John Bates Clark
Encyclopedia
John Bates Clark 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 teaching at Columbia University
.
, 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.
(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:
He hoped that communism could be combatted by suppression and reform:
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.
This view on fair wages changed in 1886: "Clark himself, it will be remembered has song down the doom of competition in The Philosophy of Wealth. But now … he has reversed his position and build[s] up a body of economic laws based on competition" writes Homan (1928) and Everett (1946) finds: "Soon after writing The Philosophy of Wealth, however, Clark started to make defences for the competitive system. What caused the change is unknown. This much we can say. By the time he wrote The Distribution of Wealth he was convinced that pure competition was the natural and normal law by which the economic order obtained justice." 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 foundation of Clark’s further work was competition: "If nothing suppresses competition, progress will continue forever". Clark: "The science adapted … is economic Darwinism. … Though the process was savage, the outlook which it afforded was not wholly evil. The survival of crude strength was, in the long run, desirable". This was the fundament to develop the theory which made him famous: Given competition and homogeneous factors of production labor and capital, the repartition of the social product will be according to the productivity of the last physical input of units of labor and capital. This theorem is a cornerstone of neoclassical micro-economics. Clark stated it in 1881 and more elaborated 1899 in The Distribution of Wealth. The same theorem was formulated later independently by John Atkinson Hobson (1891) and Philip Wicksteed
(1894). The political message of this theorem is: "[W]hat a social class gets is, under natural law, what it contributes to the general output of industry."
Clark’s conclusion rests upon the productive contribution of the last unit of physical labour – one hour unqualified labour – and the last unit of physical capital. To him heterogeneous capital goods have a second, a social form as homogeneous capital (called jelly as a street can be moulded into an engine) and the productivity of the last unit of jelly determines profit. This retakes Karl Marx
’s view that commodities have a heterogeneous natural form (Naturalform) and also opposed to it a homogenous value-form (Wertform), jelly. Clark might have known this Marxian construction from his German time and was reproached for this similarity.
Clark’s capital are not produced means of production each with a different production structure. It is an abstract, always existing and never perishing one great tool in the hand of working humanity 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 1947 textbook Economics divulged Clark’s capital concept worldwide.
J. B. Clark was the father of John Maurice Clark
.
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
. He was one of the pioneers of the marginalist revolution and opponent to the Institutionalist school of economics
Institutional economics
Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the...
, and spent most of his career teaching at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
.
Biography
Clark was born and raised in Providence, Rhode IslandProvidence, Rhode Island
Providence is the capital and most populous city of Rhode Island and was one of the first cities established in the United States. Located in Providence County, it is the third largest city in the New England region...
, and graduated from Amherst College
Amherst College
Amherst College is a private liberal arts college located in Amherst, Massachusetts, United States. Amherst is an exclusively undergraduate four-year institution and enrolled 1,744 students in the fall of 2009...
, in Massachusetts, at the age of 25. From 1872 to 1875, he attended the University of Zurich
University of Zurich
The University of Zurich , located in the city of Zurich, is the largest university in Switzerland, with over 25,000 students. It was founded in 1833 from the existing colleges of theology, law, medicine and a new faculty of philosophy....
and the University of Heidelberg where he studied under Karl Knies
Karl Knies
Karl Gustav Adolf Knies was a German economist.He is known as the author of Political Economy from the Standpoint of the Historical Method, one of the 19th century methodological treatises on German historical school of economics...
(a leader of the German Historical School
German Historical School
The German Historical School of Law is a 19th century intellectual movement in the study of German law. With Romanticism as its background, it emphasized the historical limitations of the law...
). Early in his career Clark's writings reflected his German Socialist background and showed him as a critic of capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
. During his time as a professor at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
however, his views gradually shifted to support of capitalism and he later became known as a leading advocate of the capitalist system.
Theoretical work
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 JevonsWilliam Stanley Jevons
William Stanley Jevons was a British economist and logician.Irving Fisher described his book The Theory of Political Economy as beginning the mathematical method in economics. It made the case that economics as a science concerned with quantities is necessarily mathematical...
