John Hicks

His Contributions to Economic Theory and Application

K. Puttaswamaiah

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780765807038
• eBook ISBN: 9781351309783
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Economist Sir John Hicks was the first British economist to win the Nobel Prize in Economic Science (1972) for his wide ranging contributions in general and his book Value and Capital in particular. Value and Capital showed that the basic results of consumer theory could be obtained from statistical usage; it expounded what became known as the "Hicksian substitution effect." K. Puttaswamaiah describes Hicks as a brilliant economist without whose effort present-day economies would not have grown in such dimension by now and Value and Capital as a work that revolutionized the science of economics. John Hicks is a unique collection of essays that examine Hicks through personal recollections as well as critiques and analyses of his work. For this very special volume, K. Puttaswamaiah has gathered 25 contributors. Some were friends, colleagues, and students of Hicks. All are eminent in their own areas of Hicks' work. Their articles depict various aspects of the economist's thought and personality, some depicting him in a new light. "My John Hicks," by Paul A. Samuelson identifies the landmarks in Hicks' life. Colin Simkin's "John and Ursula Hicks-A Personal Recollection" gives a vivid account of the economist's inner life. O.F. Hamouda's essay, "Hicks, A World Economist" presents a scholarly and comprehensive analysis of Hicks' economics. In "Hicks and Economic Theory," Frank Kahn sets out his own views on the major works of Hicks. Harald Hagerman distinguishes between the works of Hicks and Hayek in "Monetary Causes of the Business Cycles and Technological Changes: Hicks vs. Hayek." Axel Lejonhufvud presents a memoriam on the life and works of Hicks. The other authors have chosen different areas of Hicks' works-sometimes focusing on a single work and giving a vivid account of their own thoughts on the area chosen. This volume will interest economists and students who are concerned with Hicks' works in relation to earlier thinkers and present-day economic theory. K. Puttaswamaiah is the senior director, Planning Department, Government of Karnataka State, India. He has written or edited fourteen books. He is the founding editor of the Indian (now International) Journal of Applied Economics & Econometrics.

Chapter - 1


My John Hicks

Paul A. Samuelson

Abstract

In this paper, contributions of J.R. Hicks have been evaluated briefly. The landmarks in Hick” working life is described. Among the major works of Hicks, “Value and Capital” written at his age of 35, is a scientific epic saga – full of new and beautiful things and a springboard towards future advances. Even before the ‘General Theory’ if Keynes was considered as the greatest economist of the world’, J.R. Hicks was the greatest young economist at that time. Hick’s works are immortal.

I was lucky in my teachers at Chicago and Harvard. But being in love with the subject of economics and possessed of boundless youthful energy and a ferocious power to read and focus on everything that interested me, most of what I learned was not by word of mouth in lecturers and conversations with economists at those two great universities in the 1932-1940 period. The wide world was my school. It was from books and journal articles that I learned what were the important scientific questions to ponder over; and many of the best answers that could be then given to those questions came from those away-from-home sources, from the great “invisible college” of economic and other sciences. With two great libraries at hand, I read essentially all the journals when they were, so to speak, still hot, and I was excessively eclectic in sampling almost all of their contents.

It was a wonder that I had time to do independent thinking! And if the brain has only so much room in it (as Sherlock Holmes insisted to Dr. Watson), then my excellent memory could have endangered my own originality. But there was little danger of that, for as Chicago’s Professor Paul Douglas wrote to Professor Jacob Viner in recommending that as an undergraduate I be admitted to Viner’s celebrated Chicago graduate seminar in economic theory: “Young Samuelson is able if cantankerous and argumentative”.

All this is by way of saying that John Hicks (born 1904), early and late, was a major intellectual stimulus for me. I went over his contributions with a powerful microscope, a much more intensive analysis than he ever gave either to my own work or to that of any other economist. That was the way Hicks was. Always he preferred to do things his way. And that was the source both of his creative originality and prolific scientific productivity. Of course such a scientific style can lead to blind spots even in the best of scholars, and to the rediscovery of a certain number of round wheels. But the completed record shows that, if this was a Faustian bargain with the Devil, it was one with high net payoff.

