Clark, John Bates
Clark, John Bates
John Bates Clark (1847–1938) was the leading creative economic theorist active in America during the period when Alfred Marshall and the great Austrian marginalists were active abroad. He developed a distinctive form of marginal utility–marginal productivity theory, which he presented not as a completed system, but as a first approximation and an approach to further analysis. His major theoretical work was cast in the form of comparative statics: he constructed the model of an imaginary “static state”—one of complete competitive equilibrium—following which he analyzed the general effects of hypothetical dynamic changes, including the “dynamic friction” encountered by adjustments to these changes. His work is permeated by a social–ethical perspective that is not always well integrated with the technical economic analysis.
Clark was descended from New England Puritans. In him the original rigorous and doctrinaire features of this heritage had been relaxed and humanized, but a powerful religious and moral conviction remained. He was a lifelong active church member. His ancestors included farmers and prosperous traders; all were moved by public duty. His father was a modestly successful retailer in Providence, Rhode Island, who became a trusted adviser in the Corliss Engine Works, later moved to Minnesota in search of health, and there engaged in a small plow business.
Clark attended Amherst College, twice interrupting his study to take charge of his father’s firm when his father was incapacitated. After his father’s death he disposed of the plow business. He was graduated from Amherst in 1872, more mature and experienced than most college graduates.
He had contemplated entering the ministry but was advised to pursue economics by Professor Julius Seelye (later president of Amherst), who recognized Clark’s promise in that field. He studied in Europe for three years, mainly at Heidelberg and Zurich, his chief professor being Karl Knies. From his exposure to the German historical school he absorbed chiefly what fitted his predisposition toward a social–ethical perspective, which also made him sympathetic with British Christian socialism.
Returning to the United States, he married Myra Smith, also of New England ancestry, and joined the faculty of Carleton College, but for two years he was prevented from teaching by a crippling illness. Compelled to husband his limited working strength, he saved the best hour of each day for writing and began in 1877 to publish in The New Englander magazine the essays that later became The Philosophy of Wealth (1886). His most brilliant student was Thorstein Veblen, whose quality he appreciated and whose difficulties with the college authorities he attempted to alleviate. Veblen’s later writings had some kinship with the critical portions of Clark’s Philosophy of Wealth, with the difference that Clark’s criticism of social evils was always combined with a search for remedies.
In 1881 Clark went to Smith College, which was then six years old, where he taught until 1893, doing some part-time teaching at Amherst. He was active in forming the American Economic Association in 1885 and was its third president. During this time he formed a lifelong friendship with Franklin H. Giddings, then writing for a Springfield newspaper, and collaborated with him on economic writings. Having briefly presented his “social effective utility” theory of value in the Philosophy of Wealth, Clark staked out his marginal productivity theory of distribution in an early publication of the American Economic Association (1889). He presented his marginal productivity theory at the same session of the American Economic Association at which Stuart Wood presented his version. From 1893 to 1895 he taught full-time at Amherst; his students there included Calvin Coolidge, Lucius R. Eastman, Harlan F. Stone, and Dwight Morrow. Morrow spoke long afterward of the profound influence Clark had had upon him. Clark also lectured at Johns Hopkins, and in 1895 he joined the recently established faculty of political science at Columbia University. His more mature works appeared while he was at Columbia.
Becoming convinced that war was the greatest threat to human destiny, he took an increasingly active part in the peace movement, and after the Carnegie Endowment for International Peace was established he was chosen, in 1911, to head its division of economics and history. This post he held until his final retirement in 1923, continuing limited lecturing in economics at Columbia. He enlisted an international committee of distinguished scholars for a massive world-wide study of the economic effects of war. Work on the project was deferred by World War I, and it was later recast and completed under the editorship of Clark’s successor, J. T. Shotwell.
Much of Clark’s first book, The Philosophy of Wealth, consists of criticism of classical economics, and there is in it no constructive theory so completely worked out as that in his more famous Distribution of Wealth. In the earlier book Clark stressed the organic social character of economic processes and values. Although individual choices may be made marginally, they are nevertheless socially conditioned, since market forces are in fact integrated through social judgments embodied in the legal system. Instead of seeing self-centered interest alone as the key to human nature, Clark considered people to be motivated by a rational balance between different kinds of personal interests, self-centered and social.
He criticized classical economics for ignoring the importance of “inappropriable values,” for example, those values created when an area is opened by railroads. He distinguished several forms of competition: competition in a framework of prevailing prices he characterized as rivalry in serving, whereas sharp bargaining for favorable departures from the market he classed as a form of plunder. When competition had already passed through both the conservative rivalry phase and the later destructive rivalry phase and had begun to move toward consolidation and monopoly, he looked favorably on a possible evolution based on producers’ cooperation but thought it would succeed only under certain conditions.
