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Jevons and Menger Re-Homogenized?: Jaffé after 20 Years Author(s): Sandra J. Peart Source: American Journal of Economics and Sociology, Vol. 57, No. 3 (Jul., 1998), pp. 307-325 Published by: American Journal of Economics and Sociology, Inc. Stable URL: http://www.jstor.org/stable/3487169 . Accessed: 22/04/2014 13:01
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INVITED SYMPOSIUM SPECIAL ON THE OF NEOCLASSICAL FOUNDATIONS ECONOMICS Jevons and Menger Re-homogenized?:
Jaffe After20 Years
By SandraJ. Peart* Abstract. Following Jaffe's 1976 argument,the effort to de-homogenize beJevons, Walras,and Mengermay have obscured some key similarities tween Jevons and Menger.The articleargues thatJevons's view of human behavior is more complex than has been allowed, and has much in common with Menger'spredispositionfor process, uncertainty,mistakes,and the significance of time in decision making. Some of the key features of the Mengerianeconomic being, featuresthat have often been used to poralso characterize tray him as the "odd man out" among the triumvirate, Jevons's decision makers.Forboth MengerandJevons, the decision maker is plagued by error,indecision, and informationgaps.

Introduction TWENTY YEARS HAVE PASSED since WilliamJaffe lamented the focus of the economics profession on the achievement that, at the time, seemed the sharedby the progenitorsof the "marginal revolution"majorcontribution the notion of diminishingmarginalutility(1976, p. 511). Instead,he argued, differencesthat characterizethe analyses of Walras,Jevons, and Menger are of interest-differences that "the passage of time has revealed more importantthan anything they may have had in common" (1976, p. 511).1 The de-homogenization of Walras,Menger, and Jevons would, he maintained, enable us correctlyto perceive and appreciatethe significanceof their separatecontributionsto economic analysis. The effortto de-homogenizeJevons, Walras,and Menger,however, may have obscured some key similaritiesamong the early neoclassicals, most
* [SandraPeart is Associate Professor of Economics, Baldwin-Wallace College Berea, Ohio.]. Her research interests include classical and early neoclassical economic thought.
American Journal of Economics and Sociology, Vol. 57, No. 3 (July, 1998). ? 1998 American Journal of Economics and Sociology, Inc.

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Itis not my position thatwe need to between JevonsandMenger. notably andJevons,butrather thatcloseattention Walras, Menger, re-homogenize to the original texts(whichJaff6calledfor in 1976;see p. 523),revealsa muchmore complexview of humanbehaviorin Jevonsthanhas often been allowed,and one thathas muchin commonwith Menger's predisformistakes, underuncertainty, positionforprocess,for decisionmaking of time in decisionmaking.In what follows,I and for the significance economic demonstrate thatsomeof the keyfeatures of theMengerian perhim as the "oddman son, features thathave oftenbeen used to portray decision maker. out"amongthe triumvirate, alsocharacterize theJevonian Whilethereis some evidencein Walras, also, of concernwiththe movewasclearly muchmore mentto equilibrium hisemphasis (with"groping"), of generalequilibrium andthe determination of equifixedon the nature did not constitute a key concernfor librium prices.Pricedetermination and while both considered the economyin termsof Jevonsor Menger, describe thoseinterrelationships interrelated neither to markets, attempted JevonsandMenthen,my argument maybe that mathematically. Perhaps, not!2 be but that Walras should should "re-homogenized," ger I differences that The article as follows. beginby considering proceeds amongWalras, Jevons,and Menger. Jaffeand othershave emphasized as is thatforthe mostparttheseareproperly Here,my argument regarded on betweenWalras on the one handandJevonsandMenger differences of economicman. the other.SectionIIIinvestigates Menger's conception In SectionIV,I demonstrate ecosome key similarities betweenMenger's Ittranspires thatbothMennomicbeingandtheJevonian decisionmaker. characterized (andothers). Jevonshavebeenimproperly byVeblen gerand indeandJevons,decisionmakers areplaguedby error, ForbothMenger SectionV concludeswith some regaps. Finally, cision,and information claimsthathave been made regarding the marksaboutthe contrasting in and Such claims have resulted stance of Jevons may part Menger. policy froma misreading of the natureof economicman in Jevonson the one on the other. handandin Menger
II Differences

the economics of Walras on DIFFERENCES SEVERAL INTERRELATED characterize on the other.Thesedifferences the one handand of Jevonsand Menger

