The second semester of Economics 11 for the academic year 1934-35 was taught by Joseph Schumpeter after Frank W. Taussig taught the first semester.
Wolfgang Stolper’s notes for the course (Box 19, Notebook “Taussig Ec 11 Theory. 1934-35”) taken during the Spring Semester 1935 follow the printed reading lists given below that are undated in the folder marked “Ec11 Fall 1935” in Schumpeter’s papers.
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Economics 11
The following is a brief outline of what will be covered in the first four to six weeks of the second semester.
I. Welfare and the National Dividend. Approximately two weeks. The discussion will turn around the following chapters from “The Economics of Welfare” by A.C. Pigou (3rd or 4th edition): Part I, Chapters 1,2,3,5,6,7,8; Part IV, Chapter 2; and Part II, Chapters 1,2,3,4,11. In the second edition the corresponding chapters from Part I are 1-7 inclusive and from Part II, 1,2,3,4,10. Chap. 10 Part II is completely revised in the third edition (where it appears as Chap. 11, Part II) and should if possible be read in the third. The material from Part II leads to the second main topic, namely,
II. The Laws of Cost and Returns. Probably three or four weeks. It is proposed to deal fully with the so-called “cost controversy”, a series of more or less closely connected articles which appeared in the Economic Journal from 1922 to 1932. The following is a list of the articles in the order of their appearance. Students will not be held responsible for those included in brackets, some of which are connected only remotely with the main controversy. 1) “On Empty Economic Boxes”, J. H. Clapham, Sept. 1922; “Empty Economic Boxes: a Reply”, A.C. Pigou, Dec. 1922; “Those Empty Boxes”, D. H. Robertson, March, 1924; “The Laws of Returns under Competitive Conditions”, P. Sraffa, Dec. 1926; [“The Laws of Diminishing and Increasing Costs”, A.C. Pigou, June 1927]; [“An Analysis of Supply”, A. C. Pigou; June 1928]; “Varying Costs and Marginal Net Products”, G. F. Shove, June 1928; [“The Instability of Capitalism”, J.A. Schumpeter, Sept. 1928;] [“The Representative Firm”, L.C. Robbins, Sept. 1928]; “Increasing Returns and Economic Progress”, A.A. Young, Dec. 1928; “Increasing Returns and the Representative Firm: a Symposium”, D.H. Robertson, G.F. Shove, and P. Sraffa, March 1930. The following two articles by R.F. Harrod are in effect a continuation of the “cost controversy”, but they will be considered later in connection with the discussion of imperfect competition: “Notes on Supply”, June 1930; and “The Law of Decreasing Cost”, Dec. 1931.
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[There is a gap in reading lists between the laws of costs and production above and the discussion of imperfect competition and monopolistic competition below. The following three topics and readings are taken from the second term of the academic year 1935-36. According to Stolper’s notes (both from class and his reading notes), the topics and material were at least touched upon in the second term of the academic year 1934-35. Cf. the final exam questions below.]
- Marginal Productivity and the Theory of Wages
- Marshall, Bk. VI, especially Ch. I.
- Hicks, J. R., “The Theory of Wages”, Chs. I and VI.
- ——-, Marginal Productivity and the Principle of Variation,” Economica, Feb., 1932.
- Schultz, Henry and Hicks, J. R., “Marginal Productivity and the Lausanne School: A Reply” and “A Rejoinder”, Economica, Aug., 1932.
- Clark, J. B., “The Distribution of Wealth”, Ch. VIII.
- Robertson, D. H., “Wage Grumbles” in the volume of essays entitled Economic Fragments.
- Elasticity of Substitution
- Hicks, Ch. VI (Cf. above).
(mathematical treatment in Appendix for those who prefer) - Machlup, Fritz, “The Common Sense of the Elasticity of Substitution”, Review of Economic Studies, June, 1935.
- Also notes and articles on substitution in Review of Economic Studies, Vol. I, nos. 1 and 2, though not required reading, may be consulted.
- Hicks, Ch. VI (Cf. above).
- Opportunity Costs.
- Green, D.I., “Pain Cost and Opportunity Cost”, Quarterly Journal of Economics, 1894.
- Davenport, H.J. , “Economics of Enterprise”, Ch. VI.
- Knight, F.H., “A Suggestion for Simplifying the Statement of the General Theory of Price”, Journal of Political Economy, 1928.
Source: Harvard University Archives, HUC (FP) – 4.62. Joseph Schumpeter Lecture Notes, Box 9, Folder “Ec11 1935-36”.
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Economics 11
Following is a list of some of the most important works in English dealing with problems outside the range of perfect competition. They are not all assigned, but assigned reading is taken altogether from this list.
Pigou, A. C., Economics of Welfare, 3rd Edition.
Chamberlin, E. H., The Theory of Monopolistic Competition.
Chamberlin, E. H., On Imperfect Competition, in the March, 1934 Supplement of The American Economic Review, pp. 23-27.
Robinson, Joan, Economics of Imperfect Competition.
