John Bates Clark: Illuminating the Path of Economic Genius

By Fouad Sabry

Who is John Bates Clark

John Bates Clark was a neoclassical economist who came from the United States. A prominent figure in the marginalist revolution and an opponent of the Institutionalist school of economics, he spent the majority of his career as a professor at Columbia University. He was also a pioneer in the marginalist revolution.

How you will benefit

(I) Insights about the following:

Chapter 1: John Bates Clark

Chapter 2: Economics

Chapter 3: Neoclassical economics

Chapter 4: Piero Sraffa

Chapter 5: Price

Chapter 6: Marginalism

Chapter 7: Classical economics

Chapter 8: Maurice Dobb

Chapter 9: John Maurice Clark

Chapter 10: Herbert J. Davenport

Chapter 11: Frank Fetter

Chapter 12: History of economic thought

Chapter 13: Schools of economic thought

Chapter 14: Distribution (economics)

Chapter 15: Principles of Economics (Marshall book)

Chapter 16: Neoclassical synthesis

Chapter 17: Luigi Pasinetti

Chapter 18: Marginal utility

Chapter 19: The Theory of Wages

Chapter 20: Cambridge capital controversy

Chapter 21: Marxian economics

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information about John Bates Clark.

• Language: English
• Publisher: One Billion Knowledgeable
• Release date: Jan 16, 2024

Book preview

Chapter 1: John Bates Clark

John Bates Clark (January 26, 1847 – March 21, 1938) was an American neoclassical economist. He was one of the pioneers of the marginalist revolution and opponent to the Institutionalist school of economics, and spent most of his career as professor at Columbia University.

Clark was born and raised in Providence, Rhode Island, and graduated from Amherst College, in Massachusetts, at the age of 25. From 1872 to 1875, he attended the University of Zurich and the University of Heidelberg where he studied under Karl Knies (a leader of the German Historical School). Early in his career Clark's writings reflected his German Socialist background and showed him as a critic of capitalism. During his time as a professor at Columbia University however, his views gradually shifted to support of capitalism and he later became known as a leading advocate of the capitalist system.

After his return, from 1877 onward, Clark published several articles most of them edited later in The Philosophy of Wealth (1886). There he formulated an original version of marginal utility theory, principle already published by Jevons (1871), Menger (1871), and Walras (1878).

Until 1886 Clark was a Christian socialist reflecting the view of his German teachers that competition is no universal remedy – especially not for fixing wages. Clark writes:

It is a dangerous mistake to extol competition, as such too highly, and regard all attacks upon it as revolutionary.

… We do not eat men … but we do it by such indirect and refined methods that it does not generally occur to us that we are cannibals.

He hoped that communism could be combatted by suppression and reform:

Among the adherents of Communism there is a large element that is simply murderous, and this deserves only the murderer's fate. ... It is possible that an indefinitely large proportion of declared communists in this country may be of worthless or criminal character.

According to Clark only if ...the union of capital necessitates the union of labour just wages will come about and may be fixed by arbitration. One cause that prompted this reorientation could be the Haymarket Riot (1886) in Chicago when some strikers were shot and others hanged. In the US it resulted in a cleansing of higher education from socialist reformers and the ruin of the Knights of Labor.

In 1888 Clark wrote Capital and Its Earnings. Frank A. Fetter later reflected on Bates' motivation for writing this work:

The probable source from which immediate stimulation came to Clark was the contemporary single tax discussion. ... Events were just at that time crowding each other fast in the single tax propaganda. [ Henry George's ] Progress and Poverty... had a larger sale than any other book ever written by an American. ... No other economic subject at the time was comparable in importance in the public eye with the doctrine of Progress and Poverty. Capital and its Earnings "... wears the mien of pure theory .... But ... one can hardly fail to see on almost every page the reflections of the contemporary single-tax discussion. In the brief preface is expressed the hope that 'it may be found that these principles settle questions of agrarian socialism.' Repeatedly the discussion turns to 'the capital that vests itself in land,'..

The foundation of Clark's further work was competition: If nothing suppresses competition, progress will continue forever. similar to a field or a waterfall, also considered capital by Clark.

The arguable sides of Clark's notion of capital helped to give rise to the Cambridge capital controversy from 1954 to 1965 between the departments of economics at Cambridge University, England, and at MIT in Cambridge, Massachusetts.

Paul A. Samuelson's classic 1947 textbook, Economics, disseminated Clark's concept of capital worldwide.

Clark was the father of economist John Maurice Clark.

The Philosophy of Wealth: Economic Principles Newly Formulated (1886).

Capital and Its Earnings (1888).

The Distribution of Wealth: A Theory of Wages, Interest and Profits (1899).

Essentials of Economic Theory (1907).

Social Justice without Socialism (1914).

