Wicksteed, Philip Henry
Wicksteed, Philip Henry
Philip Henry Wicksteed (1844-1927) was an English economist of the subjective value school. He is noted for his statements of marginal utility theory, opportunity cost, the reversibility of the supply curve, and distribution theory. He is less remembered for an ambitious attempt to make economics a part of a general theory of choice.
From Jevons, Wicksteed got the idea that the more of a good we have the less is the value of an additional unit of it. Jevons called that value the final degree of utility. Wicksteed, renaming it marginal utility, reasoned that we buy goods in such quantities that a dollar spent on each of them adds the same amount to our total utility or satisfaction. Their marginal utilities then will be proportional to their prices. He first wrote of this in The Alphabet of Economic Science (1888) and used differential calculus to explain it, which was then an unusual thing to do.
Wicksteed applied marginal utility to the pricing of labor and capital. Jevons had not been explicit about the relation between the value of a good and the prices paid to the resources that produce it. Wicksteed, like, the Austrian subjective value theorists, said the value of the good determines the value of the resources. He went further and said the price of a resource equals the value that a marginal unit adds to the output it produces. This is the theory of marginal productivity; it was developed concurrently by other economists in the 1890s. Wicksteed’s originality lay in his integration of the theory of the value of goods and the theory of the value of resources. He did so in An Essay on the Co-ordination of the Laws of Distribution (1894), asserting that if in the production of any given amount of a good each resource is paid the value of its marginal product, the total of the payments will be equal to the market value of that amount of the good. He later withdrew the theorem in the belief it was mistaken, but actually the mistake was small. The theorem is valid when output varies in the same proportion as the input of resources and when a change in output does not change the price of the product, that is, when the production function is linear and homogeneous and the market is perfectly competitive.
Wicksteed made extensive use of the idea of opportunity cost, which is that the cost of anything is the (marginal) value of what must be given up to get it. He is remembered too for his conception of the supply curve, namely, that the supply price of any given amount of a good is its marginal utility to the sellers. A less familiar but not neglected idea is what Wicksteed called “the economic nexus.” It was his explanation of the mutual advantage of specialization and exchange, something Adam Smith referred to in his famous and unfortunate phrase as “the invisible hand.” Wicksteed explained that the dealings people have with each other are designed to advance their separate interests. The interests may be altruistic as well as selfish, but the altruism is never directed to the other persons in the relationship. A butcher may be philanthropic but not toward the housewife before him: he is intent on maximizing his returns, and so is she; but this makes their behavior no less worthy.
All of behavior, and not just that in the market place, was in Wicksteed’s view governed by the marginal principle. In everything we do we try to get the greatest possible return—we try to maximize. We do that when we carry each of our actions to a point at which its marginal return equals that from each of our other actions. Just as we buy bread and wine in such quantities that a dollar spent on one adds as much to our utility as a dollar spent on another, so we listen to music and look at pictures until an hour spent in one way is as rewarding as an hour spent in another. So, too, it is with the care of our children, attention to friends, the discharge of our spiritual obligations, and everything else.
Wicksteed’s theory was more useful when applied to economic choices than to others. But it was meant to do more. To think of him as a great expositor of marginalism in economics is to underestimate his intentions. While economic choices were his main interest, Wicksteed continually related them to others and said that all were determined by the principle of maximization. He did this in his major work, The Common Sense of Political Economy (1910). Its epigraph is from the early sociology of Comte to the effect that economics should be studied in relation to other behavior.
Wicksteed was influenced by Comte as well as by Jevons. Another influence was Ruskin who, insisting that wealth was that which was life-giving, tried to get economists to take a broad view of their subject. Wicksteed was in the tradition of nonconformism, being himself a Unitarian clergyman for part of his life. He brought to economics the humanitarian feelings, the critical eye, and the common sense of his tradition. He came to economics in middle age (as Ricardo did) at a time when he was under the influence of the Fabians. To the end of his life he was sympathetic to the purposes of socialism. The Fabians deferred to his economic expertise, and he has the distinction of having bested George Bernard Shaw in a polemic.
Wicksteed also brought to economics a mind interested in literature, philosophy, and theology. He was a scholar of Dante, Wordsworth, and Ibsen and wrote about them. He translated (with F. M. Cornford) the Physics of Aristotle and wrote extensively on theology, including a work on Aquinas. He seems to have approached these other fields in a didactic way, drawing from them, especially from literature, guides to behavior. His major work on economics can also be taken as such a guide.
Time, however, has not taken it that way. What are best remembered are his propositions about economic behavior. Nevertheless, the work of the economist has a place in the order of understanding, Wicksteed once said. The place is lower than that of the prophets and poets, but it is in the same universe: “If he can give no strength he may save strength from being wasted. … If he can give sight to some blind reforming Samson he too has served” (1910, p. 124).
William D. Grampp
(1888) 1955 The Alphabet of Economic Science: Elements of the Theory of Value or Worth. London: Macmillan; New York: Kelley.
(1894) 1932 An Essay on the Co-ordination of the Laws of Distribution. Series of Reprints of Scarce Tracts in Economic and Political Science, No. 12. London School of Economics and Political Science.
(1910) 1950 The Common Sense of Political Economy, and Selected Papers and Reviews on Economic Theory. Rev. & enl. ed. Edited by Lionel Robbins. 2 vols. London: Routledge; New York: Kelley.
Herford, C. H. 1931 Philip Henry Wicksteed: His Life and Work. London: Dent. → Includes an extensive bibliography of Wicksteed’s writings.
Stigler, George J. 1941 Production and Distribution Theories. New York: Macmillan. → See especially pages 38-60 and 323-335.