesis submitted for final approval must contain a central core not in excess of 15,000 words in length. This central core must be self-contained but may be supplemented by supporting material. The standard of comparison should be a first-rate journal article.
(2) Preparation of a statement on the role of the thesis and the standards to which it is expected to conform for distribution to candidates.
(3) Establishment of a thesis seminar. Regular participation in this seminar is to be required of all candidates writing theses in residence. One or more faculty members is to have direct responsibility for this seminar as part of his teaching load. All other faculty members shall be encouraged to attend.
(4) A Ph.D. candidate, whether or not he writes his thesis in residence, shall be required to make at least two appearances before this seminar.
(5) The candidate’s first appearance before the seminar shall be part of the procedure for admission to candidacy. In advance of this appearance, the candidate shall prepare a brief report (on the scale of a term paper) explaining his thesis topic, the existing state of knowledge on the topic, its potentialities, and his projected plan of attack on the problem. This report shall be duplicated and circulated to all members of the seminar an all members of the faculty in advance of the meeting of the seminar. This report plus the performance of the student before the seminar shall be the principal evidence for granting admission to candidacy, provided, of course, that other requirements are met.
(6) A candidate shall be permitted to make this first appearance preparatory to admission to candidacy if he has passed at least two of the three Ph.D. preliminary examinations.
(7) A tentative faculty committee shall be named for each candidate prior to this first appearance, and shall be expected to attend the meeting of the seminar at which it takes place.
(8) The candidate’s final appearance before the seminar shall be on the basis of a more detailed report of his findings, preferably on the basis of a draft of the “central core” of the thesis. This report shall be duplicated and circulated to all members of the seminar and all members of the faculty in advance of the meeting of the seminar.
(9) This final appearance before the seminar shall replace the present final examination on the thesis.
(10) The candidates thesis committee shall be expected to attend this final appearance before the seminar.
(11) The central core of the thesis or its equivalent shall be circulated to all members of the faculty before the final acceptance of the thesis. Final acceptance shall be based on approval by the thesis committee plus a vote of all other members of the faculty.
(12) The new procedure for admission to candidacy should apply to all students in residence at the time of its adoption, and to students not in residence who have not been admitted to candidacy prior to January 1, 1950.
___________________________
[MEMO #7, 2 February 1950]
[Carbon copy. Additions to the change in the text are highlighted. Items (7) and (10) are the significant additional changes in the specific recommendations.]
[THE UNIVERSITY OF CHICAGO]
[Date] February 2, 1950
[To] T. W. Schultz [Department] Economics
[From] R. Blough, M. Friedman, D. G. Johnson [Department] Economics
and J. Marschak
SUPPLEMENTARY REPORT OF COMMITTEE ON PH. D. OUTLINES AND REQUIREMENTS
The following summary of specific recommendations is a revision of the summary on pp. 4 and 5 of our earlier report, incorporating comments and suggestions made at the department discussion of the problem. It is proposed that the department approve the following actions and rules:
(1) A Ph.D. thesis submitted for final approval will ordinarily contain a central core not in excess of 15,000 words in length. This central core must be self-contained but may be supplemented by supporting material. In scope and quality, it shall be comparable to first-rate journal article.
(2) Preparation of a statement on the role of the thesis and the standards to which it is expected to conform for distribution to candidates.
(3) Establishment of a thesis seminar. Regular participation in this seminar is to be required of all candidates writing theses in residence. One or more faculty members is to have direct responsibility for the organization and scheduling of this seminar. A session of the seminar will ordinarily be conducted by the chairman of the tentative or final thesis committee of the student presenting a report (see point 7 below). All other faculty members shall be encouraged to attend.
(4) A Ph.D. candidate, whether or not he writes his thesis in residence, shall be required to make at least two appearances before this seminar.
(5) The candidate’s first appearance before the seminar shall be prior to his admission to candidacy. In advance of this appearance, the candidate shall prepare a brief report (on the scale of a term paper) explaining his thesis topic, the existing state of knowledge on the topic, its potentialities, and his projected plan of attack on the problem. This report shall be duplicated and circulated to all members of the seminar an all members of the faculty in advance of the meeting of the seminar.
(6) A candidate shall be permitted to make this first appearance preparatory to admission to candidacy if he has passed at least two of the three Ph.D. preliminary examinations.
(7) The candidate shall have responsibility for applying for the appointment of a tentative thesis committee prior to his first appearance at the seminar. He shall be permitted to make such application at any time after he has passed at least two of the three Ph.D. preliminary examinations. The chairman of the department shall name a tentative faculty committee for each candidate, and this committee shall be expected to attend the meeting of the seminar at which it takes place. At least one member of the tentative committee shall be a person whose major field of interest is outside of the field of the proposed thesis. If admission to candidacy is granted, a final thesis committee shall be appointed by the chairman of the department.
(8) The candidate’s final appearance before the seminar shall be a definitive report of his findings. A brief resume of this report shall be duplicated and circulated to all members of the seminar and all members of the faculty in advance of the meeting of the seminar. The candidate’s thesis committee shall be expected to attend this final appearance before the seminar. [Last sentence was recommendation (10) of previous draft]
(9) The central core of the thesis or its equivalent shall be circulated to all members of the faculty before the final acceptance of the thesis. Final acceptance of the thesis shall be by vote of the members of the faculty upon the recommendation of the thesis committee.