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in Sections IIIandIV.3 somecluesto the similarities outlined First, provide as Jaffeargued, the generalequilibrium focusof Walras placeshimapart from both Themajor forceforWalras's research JevonsandMenger. driving of a competitive marketmodel.Alone amonghis was the specification in a JubileeCelebration at the end of his career, Walras contemporaries, receivedthe honorof beingproclaimed the firstto have "established the conditions of Walras 516). (Jaffe 1976,p. general equilibrium" Accordingly, with the elaboration of a theoryof subjective was muchless concerned He rarely valuation in consumption. used the word "consumption," preinsteadthe term"possession." Such"inattention to consumption" ferring has been attributed to the factthathis gazewas fixedon the marketplace, and nowhereelse (Jaffe1976,p. 516).Hiswas a catallactic theoryof the of pricesunderperfectly free competition: determination "Our taskis to discoverthe laws to which these purchases and sales tend to conform To this end, we shallsupposethatthe market is perfectly automatically. we suppose,to start with,thatmacompetitive, justas in puremechanics chinesareperfectly frictionless" (Walras 1874,p. 84;cf. pp. 71, 255).4 some into the insights interrelationships throughout Jevonspossessed of exchange alsopresupposes a catallactic comeconomy,andhis analysis buthe clearly neverapproached 1992,p. 174;Peart 1996a), munity (Creedy in delineating Walras's interest forgeneral theconditions Thus, equilibrium.5 V of his Theory in Chapter Political find we a mathe(TPE), of Economy matical whatwe now call marginal to marargument relating productivity His "Preface to the SecondEdition" of the TPE also contains ginalutility. reflections of a general-equilibrium butasJevons acknowlhimself character, forward to the eventual results of the edgedin the samepreface, "Looking to bearin mindthatthisbookwas neverput theory, I mustbeg the reader forward as containing a systematic view of economics" (1871,p. xxx).Nor, of course, wasMenger's focus"general in the sense.6 equilibrium" Walrasian In part,the explanation forthisfirstdifference lies in the secondmajor andrather obviousdifference: neither focusedon price JevonsnorMenger whileWalras did for determination, (see, instance, 1874,p. 71). In clearly the idea of is used to derive individual demand and Walras, marginal utility offercurves,andthento determine equilibrium prices.No similar analysis is contained inJevonsor Menger. somerather Jevons,in fact,hassuffered harshcriticism for neglecting the issue. ForbothMenger andJevons,the key economicphenomenon requiring

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Givenprices,exchange occurred as was the actof exchange.7 explanation of utilitygain resulted; exchangeceasedwhen long as a preponderance of thefinaldegrees theratio of utility. the (given)ratio of exchange equaled the of existence Jevonsis veryclearthatexchangeequations presuppose which what he refersto as a "theoretically in perfectmarket-a market of his often-critito be given." The significance pricesmaybe presumed cized "trading Jevonsto specifyequilibbody"conceptis thatit enabled of exchange, behavior Insubrium conditions whenprice-taking pertains.8 he turned his fullattention to bargaining situsequentsectionsof the TPE ations(see pp. 1190, arguing-as Menger did-that such situations are of comparative resolvedon "non-economic" grounds knowledge, "dispoof character," and "force "persistence," "adroitness," sition," "experience," or kindliness" of justice "feelings (pp. 124-5;cf. Peart1996a,pp. 106-7). is in initial was to supposea rateof exchange then, procedure, Jevons's will the and to consider whether trades occur, given trading parties' place, willcease(1871,p. 96).Buthe leftno doubt tastes,andatwhatpointtrade in flux. Thuswhen he described that,in reality,priceswere constantly in operation, he readilyadmitted that pricesvariedconstantly: markets "The realcondition of industry is one of perpetual motionandchange" (p. atanyone the priceof the samecommodity mustbe uniform 96);"Though it mayvaryfrommoment to momentandmustbe conceivedas moment, in a stateof continual TheLawof One Pricewas, conse92). change" (p. in observed from In reality.9 reality,differences quently,an abstraction and"extraneous of "caprice" as a result pricesaroseallthe timein practice of the purchasers" andtheir "thedefective credit circumstances," including
imperfectknowledge (p. 91).10

in the Principles, like thatof Jevons,was not to exintention Menger's to focusattention on exchangebehavior. Thus,he plainpricesbut rather of maintained thatprices"areby no meansthe mostfundamental feature inciof exchange," instead the economicphenomenon constituting "only of these activities of an economic dentalmanifestations [trade], symptoms betweenthe economiesof individuals" (1871,p. 191).In reequilibrium whilespeAsa consequence, constantly.11 ality,pricesaresaidto fluctuate not cific pricesmay be observedat a point in time, they will generally anyonebuy grainon a grainexchangeor prevailfor futuretrades:"Let on a stockexchangeandtryto sell themagainbeforea change securities unitsof or let himtryto sell andbuyseparate in market conditions occurs,