(1871), Menger
Carl Menger
Carl Menger was the founder of the Austrian School of economics, famous for contributing to the development of the theory of marginal utility, which contested the cost-of-production theories of value, developed by the classical economists such as Adam Smith and David Ricardo.- Biography :Menger...
(1871), and Walras
Walras
Walras is surname of:* Auguste Walras , French school administrator and economist* Léon Walras * Walras' law...
(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.
This view on fair wages changed in 1886: "Clark himself, it will be remembered has song down the doom of competition in The Philosophy of Wealth. But now … he has reversed his position and build[s] up a body of economic laws based on competition" writes Homan (1928) and Everett (1946) finds: "Soon after writing The Philosophy of Wealth, however, Clark started to make defences for the competitive system. What caused the change is unknown. This much we can say. By the time he wrote The Distribution of Wealth he was convinced that pure competition was the natural and normal law by which the economic order obtained justice." 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
Knights of Labor
The Knights of Labor was the largest and one of the most important American labor organizations of the 1880s. Its most important leader was Terence Powderly...
.
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'sHenry GeorgeHenry George was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land...
] Progress and PovertyProgress and PovertyProgress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy was written by Henry George in 1879...
... 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 socialismAgrarian socialismAgrarian socialism is a socioeconomic political system which combines an agrarian way of life with socialist economic policies.When compared to standard socialist systems which are generally urban/industrial , internationally oriented, and more progressive/liberal in terms of social orientation,...
.' 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". Clark: "The science adapted … is economic Darwinism. … Though the process was savage, the outlook which it afforded was not wholly evil. The survival of crude strength was, in the long run, desirable". This was the fundament to develop the theory which made him famous: Given competition and homogeneous factors of production labor and capital, the repartition of the social product will be according to the productivity of the last physical input of units of labor and capital. This theorem is a cornerstone of neoclassical micro-economics. Clark stated it in 1881 and more elaborated 1899 in The Distribution of Wealth. The same theorem was formulated later independently by John Atkinson Hobson (1891) and Philip Wicksteed
Philip Wicksteed
Philip Henry Wicksteed is known primarily as an economist. He was also an English Unitarian theologian , classicist, medievalist, and literary critic....
(1894). The political message of this theorem is: "[W]hat a social class gets is, under natural law, what it contributes to the general output of industry."
Clark’s conclusion rests upon the productive contribution of the last unit of physical labour – one hour unqualified labour – and the last unit of physical capital. To him heterogeneous capital goods have a second, a social form as homogeneous capital (called jelly as a street can be moulded into an engine) and the productivity of the last unit of jelly determines profit. This retakes Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
’s view that commodities have a heterogeneous natural form (Naturalform) and also opposed to it a homogenous value-form (Wertform), jelly. Clark might have known this Marxian construction from his German time and was reproached for this similarity.
Clark’s capital are not produced means of production each with a different production structure. It is an abstract, always existing and never perishing one great tool in the hand of working humanity 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
Cambridge capital controversy
The Cambridge capital controversy – sometimes simply called "the capital controversy" – refers to a theoretical and mathematical debate during the 1960s among economists concerning the nature and role of capital goods and the critique of the dominant neoclassical vision of aggregate...
from 1954 to 1965 between the departments of economics at Cambridge University, England, and at MIT
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
in Cambridge
Cambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
, Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
.
Paul A. Samuelson's 1947 textbook Economics divulged Clark’s capital concept worldwide.
J. B. Clark was the father of John Maurice Clark
John Maurice Clark
John Maurice Clark was an American economist whose work combined the rigor of traditional economic analysis with an "institutionalist" attitude.- Academic career :...
.
Major works
- The Philosophy of Wealth (1886)
- The Distribution of Wealth (1899, 1902)
- Essentials of Economic Theory (1907)
- Social Justice without Socialism (1914)