(10) The final examination by the department shall be on the candidate’s major field. The examination shall be a function of the whole department but in any event shall be attended by members of the thesis committee and other faculty members specializing in the field.
(11) The new procedure for admission to candidacy should apply to all students in residence at the time of its adoption, and to students not in residence who have not been admitted to candidacy prior to July 1, 1950.
___________________________
[MEMO #8, undated, almost certainly 1950]
[Mimeographed copy.]
STANDARDS FOR Ph.D. THESIS
(Draft proposal for
circulation among
prospective candidates)
In order to guide candidates for the Ph.D. degree in selection of a thesis topic, the Department of Economics has formulated the following statement of standards which shall apply to doctoral dissertations in the future. Each candidate is urged to familiarize himself with the four main criteria set forth below.
I. The role of the thesis in the educational process is to develop the candidate’s ability to make significant contributions to knowledge in economics. To accomplish this objective the thesis must make a contribution to knowledge.
In addition:
a. The thesis must be concerned with an important and significant problem.
The “importance” and “significance” of a problem are, of course, to some extent matters of individual judgment. Different candidates will have different concepts of what is important what is relatively inconsequential. In selecting a topic, however, the candidate should first ask himself questions such as these: Why is the proposed topic “important”? Why is it worth spending time on? Would research on the topic contribute to general understanding of some central problem of our time? Would it contribute to clarifying or improving the conceptual or logical basis of economics? Questions such as the availability of material, opportunity for utilizing a particular technique, or the possible conclusiveness of findings, though important, are definitely secondary. The candidate should work on something that “matters”.
b. The thesis must involve analysis of an economic problem
Conceivably, any kind of original work, such as for example the mere gathering of statistics which have never been compiled before, might be “a contribution to knowledge”. However, such a task would not meet the requirements for a thesis unless it involved independent analysis of an economic problem. In other words, the compilation of material is not an end in itself; it is only a mans of achieving the objective of the thesis.
II. The topic should be sufficiently limited and specific to permit the candidate to do a thorough and exhaustive piece of work.
The doctoral candidate is not expected to tackle a broad or general problem in its entirety. On the contrary, in most cases, he can make the best contribution to knowledge and develop his capacity for undertaking research by concentrating on a clearly defined segment of an important and significant problem. Since quality rather than quantity will be the main standard for judgment of the thesis, the topic should be limited in scope in order to enable the candidate to concentrate his energies on intensive and exhaustive analysis.
Insofar as possible, the candidate should choose a topic in the broad problem area in which he feels he might want to do further research beyond the thesis. In other words the thesis should be looked upon as a stepping stone to more comprehensive research as the candidate acquires greater maturity and judgment after completing of the formal requirements for the degree. In short, the candidate should avoid choosing a “blind-alley” topic which offers few avenues to future research.
III. Every thesis must contain a central core of not more than roughly 15,000 words, (or approximately 50 typewritten pages.)
This central core is to be self-contained. It may, however, be supplemented by additional chapters or appendices containing more detailed data, expansions of points developed in the central core, etc.
The central core should, in general, not give much space to the general character of the problem, earlier work on the problem, and the like; those belong in supporting appendices, if anywhere. It should concentrate on the original material developed by the writer. It must contain a precise statement of its problem and its analysis, not simply summarize data, report views, or describe events.
IV. The thesis must conform to high standards of quality
The central core of the thesis should be comparable in quality and scope to a first-rate journal article, and the candidate should strive to have the central core of the thesis, or an adaptation thereof, published in a journal.
In order to achieve the standards of quality set forth above, it is assumed, as a regular matter, that the thesis will undergo several substantive revisions before final acceptance. Up to the point of writing a thesis, most candidates have had little occasion to acquire high standards of quality, since most of their written work has been of a “one-shot” variety. The thesis, on the other hand, must be a thorough and well-written piece of research. In other words, it must represent the best work of which the candidate is capable.
The initial reputation of the candidate is made largely on the basis of the excellence of his doctoral dissertation, and his capacity for further research is dependent upon the development of his ability to complete successfully a piece of research requiring analytical capacity, sound judgment and continued application. The thesis, then, is a challenge to the candidate to demonstrate his right to belong to the profession. It is, consequently, a major undertaking, and no something to be brushed off speedily or lightly.
___________________________
Source: Hoover Institution Archives, Papers of Milton Friedman, Box 79, Folder 5 “University of Chicago. Minutes. Ph. D. Thesis Committee.”
Image Source: T. W. Schultz, University of Chicago Photographic Archive, apf1-07484, Special Collections Research Center, University of Chicago Library.
Back from my trip to Edinburgh. Normal weblogging resumes today. Image above from the Main Hall of the Scottish National Portrait Gallery in Edinburgh.
Last image from the trip: David Hume and Adam Smith by David Watson Stevenson on the facade of the Scottish National Portrait Gallery. 