A rough outline with assigned readings was posted during the early days of Economics in the Rear-View Mirror for Frank W. Taussig’s year long graduate economic theory course for 1923-24. Here we add both the enrollment figures as well as the examinations for mid-year (February 1924) and the final (June 1924).
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Course Enrollment
[Economics] 11. Professor Taussig–Economic Theory.
Total 51: of which 37 Graduates, 5 Business School, 3 Seniors, 6 Radcliffe.
Source: Harvard University, Report of the President of Harvard College for 1923-24, p. 107.
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1923-24
HARVARD UNIVERSITY
ECONOMICS 11
Mid-Year. 1924.
Arrange your answers in the order of the questions
- What bearing has the turn-over of retail shops on the question whether the reward of labor is derived from the contemporaneous product of labor?
- “Suppose I employ twenty men at an expense of £1000 for a year in the production of a commodity, and at the end of the year I employ twenty men again for another year, at a further expense of £1000 in finishing or perfecting the same commodity, and that I bring it to market at the end of two years, if profits be 10 per cent, my commodity must sell for [?]. Another man employs precisely the same quantity of labour, but he employs it all in the first year; he employs forty men at an expense of £2000, and at the end of the first year he sells it with 10 per cent profit, or for [?].
Give the figures which Ricardo put into the bracketed spaces, and explain in what way he reached his figures.
What principle does he mean to illustrate by examples of this kind?
[David Ricardo, The Principles of Political Economy & Taxation. Everyman’s Library Edition (London, 1912), p. 23.]
- “Thus, in a charitable institution, where the poor are set to work with the funds of benefactors, the general prices of the commodities, which are the produce of such work, will not be governed by the peculiar facilities afforded to these workmen, but by the common, usual, and natural difficulties which every other manufacturer will have to encounter. The manufacturer enjoying none of these facilities might indeed be driven altogether from the market if the supply afforded by these favoured workmen were equal to all the wants of the community; but if he continued the trade, it would be only on condition that he should derive from it the usual and general rate of profits on stock; and that could only happen when his commodity sold for a price proportioned to the quantity of labour bestowed on its production.”
What principle was Ricardo trying to elucidate in this passage? Is his reasoning sound?
[David Ricardo, The Principles of Political Economy & Taxation. Everyman’s Library Edition (London, 1912), p. 37.]
- “The amount of produce raised, and therefore the position of the margin of cultivation (i. e., the margin of the profitable application of capital and labour to good and bad land alike) are both governed by the general conditions of demand and supply. They are governed on the one hand by demand; that is, by the numbers of the population who consume the produce, the intensity of their need for it, and their means of paying for it: and on the other hand by supply; that is, by the extent and fertility of the available land, and the numbers and resources of those ready to cultivate it. Thus cost of production, eagerness of demand, margin of production, and price of the produce mutually govern one another: and no circular reasoning is involved in speaking of any one as in part governed by the others.”
Is this different from Ricardo’s doctrine on the relation between cost of production, value, rent? Is it inconsistent with Ricardo’s doctrine?
[Alfred Marshall. Principles of Economics, 8th ed., Book V, Ch. X, §1 (London, 1920), p. 427.]
- “In short periods, that is, in periods short relatively to the time required to make and bring into full bearing improvements . . . no such direct influence on supply price is exercised by the necessity that such improvements should in the long run yield net incomes sufficient to give normal profits on their cost. And therefore when we are dealing with such periods, these incomes may be regarded as quasi-rents which depend on the price of the produce.”
Would you regard “these incomes” as quasi-rents, in Marshall’s sense? Would you consider this a good definition of quasi-rents?
[Alfred Marshall. Principles of Economics, 8th ed., Book V, Ch. X, §1 (London, 1920), p. 426.]
- Indicate summarily Mill’s doctrines regarding
the law of the accumulation of capital;
the factors on which the rate of profits depends;
the tendency of profits to a minimum.
Are they consistent with each other? Which of them, if any, is in accord with Ricardo’s doctrine on profits?
- “An increase in the aggregate volume of production of anything will generally increase the size, and therefore the internal economics possessed by a representative firm; it will always increase the external economies to which the firm has access; and thus it will enable it to manufacture at a less proportionate cost of labour and sacrifice than before.”