He believed that workers need the protection of unions and that every man has the right to a living, particularly if socially generated adjustments prevent him from earning one. He deplored the economic “caste system” that prevails among certain Protestant denominations because it vitiates the spirit of fraternity so important to his religious beliefs. The ethical message of The Philosophy of Wealth elicited wide acclaim, as well as some criticism.
In Clark’s next major work, The Distribution of Wealth (1899), he developed much more fully the marginalist theories for which he became known. His theories were published later than those of the great contemporary marginalists, but, so far as can be determined, they were independently arrived at. Clark separated economic theory into statics and dynamics, presenting the statics first, as a first approximation and an approach to the greater complexities of dynamics. A dynamic analysis was his ultimate objective, but his “dynamics” were what we would now call comparative statics. Thus he depicted the forces acting toward equilibrium by means of an elaborate model of an imaginary society from which dynamic change and disturbance were eliminated, permitting the static forces to act in isolation and to bring processes to their “natural” (static) levels. The valid elements in the Ricardian type of deductive theory could thus be seen in properly limited perspective as unconscious statics (1899, pp. 68–69).
In this book Clark generalized the Ricardian marginal principle, applying it to both labor and capital (to which he assimilated land) and concluding that in the competitive static state the owners of all productive factors would get what each factor (marginally) produces. Although his conclusion was an important contribution to marginal analysis, the ethical approval he attached to his marginal productivity theory left many loose ends and is probably best construed as an emphatic rebuttal to the exploitation theories of Henry George and Karl Marx, in which rent and profits are, inherently, robbery.
Clark’s Distribution contains a distinctive variant of utility theory. This is his idea that commodities represent “bundles of utilities”—that is, they have embodied in them diverse qualitative increments of utilities—and, further, that different purchasers are marginal for different items in such a “bundle” (1899, pp. 214, 220, 229–244). For example, a millionaire is a marginal buyer for the difference between a fine and a superfine watch, whereas poorer men determine the values of cruder grades of watches, for which the millionaire would be willing to pay much higher prices if he had to. E. R. A. Seligman called this “Clark’s law.” Its acceptance has suffered from its perhaps fortuitous alliance with the vulnerable doctrine of consumers’ surplus, and its meaning seems currently sub-merged in the abstractions of indifference maps.
The concept of capital advanced in The Distribution of Wealth has become a part of the permanent legacy of economics. Clark distinguished capital goods from social capital, which is the permanent flow of resource services or future incomes, of which the capital goods are a temporary embodiment. It is the marginal productivity of social capital, not of specific capital goods, that determines the rate of interest.
This capital concept differs greatly from that of Clark’s influential contemporary Böhm-Bawerk, and a lively controversy emerged between them. Clark (and, on different grounds, Irving Fisher) attacked Böhm-Bawerk’s theory that capital constitutes advances to laborers and capitalists during the “period of production.” Clark’s thesis that production and consumption are “synchronous” was generally accepted by the theoretical tradition.
In his Essentials of Economic Theory (1907) Clark noted that the economic laws he analyzed apply only to economically developed regions in which factors are mobile and their response to market forces active (pp. 210–215). World-wide equilibrium between developed and underdeveloped areas he considered too long-term a matter for analysis; in actuality, a stable outcome would be heavily dependent on technical progress. Without considerable technical progress the developed economies would be forced down to the level of the underdeveloped (pp. 227–228).
After a condensed review of statics, Clark analyzed the impact of five major dynamic changes: growth of population, growth of capital, technical improvement, changes in market organization, and changes in consumers’ wants, seeking to provide inductive dynamics with a deductive framework. Thus he made a heroic attempt to deduce the effect of each change by itself and then to combine them all (1907, esp. chapters 14–17). For the combined effects, he could cite observed tendencies and rationalize them. It is a tribute to his sense of reality that the bold attempt yielded meaningful results.
The proposition that a vigorously dynamic economy hovers closer to its temporary static norms than does a sluggish or stagnant one is convincing, even if it was not rigorously derived. Clark predicted that the increase of qualitative refinements of products will outstrip the increase in amount of materials consumed (1907, pp. 293 ff.) and declared that the displacement of one kind of machine tending by another inflicts less hardship on the worker than does the displacement of a skilled manual craft (1907, pp. 298–299). Machine tending is now being displaced by something harder to learn than another kind of machine tending, the enormous growth of professional and managerial services and departments of research and planning, but these could hardly have been foreseen in 1907. Clark recognized that dynamics includes relative time rates of change and reaction, but he did not fully treat this factor.
