Kenneth E. Boulding: Economics

“Economic development does not consist merely in the piling up of things, but in the accumulation of new kinds of things”

Kenneth E. Boulding

Source: 1960s, The meaning of the twentieth century: the great transition, 1964, p. 116. partly cited in: (2013) " What Boulding Said Went Wrong with Economics, A Quarter Century On http://www.deirdremccloskey.com/editorials/boulding.php"
Context: The success of Japanese development is due simply to the fact that Japan devoted a substantial portion of its resources to the growth industry, and particularly to the human resources and then commended Max Weber's emphasis on hard work and thrift.
All the law and the prophets of economic development can be summed up in the old proverb that "where there's a will there's a way". The way indeed is absurdly easy and is well known. It consists merely in putting resources into growth. What could be simpler and easier! the problem however, is the will, and this. I think, we understand very little. The whole cultural milieu of society plays a role in the process of developing its will, and it is hard to separate the determining factors. A widespread puritan ethic, as Max Weber pointed out, is undoubtedly an asset, if this leads people to place a high value on hard work and thrift. On the other hand, puritanism often goes along with a resistance to social change and an unwillingness to innovate outside a narrow field of technology, and thrift alone can often lead to uncreative forms of accumulation or even to unemployment and depression. Mere accumulation is not enough. Economic development does not consist merely in the piling up of things, but in the accumulation of new kinds of things.

“The process of consumption… is the final act in the economic drama”

Kenneth E. Boulding

Source: 1940s, Economic Analysis, 1941, p. 614 (rev. ed. 1948) as cited in: Andrew McMeekin (2002) Innovation by Demand. p. 131

“Economists can take a good deal of credit for the stabilization policies which have been followed in most Western countries since 1945 with considerable success. It is easy to generate a euphoric and self-congratulatory mood when one compares the twenty years after the first World War, 1919-39, with the twenty years after the second, 1945-65. The first twenty years were a total failure; the second twenty years, at least as far as economic policy is concerned, have been a modest success. We have not had any great depression; we have not had any serious financial collapse; and on the whole we have had much higher rates of development in most parts of the world than we had in the 1920’s and 1930’s, even though there are some conspicuous failures. Whether the unprecedented rates of economic growth of the last twenty years, for instance in Japan and Western Europe, can be attributed to economics, or whether they represent a combination of good luck in political decision making with the expanding impact of the natural and biological sciences on the economy, is something we might argue. I am inclined to attribute a good deal to good luck and non-economic forces, but not all of it, and even if economics only contributed 10 percent, this would amount to a very handsome rate of return indeed, considering the very small amount of resources we have really put into economics.”

Kenneth E. Boulding

Source: 1960s, The economics of knowledge and the knowledge of economics, 1966, p. 9

War , World , Failure , Mood

“One of the most important skills of the economist, therefore, is that of simplification of the model. Two important methods of simplification have been developed by economists. One is the method of partial equilibrium analysis (or microeconomics), generally associated with the name of Alfred Marshall and the other is the method of aggregation (or macro-economics), associated with the name of John Maynard Keynes.”

Kenneth E. Boulding

Source: 1950s, The Skills of the Economist, 1958, p. 19

“[This book] is intended as a text from which the student can learn and the teacher can teach the methods and results of economic analysis. It also seeks to be a contribution to the development and systematization of the body of economic analysis itself. These purposes are not separate. The task of presenting a systematic, orderly, and accurate account of economic analysis is identical with the task of preparing the material for teaching. It must be emphasized, however, that the purpose of this work is not primarily to entertain the student, or to enable him to regurgitate appropriate material into examination books, or to learn a few pat phrases, or to indoctrinate him with an abstract discipline which he will never use. Economics is like photography in this respect, that under-exposure is less desirable than no exposure at all.”

Kenneth E. Boulding

Source: 1940s, Economic Analysis, 1941, p. xv

Books , Learning , Teachers

“It is almost as hard to define mathematics as it is to define economics, and one is tempted to fall back on the famous old definition attributed to Jacob Viner, “Economics is what economists do,” and say that mathematics is what mathematicians do. A large part of mathematics deals with the formal relations of quantities or numbers.”