Why “generally” in the first case? Why “always” in the second? or why not in either case?
[Alfred Marshall. Principles of Economics, 8th ed., Book IV, Ch. XIII, §2 (London, 1920), p. 318.]
- Explain
cost of production,
expenses of production,
supply price,
contemporaneous costs curve,
successive costs curve.
- “Among 1317 farms in one county in New York, 13 farms yielded labor incomes of over $2000. . . . Part of this difference was due to the soils being better than the average, and part was due to better management.” In the book from which this passage is taken, “labor income” is ascertained by deducting from the farm receipts (a) expenses incurred in operating the farm, (b) the interest which the farmer would have got if, instead of investing in the farm, he had lent his money at the current rate. Would you accept this definition of labor income?
Does “economic rent” appear in the analysis? If so, where and how?
[George F. Warren, Farm Management (New York, 1913), p. 167.]
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1923-24
HARVARD UNIVERSITY
ECONOMICS 11
Final. 1924.
Arrange your answers strictly in the order of the questions
- What is left, in the present stage of economic theory, of Ricardo’s doctrine of value? of wages? of profits?
- “When considering costs from the social point of view, when inquiring whether the cost of attaining a given result is increasing or diminishing with changing economic conditions, then we are concerned with the real costs of efforts of various qualities, and with the real cost of waiting. If the purchasing power of money in terms of effort has remained about constant, and if the rate of remuneration for waiting has remained about constant, then the money measure of costs corresponds to the real costs; but such a correspondence is never to be assumed lightly.” — Marshall.
Consider separately the two propositions stated in these sentences, and give your opinion on them.
[Alfred Marshall. Principles of Economics, 8th ed., Book V, Ch. III, §7 (London, 1920), p. 350.]
- “Let us now drop the supposition that labour is so mobile as to ensure equal remuneration for equal efforts, throughout the whole of society, and let us approach much nearer to the actual conditions of life by supposing that labour is not all of one industrial grade, but of several. Let us suppose that parents always bring up their children to an occupation in their own grade; that they have a free choice within that grade, but not outside it. Lastly, let us suppose that the increase of numbers in each grade is governed by other than economic causes: as before it may be fixed, or it may be influenced by changes in custom, in moral opinion, etc.” — Marshall.
On these suppositions, is value determined by “real costs.”? Wherein, if at all, do the suppositions differ from those made by Marshall in earlier editions?
[Alfred Marshall. Principles of Economics, 8th ed., Book VI, Ch. I, §6 (London, 1920), pp. 513-4.]
- “While we [the Austrians] say that the value of means of production, that is of cost-goods, is determined by the value of their products, the usual way of interpreting the law is to say that the value of their products, the usual way of interpreting the law is to say that the value of the products is determined by the amount of their costs, — by the value of the means of production out of which they are made.” — Böhm-Bawerk.
What are grounds of this conclusion? What is your own view?
[Eugen v. Böhm-Bawerk, The Positive Theory of Capital (New York, 1891), p. 184.]
- “The difference between land and other durable agents is mainly one of degree; and a great part of the interest of the study of the rent of land arises from the illustration it affords of a great principle that permeates every part of economics.” — Marshall.
Why is the difference mainly one of degree? and what is the great permeating principle?
[Alfred Marshall. Principles of Economics, 8th ed., Appendix K, §2 (London, 1920), p. 832.]
- State the precise point on which Böhm-Bawerk rests his contention that there is no specific productivity of capital.
- Böhm-Bawerk remarks that the theory put forth by him bears a certain resemblance to the wage fund doctrine of the older English school, but differs from it in essentials. Explain the resemblance; point out the difference which Böhm-Bawerk believes to be essential; and give your instructor’s comment on that point of difference.
- Under the regulation for administering the Excess Profits Tax, while it was levied in the United States, an individual business man liable for this tax was allowed, when declaring his profits, to deduct from his receipts not only all outlays incurred but also (a) eight per cent on his invested capital, (b) a reasonable salary for his own labor of management.
Were these two allowances in accord with the theoretic treatment of business profits by Clark? by Marshall? by your instructor?
Source: Harvard University Archives. (HUC 7882) Examination papers in economics 1882-1935, Prof. F.W. Taussig.
Image Source: Frank Taussig from Harvard Class Album 1925.