Of the five major dynamic changes he considered technical improvement the most important. Technical improvement is promoted by a judicious combination of competition and temporary monopoly or by delays in imitating successful innovations (1907, pp. 360–368). Ideally, the patent monopoly confers rights to something that would not have existed without the innovation, so that no one loses by the innovator’s temporary tribute. Actually, rights could be made unduly broad; and an industry built on them could establish a monopoly power extending beyond the proper coverage of the patent. Meanwhile, competition between large corporations generates more rapid improvement than does monopoly, while their rivalry speeds the passing of the benefits on to the public.
In the concluding chapters of the Essentials Clark dealt with other specific problems, including principles of transportation and railroad problems, labor organization, wage arbitration and boycotts, protection in relation to monopoly, and money. In his analyses of current problems he always attempted to discover and apply general principles.
On the question of monopoly and competition he published two small but influential volumes, The Control of Trusts (1901) and The Problem of Monopoly (1904). In them he stressed the force of potential competition, the methods of unfair competition that had been used to handicap or extinguish small competitors, and the need to protect small competitors against such methods. His ideas were reflected in the part of the antitrust legislation of 1914 that included the prohibition of unfair competition and in the establishment of a Fair Trade Commission.
The contrast between the morally critical tone of The Philosophy of Wealth and the analytical emphasis and optimism of Clark’s later theoretical works has suggested to many that his ethical views changed. On this difficult question the present writer is persuaded that the observed differences stem partly from a change in Clark’s method of theoretical analysis, that is, his use of a model economy, and partly from his adaptation to new events. Enlightening evidence is afforded by his last economic utterance, a published lecture entitled Social Justice Without Socialism (1914). He no longer recommended producers’ cooperation, with its merging of groups or classes; it had not fulfilled his optimistic expectations. Instead, he stressed collaboration between existing groups, in a prospective system of democratically disciplined economic activity amounting to a “welfare state.” It seems that the author of The Philosophy of Wealth was responding to historical developments without changing his basic values.
Clark’s concern with the preservation of peace persisted: his last publication, A Tender of Peace (1935), was a brief plea for a League of Nations with sufficient power and resolution to enforce peace. Clark died at 91 in March 1938, the year before world war again engulfed civilization.
John M. Clark
[For the historical context of Clark’s work, seeEconomic thought, articles onthe austrian schoolandthe historical school; and the biographies ofGeorge;Jevons;Marshall;Marx; Menger;Wieser. For discussion of the development of Clark’s ideas both during and after his time, seeCapital;Utility;Wages, article onTheory; and the biographies ofBöhm-Bawerk;Fisher, I.; .]
1886 The Philosophy of Wealth: Economic Principles Newly Formulated. Boston: Ginn.
1888 Capital and Its Earnings. American Economic Association Monographs, Vol. 3, No. 2. Baltimore: American Economic Association.
1888 Clark, John Bates; and Giddings, Franklin H. The Modern Distributive Process. Boston: Ginn.
1889 The Possibility of a Scientific Law of Wages. Volume 4, pages 37–69 in American Economic Association, Publications. Baltimore: American Economic Association.
(1899) 1902 The Distribution of Wealth: A Theory of Wages, Interest and Profits. New York and London: Macmillan.
(1901) 1912 The Control of Trusts. 2d ed., enl. New York and London: Macmillan.
1904 The Problem of Monopoly: A Study of a Grave Danger and of the Natural Mode of Averting It. New York and London: Macmillan.
1907 Essentials of Economic Theory as Applied to Modern Problems of Industry and Public Policy. New York: Macmillan.
1914 Social Justice Without Socialism. Boston and New York: Houghton Mifflin.
1935 A Tender of Peace: The Terms on Which Civilized Nations Can, If They Will, Avoid Warfare. New York: Columbia Univ. Press.
[The Bibliography of] John Bates Clark. 1931 Pages 77–90 in Columbia University, Faculty of Political Science, A Bibliography… 1880–1930. New York: Columbia Univ. Press.
Clark, A. H.; and Clark, John M. 1938 John Bates Clark: A Memorial. New York: Columbia Univ. Press.
Clark, John M. 1952 J. B. Clark. Pages 592–612 in Henry W. Spiegel (editor), The Development of Economic Thought: Great Economists in Perspective. New York: Wiley.
Dorfman, Joseph 1949 John Bates Clark: The Conflict of Logic and Sentiment. Volume 3, pages 188–205 in Joseph Dorfman, The Economic Mind in American Civilization. New York: Viking.
Hollander, Jacob H. (editor) 1927 Economic Essays, Contributed in Honor of John Bates Clark. Published on behalf of the American Economic Association. New York: Macmillan.
Homan, Paul T. 1928 John Bates Clark. Pages 17–103 in Paul T. Homan, Contemporary Economic Thought. New York: Harper.
Shotwell, James T. 1938 John Bates Clark, 1847–1938: A Tribute. Pages 157–163 in Carnegie Endowment for International Peace, Annual Report for 1937 of the Division of Economics and History. New York: Carnegie Endowment.