Kenneth E. Boulding

Source: 1970s, Economics As a Science, 1970, p. 97

Mathematics , Parting

“The ultimate "causes of price" - to use a Classical term - lie deeply embedded in the psychology and techniques of mankind and his environment, and are as manifold as the sands of the sea. All economic analysis is an attempt to classify these manifold causes, to sort them out into categories of discourse that our limited minds can handle, and so to perceive the unity of structural relationship which both unites and separates the manifoldness. Our concepts of "" and "supply" are such broad categories. In whatever sense they are used, they are not ultimate determinants of anything, but they are convenient channels through which we can classify and describe the effects of the multitude of determinants of the system of economic magnitude.”

Kenneth E. Boulding

Kenneth Boulding (1944) " A Liquidity Preference Theory of Market Prices http://cas.umkc.edu/econ/economics/faculty/wray/631Wray/Week%207/Boulding.pdf". In: Economica, New Series, Vol. 11, No. 42 (May, 1944), pp. 55-63.
C. Brown (2003) " Toward a reconcilement of endogenous money and liquidity preference http://www.clt.astate.edu/crbrown/brownjpke.pdf" in: Journal of Post Keynesian Economics. Winter 2003–4, Vol. 26, No. 2. 323 commented on this article, saying: "Boulding (1944) argued that if liquidity preference were divorced from the "demand for money," the former could come into its own as a theory of financial asset pricing. According to this view, rising liquidity preference or a "wave of bearish sentiment" is manifest in a shift from certain asset categories, specifically, those that are characterized by high capital uncertainty (that is, uncertainty about the future value of the asset as a result of market revaluation) to assets such as commercial paper or giltedged securities."
1940s

Lie , Sense , Sea

“Canada has no cultural unity, no linguistic unity, no religious unity, no economic unity, no geographic unity. All it has is unity.”

Kenneth E. Boulding

Kenneth Boulding cited in: World Union (Organization) (1982) World union. Vol 22. p. 35
1980s

“[The consumer is] the supreme mover of economic order… for whom all goods are made and towards whom all economic activity is directed.”

Kenneth E. Boulding

Source: 1940s, Economic Analysis, 1941, p. 613 (rev. ed. 1948) as cited in: Andrew McMeekin (2002) Innovation by Demand. p. 131

“Mathematics brought rigor to Economics. Unfortunately, it also brought mortis”

Kenneth E. Boulding

Attributed to Kenneth Boulding in: Peter J. Dougherty (2002) Who's afraid of Adam Smith?: how the market got its soul. p. 110
1990s and attributed

Mathematics

“I have been gradually coming under the conviction, disturbing for a professional theorist, that there is no such thing as economics - there is only social science applied to economic problems.”

Kenneth E. Boulding

Source: 1950s, A Reconstruction of Economics, 1950, p. vii

Problem , Science

“Economics deals with the behavior of commodities rather than with the behavior of men.”

Kenneth E. Boulding

Attributed to Kenneth Boulding in: Peter F. Drucker, Management: Tasks, Responsibilities, Practices, New York: Truman Talley Books, E.P. Dutton, 1986, p. 21.
1980s

Men , Behavior

“Adam Smith, who has strong claim to being both the Adam and the Smith of systematic economics, was a professor of moral philosophy and it was at that forge that economics was made. Even when I was a student, economics was still part of the moral sciences tripos at Cambridge University. It can claim to be a moral science, therefore, from its origin, if for no other reason. Nevertheless, for many economists the very term “moral science” will seem like a contradiction. We are strongly imbued today with the view that science should be wertfrei and we believe that science has achieved its triumph precisely because it has escaped the swaddling clothes of moral judgment and has only been able to take off into the vast universe of the “is” by escaping from the treacherous launching pad of the “ought.” Even economics, we learn in the history of thought, only became a science by escaping from the casuistry and moralizing of medieval thought.”

Kenneth E. Boulding

Source: 1960s, Economics As A Moral Science, 1969, p. 12

History , Strong , Learning , Universe

“We have defined the main task of economic analysis as the explanation of the magnitudes of economic quantities. The student will find also that the main part of this, as of most other works on the subject, is concerned with the theory of the determination of prices, wages, interest rates, incomes, and the like. He may well inquire, therefore, in the midst of so much mathematics, whether the first task of economics is not the investigation of wealth, or welfare. Some economists have endeavored to restrict the boundaries of the science to the investigation of those quantities which are numerically measurable. Well-being, under such a restriction, would not be part of economics at all.”