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the samecommodity atthe sametime,andhe willeasilybe convinced that the difference betweensupplypricesanddemandpricesis no mereaccident but a general featureof social economy" (pp. 192-3).12

thus nevertriedto linkthe importance of satisfactions analytiMenger to the ratioof exchange while callywithmarket prices.He neverreferred the relation betweenscalesof wantor satisfaction andthe demonstrating of horsesor cowstraded. market Instead, quantities priceis a positedmanof forcesthatshowhow "economizing men" ifestation areinduced "togive goods (that is, definite quantitiesof goods) for other goods" (1871,
pp. 193-4).13

or "points of rest," did,however,use the notionof equilibrium, Menger foran individual: foreconomicexchanges areconstantly "thefoundations andwe therefore observethe phenomenon of a perpetual succhanging, Buteven in thischainof transactions cessionof exchange transactions. we find of rest at for can,by observing times, particclosely, points particular ularpersons, andwithparticular kindsof goods.Atthesepointsof rest,no of goodstakesplacebecausean economic limit to exchange had exchange been reached" as has such 188). But, (1871, already p. Vaughn argued, arepresented as "partial andephemeral" (1990,p. 384).14 equilibria where smallnumbers are Mengerarguedthat in exchangesituations involved,the agreed-upon pricewill settle halfwaybetweenthe supply and demandpricefor "economically (1871, equallycapableindividuals" he recognized thatif bargaining Jevons,however, p. 196).Like capabilities the agreed-upon overtheother. While differed, pricemayfavorone trader he acknowledged that"human has some influence on the result, caprice" maintained the "opposing of the bargainers thatgenerally, efforts Menger to derivethe greatest will balanceout possiblegain fromthe transaction in mostcases,andthatpriceswilltherefore havea tendency to settleatthe of the extreme limits" But "non-eco(p. 197).15 other, average possible nomic" "founded on the of the two infactors, personalities economizing or on otherexternal dividuals conditions the transaction," affecting may in whichcase pricesthen "candeviatefromthisnatural middle interfere, positionbetweenthe limits".

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III Menger's Economic Man

In all the receivedformulations of economictheory,whetherat the handsof the the humanmaterial with which the Englisheconomistsor those of the Continent, inquiryis concernedis conceivedin hedonisticterms;that is to say, in termsof a inertandimmutably Thepsychological passiveandsubstantially givenhumannature. and anthropological of the economistshavebeen those whichwere preconceptions and socialsciencessome generations acceptedby the psychological ago. The hedonisticconceptionof manis thatof a lightning calculator of pleasures andpains,who oscillateslike a homogeneousglobule of desireof happinessunderthe impulseof stimulithatshifthim aboutthe area,but leave him intact.He has neitherantecedent nor consequent.He is an isolated,definitivehumandatum,in stable equilibrium forcesthatdisplacehim in one direction or except for the buffetsof the impinging another(Veblen1897,p. 232).

the characterization by Veblen outlined above, Jaff6 man as "a economic posits Menger's bumbling, erring, ill-informedcreature, plagued with uncertainty,forever hovering between alluringhopes and hauntingfears, and congenitallyincapableof makingfinely calibrated decisions in pursuitof satisfactions" (1976, p. 521). Mengerianman is aptly described as operating under uncertainty,with less than full information. In fact, a major theme of Menger'sPrinciples is that decision making is largely about the acquisitionof information,since men "naturally acquire a very obvious interestin being informednot only about all the goods in theirown possession but also about the goods of all the otherpersons with whom they maintain trading relations"(1871, p. 91).16Such behavior is choice thoroughlypurposeful(though not alwayssuccessful),so thatJaffe's of adjective, "bumbling," be somewhat harsh. While the may Mengerian decision maker possesses little informationabout the present, he is constantly trying to increase his knowledge-being "seriouslyconcerned to obtainas exact a knowledge as possible of the quantitiesof goods available to them for this purpose" (1871, pp. 89-90). Moreover, he attempts to acquire informationconcerning futureneeds and wants: "men in civilized societies alone among economizing individualsplan for the satisfactionof their needs, not for a short period only, but for much longer periods of time" (1871, p. 78). He even goes so far as to create social institutionsto gather information(1871, p. 91; cf. Streissler1972, p. 433).17 Menger'sdecision makersknow even less, and possess even more "deficientforesight"about the futurethan the present:"experiencetells us that
IN STARK CONTRAST to