{End Chapter 1}

Chapter 2: Economics

Economics (/ˌɛkəˈnɒmɪks, ˌiːkə-/)

A graph depicting Quantity on the X-axis and Price on the Y-axis

The supply and demand model describes how prices vary as a result of a balance between product availability and demand.

Economics examines the actions and relationships of economic actors, as well as the functioning of economies. Microeconomics is the study of the economy's fundamental building blocks, such as individual agents and markets, as well as the interactions between them and the results of those interactions. Households, businesses, customers, and vendors are all examples of possible agents. The field of macroeconomics examines the economy as a whole, including its constituent parts and the forces that shape them, such as the allocation of scarce resources like labor, capital, and land, the value of money, the rate of economic expansion, and government intervention.

Other major divisions in economics include the study of what is (positive economics) and what ought to be (normative economics); Political economy was the original name for this field of study, but economists have been using the term economics since the late 19th century. Therefore, political economy became the de facto method of running a polis or state.

There are numerous current definitions of economics, some of which reflect shifting perspectives on the field or disagreements among economists. Political economy, as defined by Scottish philosopher Adam Smith in 1776, was an inquiry into the nature and causes of the wealth of nations, with the emphasis on the nature:

a subfield of political science concerned with generating enough money for everyone to live comfortably and giving the government enough money to fund public services.

Jean-Baptiste Say (1803) distinguished the field from its public-policy applications by defining economics as the study of how wealth is created, circulated, and consumed. In 1844, John Stuart Mill provided further clarification on the topic:

Economics is the study of the social phenomena that result from the coordinated actions of people to create material wealth, unaltered by the pursuit of any other goal.

In his seminal work Principles of Economics (1890), Alfred Marshall offered a definition that is still widely used. In it, he argued that economics should be studied at both the macro- and micro-levels, not just in relation to wealth:

Economics is the study of regular people doing regular things. It probes his means of financial support and his spending habits. Thus, it is, on the one hand, a branch of the economics discipline and, on the other, a crucial part of the study of man.

To what extent does Lionel Robbins' (1932) [p]robably the most commonly accepted current definition of the subject hold?:

Economics is the study of human action in light of the constraints imposed by limited resources and competing goals.

According to Robbins, the definition is more analytical than categorical because it focus[es] attention on a particular aspect of behavior, the form imposed by the influence of scarcity rather than pick[ing] out certain kinds of behavior. However, he argued that economics can be applied to the study of topics other than peace and security. This is due to the fact that war is fought for the purpose of victory (a desired end), that this pursuit incurs both costs and benefits, and that resources (human life and other costs) are expended in order to achieve victory. The rational actors making the decision may never go to war if they believe it is impossible to win or if the costs are too high relative to the benefits. Economic analysis can be applied to a wide range of fields, but this does not mean that economics is the science of studying all of these fields. Rather, economics is the science of studying the commonalities among them (they all use scarce resources to attain a sought after end).

Some responses later argued that the definition was too general and should have focused solely on market analysis. However, these criticisms faded after the 1960s, when rational-choice modelling and the economic theory of maximizing behavior broadened the scope of economics to include topics previously addressed by other disciplines.

Hesiod, a poet from Boeotia, is often cited as the first economist because of the prevalence of resource distribution questions in his works.

A seaport with a ship arriving

A 1638 painting of a French seaport during the heyday of mercantilism

The subject was shaped primarily by two groups, the mercantilists and the physiocrats of the future. Both of these movements can be traced back to the emergence of modern European capitalism and economic nationalism. The economic doctrine of mercantilism was widely disseminated in pamphlet form by merchants and politicians from the 16th to the 18th centuries. It believed that a country's prosperity was tied to its ability to hoard precious metals. Only by exporting goods and limiting imports other than gold and silver could countries without access to mines obtain these precious metals through trade. State regulation would impose protective tariffs on foreign manufactured goods and ban manufacturing in the colonies, as well as encourage the import of cheap raw materials to be used in manufacturing goods that could then be exported.

Picture of Adam Smith facing to the right

The publication of Adam Smith's The Wealth of Nations in 1776 is considered to be the first formalisation of economic thought.

It has been said that the effective birth of economics as a separate discipline occurred with the publication of Adam Smith's The Wealth of Nations in 1776. In contrast to the physiocratic belief that only agriculture was productive, the book identifies land, labor, and capital as the three factors of production and the main contributors to a nation's wealth.

Smith explains the potential advantages of specialization through division of labor, such as higher labor productivity and benefits from trade, both locally and internationally. Within this context:

He generally, indeed, Neither side has any interest in serving the general public, or how much he is actually advertising it.

By putting more emphasis on domestic rather than international manufacturing,, His only concern is for his own safety; and by guiding that sector in a way that maximizes the value of its output, He is only thinking of himself, which he is a part of, like many other situations, propelled by forces beyond his control toward a goal that was never in his original