Kenneth E. Boulding

Source: 1940s, Economic Analysis, 1941, p. 7-8

Mathematics , Science , Parting , Wealth

“It is probable that when future historians of economic thought look back over this century, the thirties will appear as an era of rapid development in economic theory. Not only has there been unusual activity in monetary theory, theory of value. but extensive transformations have also been made in the basic theory of value. The outstanding publications in this field are, of course, Joan Robinson's Theory of Imperfect Competition and Chamberlin's Theory of Monopolistic Competition, the first produced in Cambridge, England, and the second in Cambridge, Massachusetts. These volumes mark the explicit recognition of the theory of the firm as an integral division of economic analysis upon which rests the whole fabric of equilibrium theory. General equilibrium is nothing more than the problem of the interaction of individual economic organisms, under various conditions and assumptions; as a necessary preliminary to its solution, an adequate theory of the individual organism itself is necessary.”

Kenneth E. Boulding

Source: 1940s, The theory of the firm in the last ten Years, 1942, p. 791

Problem , Appearance , Future

“In view of the importance of philanthropy in our society, it is surprising that so little attention has been given to it by economic or social theorists. In economic theory, especially, the subject is almost completely ignored. This is not, I think, because economists regard mankind as basically selfish or even because economic man is supposed to act only in his self-interest; it is rather because economics has essentially grown up around the phenomenon of exchange and its theoretical structure rests heavily on this process.”

Kenneth E. Boulding

Kenneth Boulding (1962) " Notes on a Theory of Philanthropy http://www.nber.org/chapters/c1992.pdf" in: Philanthropy and Public Policy. Frank G. Dickinson, ed., New York, National Bureau of Economic Research.
1960s

Thinking , Selfishness

“Conventions of generality and mathematical elegance may be just as much barriers to the attainment and diffusion of knowledge as may contentment with particularity and literary vagueness… It may well be that the slovenly and literary borderland between economics and sociology will be the most fruitful building ground during the years to come and that mathematical economics will remain too flawless in its perfection to be very fruitful.”

Kenneth E. Boulding

Kenneth Boulding (1948) "Samuelson's Foundations: The Role of Mathematics in Economics," In: Journal of Political Economy, Vol 56 (June). as cited in: Peter J. Boettke (1998) " James M. Buchanan and the Rebirth of Political Economy http://publicchoice.info/Buchanan/files/boettke.htm". Boettke further explains "Boulding's words are even more telling today than they were then as we have seen the fruits of the formalist revolution in economic theory and how it has cut economics off from the social theoretic discourse on the human condition."
1940s

Mathematics , Knowledge , Perfection

“Economic progress… means the discovery and application of better ways of doing things to satisfy our wants. The piping of water to a household that previously dragged it from a well, the growing of two blades of grass where one grew before, the development of a power loom that enables one man to weave ten times as much as he could before, the use of steam power and electric power instead of horse or human power — all these things clearly represent economic progress.”

Kenneth E. Boulding

Remark: Kenneth Boulding gave the same example in his 1945 The economics of peace, p. 74
Source: 1950s, Principles of economic policy, 1958, p. 23

Way , Grass , Water , Time

“[You know you are in a part of the economy dealing with grants instead of exchange when] A gives B something and B does not give A anything in the way of an economic good.”

Kenneth E. Boulding

McCloskey (2013) commented earlier: "Boulding invented what he called, infelicitiously, "grants economics" (he might better have used the anthropologist's term gifts, or even the theologian's term grace... It's an idea about the economy, but draws the attention of economists to exactly what they do not attend to when thinking of exchange alone."
Source: 1970s, The Economy of Love and Fear, 1973, p. i as cited in: Deirdre Nansen McCloskey (2013) What Boulding Said Went Wrong with Economics, A Quarter Century On http://www.deirdremccloskey.com/editorials/boulding.php

Way , Parting

“Production functions involving only land, labor and capital… never work and never explain economic development.”

Kenneth E. Boulding

Kenneth Boulding (1990). "Taxonomy as a Source of Error." in Methodus Vol 2. p. 17-21, as cited in: Deirdre McCloskey (2013) " What Boulding Said Went Wrong with Economics, A Quarter Century On http://www.deirdremccloskey.com/editorials/boulding.php"
1990s and attributed