Stigler, George J. (1941) 1948 John Bates Clark. Pages 296–319 in George J. Stigler, Production and Distribution Theories. New York: Macmillan.
"Clark, John Bates." International Encyclopedia of the Social Sciences. . Encyclopedia.com. (August 17, 2017). http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/clark-john-bates
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John Bates Clark
John Bates Clark
The American economist John Bates Clark (1847-1938) was the first economic theorist from the United States to achieve an international reputation.
John Bates Clark was born and raised in Providence, R. I. In 1872, after an absence due to his father's illness and death, Clark graduated from Amherst College. Abandoning earlier plans to enter divinity school, he turned to economics. From 1872 to 1875 he studied at the University of Heidelberg under Karl Knies, leader of the German historical school, and at the University of Zurich.
On his return Clark participated actively in the creation of a "new" economics, becoming the third president of the young reformers' American Economic Association. He was professor of history and political economy at Carleton College until 1882. He then taught at Smith College, Amherst, and Johns Hopkins University. From 1895 until his retirement as professor emeritus in 1923, Clark was part of the influential faculty of political science at Columbia University, where he edited the Political Science Quarterly (1895-1911). After 1911 he devoted himself to pacifist causes and served as the first director of the Carnegie Endowment for International Peace.
Near the turn of the century, rapid industrial development and serious discontent, especially with the anomalous distribution of wealth, prompted Clark to examine problems of production and distribution. The indisputable influence which he exercised upon at least a generation of economists lay more in his development of analytical tools than in the conclusions he drew from them. Through his marginal utility principle, developed independently of Léon Walras, Carl Menger, and W. S. Jevons, Clark became the leading theorist of a marginal productivity theory of distribution which idealized the relationship between income and an individual's contribution to goods or services.
Clark's first important work, The Philosophy of Wealth (1885), attacking the hedonistic and atomistic assumptions of classical economics, attempted to tie economics to social ethics. Clark's major contribution, The Distribution of Wealth (1899), discarded his early reformist tendencies to present a deductive system of economic harmony based upon the competition of rational, self-interested men inevitably progressing. Clark began by assuming that society was a biological organism subject to collective moral judgment. Then he divided economics into "static" and "dynamic" analysis, a distinction which continues to characterize American economics. Clark's own analysis was a static description of economic laws in an unchanging society where perfect competition led to economic equilibrium. Static phenomena were not analytical abstractions but real economic forces isolated from dynamic laws of social change so that the mechanics of distribution were revealed. Dynamic laws, to be discovered by future generations using refined empirical techniques, were formulated tentatively by Clark in the last chapters of Distribution and in his later Essentials of Economic Theory (1907) on the basis of static economics and an optimistic justification of the status quo. To Clark, population growth, improvement in tastes, capital accumulation, technological innovation, and industrial organization were dynamic, necessarily progressive forces.
Clark's other important works included The Modern Distributive Process (with Franklin H. Giddings, 1888); The Control of Trusts (1901); The Problem of Monopoly (1904), influential in the antitrust legislation of 1914; Social Justice without Socialism (1914); and A Tender of Peace.
There is no biography of Clark. The essay on Clark in Paul T. Homan, Contemporary Economic Thought (1928), remains the clearest exposition of his economic theory. The discussion by Clark's distinguished economist son, "J. M. Clark on J. B. Clark," in Henry W. Spiegel, ed., The Development of Economic Thought: Great Economists in Perspective (1952; abr. ed. 1964), is warm, filial, and defensive but not very useful. John Rutherford Everett, Religion in Economics: A Study of John Bates Clark, Richard T. Ely, Simon N. Patten (1946), lifts whole sections from other commentators without adding anything new. Jacob H. Hollander, ed., Economic Essays Contributed in Honor of J. B. Clark (1967), which includes a brief memoir by Hollander, shows the development of Clark's thought.
Henry, John F., John Bates Clark: the making of a neoclassical economist, New York, N.Y.: St. Martin's Press, 1995. □
"John Bates Clark." Encyclopedia of World Biography. . Encyclopedia.com. (August 17, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/john-bates-clark
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Clark, John Bates
John Bates Clark, 1847–1938, American economist, b. Providence, R.I. He studied economics in the U.S. and Germany, and taught at Columbia Univ. and several other colleges in the United States. In 1885 he helped found the American Economic Association, serving as its president (1893–95). Clark's best-known work, The Distribution of Wealth (1899), outlined his theory of marginal productivity, based on an ideal of competitive equilibrium without dynamic change. By the breadth of his work and contributions to economics, Clark became the first American economist to achieve international distinction.
"Clark, John Bates." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. (August 17, 2017). http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/clark-john-bates
"Clark, John Bates." The Columbia Encyclopedia, 6th ed.. . Retrieved August 17, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/clark-john-bates