More than once I have recorded the autobiographical fact that, as a teenager at Chicago, I was told by an early tutor that John Maynard Keynes was then – 1932 or 1933, well before The General Theory (1936) – “the greatest economist in the world” and told also, that at Harvard around 1935 by an Assistant Professor friend J.R. Hicks was the greatest young economist at that time. Both evaluations squared with my own early impressions. I spent a lot of time dissecting Hicks’s (1932) Theory of Wages; and, incidentally, I later disagreed with Hick’s own damning-with-faint-praise that early first book. By then I had learned to accept only with guarded reservations John’s claims and disclaimers about his own contributions. Expressions of modesty can sometimes be veiled signs both of vanity and Napoleonic ambition.

I wish present readers to understand that I always regarded Hicks as having been somewhat undervalued, particularly in Britain his own country. As he learned during his brief and not happy sojourn at Cambridge University – in between his nine golden years at the LSE and his decade of loner productivity at Manchester – Hicks was not “politically correct” and therefore not popular with the leftish elite at Oxbridge. Dennis Robertson engineered Hicks’ Cambridge appointment to keep down Joan Robinson; but subsequently Robertson kept somewhat at a distance. Moreover, in England an early failure to earn a First leaves scars on the ego that will not fade. If I ran the world I would heap every honor early on whomever was later to shine in the scientific barnyard; that might get out of the way some of the pathology of unbridled ambition, which can never be satiated even by the greatest of accomplishments. (I think of Joseph Schumpeter and of the mathematician Norbert Wiener as examples in point.)

John Hicks had another fault. He wrote well. This is not a common crime among economists. And it meant that his was a wide audience among readers, some of whom were not very expert in mathematical jargon and techniques. The good fairies balance their gifts. Hicks was not a terribly good lecturer. He did not stammer but his flow of words was not smooth, and in a personal dialogue with a Nicholas Kaldor or Milton Friedman he did not excel in quick repartee.

At Oxford over the years Hicks had some very good students. To name just two, these included the American Lionel McKenzie and the Japanese Michio Morishima. On their travels all over the world, John and Ursula Hicks would be met by admiring former pupils. But the master was not a warm, outgoing personality. He wrote few joint papers and tended to concentrate most on his own research puzzles. It was not a rash decision for him to retire early from his Drummond Professorship: that kept him in step with his older wife; and it in no way inhibited twenty more years of prolific and provocative innovative contributions.

In The New Palgrave A Dictionary of Economics (1987, pp. 641-646), Christopher Blisst gives an admirable selective description of J.R. Hicks’s many and fine contributions to varied fields of economic theory. I shall not duplicate that here. Let me merely sing the praises of Value and Capital (1939, 1946). Written when the author was 35, this is a scientific epic saga – full of new and beautiful things and a springboard toward future advances. No single misprint mars its mathematical text; and the one major omission in its first edition he was able to repair by altering a few pages only.

To summarize my superlative evaluation of John Hicks, I believe it would have been as well for the Royal Swedish Academy of Science to have named Hicks alone for the second Nobel Prize in 1970, following immediately after Ragner Frisch and Jan Tinbergen in 1969. That would have left Kenneth Arrow to receive later an unshared award: the Hicks and Arrow coupling was not particularly optimal; and it came about, I suspect, from the happenstance that some of the judging committee resented Hicks’s cavalier citings of contemporary work by other scholars – a non-Scandinavian practise not uncommon in the British senior common rooms of that time. (I should add that Kenneth Arrow, in my book, deserves at least two Nobel Prizes).

I remember Sir John the last time I saw him in person, toward the end of his life, at the Saltzesbaden 1987 conference near Stockholm in honor of Erik Lundberg. He was in good form for an octogenarian. “Fortunately I am dying from my feet up rather than from my brain down”, he quipped.¹ Years before John Hicks had confided to me, “When one of us – Ursula or I – dies, the other will be left lonely”. And so it was for this childless couple; when Ursula (born in 1896!) died first, Sir John lived alone at his Blockley family property in the Cots-wolds near Oxford. Fortunately younger economists on the Oxford scene helped him travel to conferences in Italy and elsewhere.

To the end Sir John Hicks was as he had been throughout his life: a loner scholar, for whom the sun rose in the morning when first he opened his eyes. His works constitute his immortality.

References

Bliss, Christopher, 1987. “Hicks, John, R.” in J. Eatwell, M. Milgate and P. Newman, eds., The New Palgrave A Dictionary of Economics, Vol. 2, London. Macmillan.