Robinson, Joan, What is Perfect Competition, Q. J. E., Nov. 1934.
Zeuthen, F., Problems of Monopoly and Economic Warfare.
Cournot, A. A., Mathematical Principles of the Theory of Wealth.
Edgeworth, F. Y., The Pure Theory of Monopoly (Papers, Vol. I)
Hotelling, Harold, Stability in Competition, E. J., March 1929.
Shove, G. F., The Imperfection of the Market, E. J., March 1933.
Harrod, R. F., Doctrines of Imperfect Competition, Q. J. E., May 1934.
Hicks, J. R., The Theory of Monopoly, Econometrica, Jan. 1935.
The subjects, in the order in which they will be taken up, together with the assigned reading, are given below.
| I. The Technique and the Background.Pigou, Part II, Ch. XIV. Robinson, Chs. 1, 2. Chamberlin, Chs. 1, 2. |
V. Monopolistic CompetitionChamberlin, Chs. 4, 5, 6, 7. Robinson, Ch. 7. Q.J.E., Nov. ‘34 Shove, E.J., March ’33. Harrod, Q.J.E., May ’34. |
| II. Simple Monopoly.Pigou, Part II, Ch. XVI. Robinson, Chs. 3, 4, 5. |
VI. Discrimination.Pigou, Chs. XVII, XVIII (Part II). Robinson, Chs. 15, 16. |
| III. Duopoly and OligopolyPigou, Part II, Ch. XV. Chamberlin, Ch. 3. |
VII. Imperfect Competition and the Theory of Distribution.Chamberlin, in March ’34 A.E.R. Supplement. |
| IV. Bilateral Monopoly.(To be discussed in class) |
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1934-35
Harvard University
ECONOMICS 11
Two questions may be omitted. Arrange your answers in the order of the questions.
- State the principle of Pigou’s method of measuring the National Dividend, and explain the relation of variations in the National Dividend, as thus measured, to “Welfare.”
- “What the production of any commodity costs to society or any individual, is the satisfaction which could have been derived from producing something else with the same means of production.” What do you think of this proposition?
- Explain briefly what is meant by
(a) Elasticity of demand,
(b) Elasticity of substitution,
(c) Marginal revenue,
(d) Bilateral monopoly,
(e) Perfect competition. - State the three theorems, which together constitute the “theory of marginal productivity” and show what, if anything, corresponds to each of them in the case of imperfect competition.
- “Monopolistic competition implies oligopoly and could not exist without it.” Do you agree?
- Define discrimination, and formulate the condition which must be fulfilled in order to maximize the discriminating monopolists profit. Do you think that the monopolists output will be greater or less than it would be without discrimination?
Final. 1935.
No. 55
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Source: Harvard University Archives. HUC (FP)–4.62. Joseph Schumpeter Lecture Notes, Box 6. Folder “Ec 11, Fall 1935”.
One reply on “Harvard Economics. Course. Graduate Theory. Schumpeter. Spring 1935”
This is very interesting! Yet, it tells a somewhat different story from the recollection of Musgrave who also claimed to have attended the Spring 1935 course by Schumpeter.
In a 1986 interview with Colander and Landreth, he states:
“Well, the basic theory course then was Ec. 11, which was the first graduate course. That fall it was taught for the last time by Professor Taussig, who subsequently retired. The subject never went beyond Ricardo, but Taussig was a marvelous Socratic teacher. He would give a problem, raise questions and leave it to us to find the answers. Joseph Schumpeter, who had recently arrived at Harvard, took over the course in the spring term. He covered Walrasian economics. So you see we had two great teachers in that first year. The introductory course they taught was a totally different approach than is now the case. It was not a boning up on tools, but the teaching of a broad vision of economics. Both micro and macro were seen in an interconnected way. Schumpeter considered the broad movements of the aggregate economy. But his treatment was of an evolutionary system; it was not the neoclassical equilibrium model that came to domi- nate macro in the 1960s and 1970s. It was dynamic evolution. So, in his way, Schumpeter covered macro.”
“Richard A. Musgrave (b. 1910)” In D. C. Colander & H. Landreth (Eds.), The Coming of Keynesianism to America (pp. 193–202). 1996. Edward Elgar.
Musgrave also makes a similar claim about Schumpeter teaching Walrasian economics in the preface to his first volume of collected writings:
“I then proceeded to Harvard to undertake graduate work, in time to benefit from Taussig’s last term of teaching Ec 11, the basic theory course. Thereafter, his sparse and socratic method yielded to Schumpeter’s brilliant and sparkling style, replacing Ricardian puzzles with the elegance of Walrasian equations. Though uneasy in Schumpeter’s overwhelming presence (Mephistopheles conversing with Wagner, the student), I admired his sweeping vision of economic theory and the social system, especially in his history of doctrine course.”
Musgrave, R. A. (1986). “In Retrospect” In Public Finance in a Democratic Society. Volume I: Social Goods, Taxation and Fiscal Policy (Vol. I, pp. vii–xiii). New York: New York University Press.