Jacob Viner

Together with Knight, the Canadian-born Jacob Viner was the leading light of the Chicago School of the inter-war period. His work ranged all over economics, but it is perhaps his work on the history of economic thought and international trade theory that we find his remarkable strengths. Nonetheless, as Robbins characterized him, Jacob Viner was “the outstanding all-rounder of his time in our profession” (Robbins, 1970: p.2).

Trained by Taussig at Harvard, Jacob Viner’s very first publication was on methodology (1917), in which he provided a full-fledged defense of the inductive method. His subsequent work was on problems in trade theory (1923, 1924) – a concern which he maintained throughout the rest of his career.

This work was concurrent with his masterly 1921 and 1931 articles on price theory – the first began inching towards a theory of imperfect competition, the second providing an analytical and graphical exposition of the theory of the firm (the long-run and short-run cost curves we see in modern principles textbooks). A famous error on the long-run envelope of short-run average cost curves in his 1931 article and anticipation by Roy Harrod did not diminish his claim to fame.

Jacob Viner was fiercely opposed to the Keynesian Revolution – but not because of its policy prescriptions as indeed, Viner himself had recommended them. As he wrote in several papers (e.g. 1933), he believed the Great Depression was due to deflation in output prices being faster than the collapse in costs. Recovery, he believed, required a restoration of profit margins and thus government-induced inflation – not by monetary expansion, but rather by deficit spending. This would create the necessary price rise,(and, with costs lagging, profits) and the consequent cumulative rise in output to pull the economy out of depression. He was very much a fiscal policy advocate and a believer in policy discretion rather than fixed rules – thus he did not take Milton Friedman’s attempt to paint him as an “early Monetarist” very well.

Jacob Viner’s famous 1936 critique of John Maynard Keynes was not over policy implications but rather a result of theoretical disputes over liquidity preference and what Viner thought was oversimplified theory of effective demand. Viner preferred to famously characterize Keynesian theory as “short-run” analysis while considering neo-classical theory to be true in the ‘long-run’. It was Viner’s scathing 1936 critique that prompted Keynes to write his famous 1937 QJE article as a response.

Viner’s work on the history of economic thought began with his 1926 essay on Adam Smith and culminated in his magnum opus, Studies in the Theory of International Trade (1937) – to which we owe most of our knowledge of the Bullionist Controversy in 19th Century Britain – and the masterful introduction to the 1965 reprint of Rae’s Life of Adam Smith.

Viner’s relations with Knight were cool but respectful. Compared to Knight, Viner was less opposed to quantitative techniques but remained wary of them. A recurring, if pointless, amusement at Chicago was the controversy over cost theory between Knight and Viner – with Knight supporting the Austrian doctrine of opportunity cost and Viner espousing the Marshallian ‘real cost’ theory. This position was, in fact, more than a personal diversion: Viner (1932, 1937), after all, had promoted a ‘real cost’ version of the comparative advantage thesis as opposed to Gottfried Haberler’s ‘opportunity cost’ version or Bertil Ohlin’s ‘factor-endowment’ version.

Despite being one of the leaders of the Chicago School, Viner left Chicago for Princeton in 1946 – perhaps to the relief of many Chicago first-year students: Viner’s ‘price theory’ course was notorious for the terrifying way in which he conducted the classroom discussion. In later years, when questioned as to whether he thought himself part of the Chicago School, his reply was unequivocal:

“I am willing to consider the existence of a ‘Chicago School’ (but not one confined to the economics department and not embracing all of the department) and that this ‘School’ had been in operation, and had won many able disciples, for years before I left Chicago. But at no time was I consciously a member of it, and it is my vague impression that if there was such a school it did not regard me as a member, or at least as a loyal and qualified member” (Letter to Patinkin, Nov. 24, 1969).

Although he missed the Nobel awards, Viner was awarded the American Economic Association prestigious Francis A. Walker Medal in 1962 – the economics’ profession’s Nobel equivalent prior to 1969. Viner’s exhortation for serious scholarly treatment of economics is best expressed in his famous 1950 address, A Modest Proposal for Some Stress on Scholarship in Graduate Training.

Major Works of Jacob Viner

– Some Problems of Logical Method in Political Economy, 1917
– Price Policies: the determination of market price, 1921
– Dumping: A problem in international trade, 1923
– Canada’s Balance of International Indebtedness: 1900- 1913, 1924
– The Utility Concept in Value Theory and its Critics, 1925
– Adam Smith and Laissez-Faire, 1927
– The Present Status and Future Prospects of Quantitative Economics, 1928
– Mills’ Behavior of Prices, 1929
– Costs Curves and Supply Curve, 1931
– The Doctrine of Comparative Costs, 1932
– Inflation as a Possible Remedy for the Depression, 1933
– Mr. Keynes and the Causes of Unemployment, 1936
– Studies in the Theory of International Trade, 1937
– Marshall’s Economics, in Relation to the Man and to his Times, 1941
– Trade Relations Between Free-Market and Controlled Economies, 1943
– International Relations between State-Controlled National Economies, 1944
– Prospects for Foreign Trade in the Post-War World, 1946
– Power Versus Plenty as Objectives of Foreign Policy in the Seventeenth and Eighteenth Centuries, 1948
– Bentham and J.S. Mill: the Utilitarian Background, 1949
– The Customs Union Issue, 1950
– A Modest Proposal for Some Stress on Scholarship in Graduate Training, 1950
– International Economics, 1951
– International Trade and Economic Development, 1952
– Review of Schumpeter’s History of Economic Analysis, 1954
– Fashion’ in Economic Thought, 1957
– International Trade Theory and its Present-Day Relevance, 1955
-The Long View and the Short: Studies in economic theory, 1958
– Stability and Progress: the poorer countries’ problem, 1958
– Five Lectures on Economics and Freedom, 1959
– The Intellectual History of Laissez-Faire, 1960
– Hayek on Freedom and Coercion, 1960
– Relative Abundance of the Factors and International Trade, 1962
– The Necessary and Desirable Range of Discretion to be Allowed to a Monetary Authority, 1962
– Progressive Individualism as Original Sin, 1963
– The Earlier Letters of John Stuart Mill, 1963
– The Economist in History, 1963
– The United States as a Welfare State, 1963
– Problems of Monetary Control, 1964
– Comment on my 1936 Review of Keynes, 1964
– Introduction, in J. Rae, Life of Adam Smith, 1965
– Adam Smith, 1968
– Mercantilist Thought, 1968
– Man’s Economic Status, 1968
– Satire and Economics in the Augustan Age of Satire, 1970
– The Role of Providence in the Social Order, 1972
– Religious Thought and Economic Society, 1978
– Essays on the Intellectual History of Economics, 1991