Hicks John, R., 1932, 1963. The Theory of Wages. London. Macmillan.

Hicks John, R. 1937. La Théorie Mathématique de la valeur end régime de libre concurrence. Trans. G. Lutfalla. Paris: Hermann.

Hicks John, R. 1939, 1946. Value and Capital. Oxford: Clarendon Press.

Keynes, John Maynard. 1936. The General Theory of Employment, Interest and Money. London. Macmillan.

---

¹Wanting to square the books before it was too late, John Hicks in private at Saltzesbaden expressed worry that he had been remiss in properly citing my works parallel to his. Long earlier I had made the optimal adjustment to his manner of composition and I could see no point in worrying a doughty warrior at that stage of life. Therefore I assured him that always I had learned much from him (a literal truth); and that indeed I had early known the brief 1937 French version of his developed 1939 classic. Reassured, he confided: “Now that I am old and working alone, getting the big books off the library shelf is quite a chore and that inhibits my bibliographical accuracy”. When I told Bob Solow this story I added: “Those books were always heavy on Sir John’s shelves”.

Chapter - 2


John and Ursula Hicks – A Personal Recollection

Colin Simkin

Abstract

In this article I describe an association with John Hicks and his wife Ursula that began during the Second World War and lasted until his death in 1989. I first wrote expressing a wish to do post-graduate work under him, and he encouraged me to come to Oxford for that purpose after the war. In 1947 I joined him at Nuffield College, before it had its own permanent buildings and when there was an exciting atmosphere of academic pioneering. My two years there resulted in a friendship which gave me introductions to British and foreign economists, and warm hospitality at Porch House, their Cotswold home. They also resulted in D Phil and the publication of a book based on my thesis. After my return to Auckland I kept in touch by correspondence and by two visits to England in 1958 and 1966-67, and arranged academic hospitality for them at Sydney during their visit to Australia in 1976. When I retired in 1980, I paid further visits to England, during which I received more hospitality at Porch House. In all these ways I came to form a long and rewarding friendhsip with John and Ursula, from whom I received much kindness, intellectual benefit and professional help. I was, of course, only one of many who could express deep indebtedness to these two remarkable people, but my account may convey something of what they meant to those fortunate enough to know them well.

1. Introduction

I have had the good fortune to know two men of something like genius, both of whom became life-long friends and from whom I received much personal kindness as well intellectual benefit. And I cannot think of them apart from their two exceptional and friendly wives.

The first was Karl Popper whom I met in 1939 when I went to Canterbury University College where he was the senior lecturer in philosophy, and gave him some help in writing the great Open Society and its Enemies, and also The Poverty of Historicism, both written with secretarial and other help from his devoted wife Hennie. But I got much more from him than I could give; insight into scientific method, probability theory and mathematics in its application to economics. I recall particularly his elucidation for me of R.G.D. Allen’s mathematical half of the Reconsideration of the Theory of Value which was written in collaboration with J.R. Hicks in 1934,¹ and his encouragement to persevere with the study of Value and Capital which Hicks published in 1939. This germinal work, together with Jan Tinbergen’s Statistical Testing of Business Cycles (1938) gave me new insights into economics and its possibilities, reinforced by reading current volumes of Econometrica,² again aided by Karl. In them I found John’s important article, Mr Keynes and the Classics, and also his useful survey of monopoly theory. I had not then read his first book, a neo-classical one, The Theory of Wages, although I had learnt something of its ideas from studying R.G.D. Allen’s Mathematical Analysis for Economists.

I was not able to proceed far in such directions because I entered the Royal New Zealand Air Force in 1942 and had a tour in the Pacific Islands (as a meteorologist). But when it became clear that Nazi Germany and Imperial Japan could be defeated, I decided to try building a bridge to my future by writing to John Hicks, then Professor of Economics at Manchester. I sent him two articles, which I had published, in The Economic Record on budgetary reform, drawing a good deal on Swedish theory and practice of counter-cycle budgeting. It turned out that Ursula Hicks, who had a strong interest in public finance, had helped Erik Lindahl prepare the English edition of his Studies in the Theory of Money and Capital (1939) when he came to the LSE to arrange for this³. She and John, moreover, collaborated during the war years in work on local authority rating and other aspects of public finance.⁴ My joint articles were thus well received and John encouraged me to plan coming to Manchester to do a PhD under his supervision. Later he wrote to say that he was leaving Manchester to take up an official fellowship at the new undeveloped Nuffield College in Oxford, and suggested that I should plan to come there for my postgraduate study.

