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Conceptual Difficulties in Modern Economic Theory

Published online by Cambridge University Press:  14 March 2022

Henry Winthrop
Henry Winthrop*
Affiliation:
U. S. Department of Labor, Washington, D. C.
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Extract

The use of the marginal concept in academic economic theory is found to underlie a good deal of current orthodox economic analysis. The marginal concept is used by thinkers with a collectivist bent as well as thinkers of an orthodox stamp. Marginal analysis is reasonably serviceable on some occasions but fraught with difficulties on others. When the marginal concept refers to a measurable factor, such as the marginal product of an additional unit of capital, it is unquestionably useful for analysis. When it refers to a subjective situation, such as a marginal increase or decrease in satisfaction or demand, the analysis which rests upon it is often somewhat shaky. This paper is an attempt to point out some difficulties in the use of marginal analysis when such analysis refers to internal psychological states of economic men. The points made here will center about the concept of marginal satisfaction in income, that is to say, the assumption that the increment of satisfaction resulting from an additional unit of income, diminishes with size of income.

Type
Research Article
Information
Philosophy of Science , Volume 12 , Issue 1 , January 1945 , pp. 30 - 39
Copyright
Copyright © The Philosophy of Science Association 1945

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Footnotes

1

The views presented here are the author's own and are in no wise to be construed as officially representing those of the U. S. Department of Labor or any other governmental agency.

References

2 The orthodox theorist argues, of course, that the different books and installments are, strictly speaking, not the same commodities. This is unalterably true. However this would not deter him from assuming a reader's satisfaction in each of several identical volumes successively bought, to be positive. Readers rarely buy more than one copy of a volume for their own use and enjoyment and anything purchased beyond this would really have disutility in personal use though possibly providing satisfaction as a means for sale and profit. Nevertheless the orthodox economic analyst stands unwaveringly brandishing his marginal conceptual techniques before the fantastic spectacle of a reader buying 10,000 copies of “Gone With The Wind,” who grunts approvingly with each copy reread, although each successive grunt is feebler than the last, which, I suppose, is as it should be.

3 This should not be so in a systematic science since it is tantamount to building the science, in part at least, on an argumentum ad ignorantiam.

4 Hull, Clark, “Value, Valuation, and Methodology,” Philosophy of Science, July, 1944.

5 A discussion of what I have called the “realities of the market place” can be found in critical literature on the calculus of economic hedonism. Studies of market surveys and consumers' expenditures will reveal internal states for consumers which are quite remote from the marginal vagaries of orthodox analysis.

6 Figure I is taken from Lerner, Abba P., “The Economics of Control,” The Macmillan Company, New York, 1944, p. 30.

7 Assuming with Lerner equal numbers of duodirectional shifts.

8 The position taken by the writer of this paper does not argue against an equalitarian distribution of income as optimum. The question is optimum for what? An equalitarian distribution may be optimum on other grounds, where the objective may be a desire to avoid inflation, balance production and consumption under a regime of rising productivity, accelerate the expansion of a controlled economy via investment, as much as possible, etc. Our discussion merely stresses the dubiousness of arguing that an equalitarian distribution is optimum on grounds of an analysis based on marginal assumptions.