But the War ended in 1945, Karl left to take up a readership in Logic and Scientific Method at the London School of Economics and I, quite unexpectedly, was appointed to the vacant chair of economics at Auckland University College. I wrote to John explaining this appointment and saying that nevertheless I hoped to join him before long for postgraduate work. He answered expressing doubts about that, and I had them, too. Then came two unexpected strokes of luck. The Rockerfeller Foundation offered me a generous fellowship for two years of overseas study, and the council of the College approved my taking leave (on half pay) for this purpose. I wrote to John with this news and also enclosing an article which I had written, Notes on the Theory of Discriminating Monopoly. This was published before the end of 1947 in The Review of Economic Studies, of which Ursula was an editor. Greatly elated I set out for Oxford and arrived there in January 1947.

My wife and I were soon invited by John to a lunch at what was then Halifax House with Ursula and Herbert Frankel, a South African who held the chair of economic development and whom John had known during the year he served as a temporary replacement lecturer at the University of Johannesburg. It was a very pleasant personal introduction to the Hicks, both friendly and Ursula warm where John was shy or reserved, and good to meet Herbert, a fellow ‘colonial’ and an able economist. They were very encouraging and John soon arranged that I should become a research fellow of Nuffield (unpaid), that he should be my supervisor for a thesis on what I took to be business cycles in New Zealand, introduced me to the excellent facilities of Rhodes House and got me a room in the Institute of Statistics where I benefited from contact with Patrick Moran and David Champernowne. I attended his weekly seminar for Nuffield students and heard interesting exchange between him and a visiting Paul Samuelson on the valuation of the social income; and Ian Little, then a research student, astounded us with a brilliant paper on revealed preference. I also attended the lectures John was giving in 1948 on Keynesian theory – lectures which became the basis of A Contribution to the Theory of ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Foreword by Paul A. Samuelson
• Preface
• 1. My John Hicks
• 2. John and Ursula Hicks - A Personal Recollection
• 3. Hicks, a World Economist
• 4. “Mr. Keynes” and Hicks’s Value and Capital
• 5. Hicks on Capital
• 6. Hicks and Economic Theory
• 7. Monetary Causes of the Business Cycles and Technological Change: ‘Hicks vs Hayek’
• 8. Capital and Growth: Its Relevance as a Critique of Neo-Classical and Classical Economic Theories
• 9. Equilibrium, Expectations and ISLM
• 10. The Function of the Hicksian Economic Institution
• 11. Hicks and the Crisis in Keynesian Economics
• 12. A Note on Don Patinkin’s Misspecification of Keynes’ Consumption Function and Misinterpretation of Keynes’ Elasticity Analysis in Chapter 10 of the General Theory
• 13. Money, Individual Choice and Frictions
• 14. Patinkin, the General Theory and Keynes’s Aggregate Supply Function : A Study of the Reasons Underlying Patinkin’s Misinterpretation of the GT
• 15. Neoliberalism and Globalisation - Justifying Policies of Redistribution
• 16. J.M. Keynes’s Bad H abit: A Critique of His Correspondence Style Based on the Hicks-Keynes Exchange over the General Theory in 1936-37
• 17. Sir John Hicks’s Contribution in the Field of Income Distribution, Profit Determination and Differentiated Behaviour of Economic Classes
• 18. The Birth of Karl Popper’s Open Society : A Personal Reminiscence
• 19. Mr. Hicks and the Classics
• 20. Neo Austrian Process(es)
• 21. Culture and Economic Growth: The State and Globalization
• 22. Financing of Government Expenditure and the Efficacy of IS-LM
• 23. Hicks’ Approach to Economic Theory
• 24. In Memoriam : John Hicks
• Annex - 1 Sir John R. Hicks : Published Writings
• Annex - 2 Presentation of the Kannada Version of ‘Value and Capital’ to Prof. J.R. Hicks, at Mysore on 7th February 1979
• Index
• Contributors