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certain needswillbe feltin the we areoftenmoreor less in doubtwhether future at all"(1871,pp. 81, 82;cf. Streissler 1972,p. 433).Againandagain of goods and the amountof uncerstressesthe timedimension Menger entails. in the this lightof Jevons'spositiondescribed Significantly tainty choices stressedthe in SectionIV, Menger's discussionof intertemporal of future wants,as well as the defective telescopicfacmyopicestimation teachesthata present orone inthe ultyof man:"All experience enjoyment more to men than one of equalinnearfuture usuallyappears important at a moreremote timein the future" (1871,pp. 153-54;cf. Streissler tensity
1972, p. 434).18

Veblen's the economicbeingforMenger is neither lightConsequently, nor reactor to constraints. He cannot a ning calculator, passive changing function. He is be fullysummarized by a static,well-defined preference in theattempt to remove of theworldaround him,butpurposeful ignorant as muchof thatignorance as he can. It is important of economic to keep in mindthatwhile the movement mantoward a slow andpainstaking was, forMenger, equilibrium process, he nevertheless attributed to economicmana fairly specificgoal.Hispuris to "show how men,on thebasisof thisknowledge, pose inthe Principles direct the available of goods (consumption quantities goodsandmeansof to the greatest of theirneeds"(1871,p. production) possiblesatisfaction
Yet while he was adamantabout the sovereignty of pref94; cf. p. 115).19 erences and the purposefulnessof actions, he was also of the opinion that consumersmay be "mistaken" as to what is in fact in theirown best interest He stressed that there are both "real" and "imag(Kirzner1990, p. 102).20

"real" and"imagined" can ined" needs,and,correspondingly, goods:"men withrespect be in error aboutthevalueof goodsjustas theycanbe in error to all otherobjectsof humanknowledge. Hencethey mayattribute value to economicconsiderations, to thingsthatdo not, according possessit in if theymistakenly thatthemoreorlesscomplete assume satisfaction reality,
of their needs depends on a good, or quantityof goods, when this relationship is really non-existent. In cases of this sort we observe the phenomenon of imaginaryvalue"(1871, p. 120). He argued,for instance,that consumers erroneously assign value to primitivemedicines, or love po-

likeJevons,thatpeople displaya weaknessfor tions,and he maintained,
the importanceof satisfactionsthat give intense momen"overestimating tary pleasure but contributeonly fleetinglyto their well-being":

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thatstupidmenmay, Butwhathas been saidby no meansexcludesthe possibility of various estimate theimportance as a resultof theirdefectiveknowledge,sometimes Evenindividuals whose in a mannercontrary to theirreal importance. satisfactions and who thereforecertainly endeavorto economicactivityis conductedrationally, foundation in orderto gainan accurate of satisfactions recognizethe trueimportance fromall human are subjectto error.Error is inseparable for theireconomicactivity, knowledge. the imMenare especiallyprone to let themselvesbe misledinto overestimating thatgive intensemomentary only pleasurebut contribute portanceof satisfactions the importance of satisfacfleetinglyto theirwell-being,and so into underestimating tions on which a less intensivebut longer enduringwell-beingdepends. In other more highlythantheirperwords, men often esteem passing,intense enjoyments manentwelfare,and sometimeseven morethantheirlives (1871,p. 148).21

Such an attitudeopened the door for government interventionto correct consumer errorsin valuation.In fact, Mengercalled for state action to encourage thrift-an expression of his paternalisticurge to counteract the circumstancethat "men often esteem passing, intense enjoyments more highly than their permanentwelfare, and sometimes even more than their lives" (Kirzner1990, p. 102). LikeJevons, Mengerheld that mistakenevaluations concerning the capacityof goods to fulfillneeds occur disproportionately among "peoples who are poorest in true goods" (1871, p. 53). Menger'sposition concerning such real and imaginarywants had implications for his price theory. Since in theory prices are based on marginal utility foundations for consumer valuation, while in actualityconsumers may be mistaken regarding those valuations, Menger distinguished between what he called "economic prices"and real-worldprices. Economic prices are the prices that would pertainin the absence of error,if rational economic actorspursuedtheir own best interestswithout the hindranceof incomplete informationeither concerningtheir own wants or marketphenomena. But in the real world, human decision makingis characterized by and other of toward well as as considerations others, goodwill errors, causes. Thus, only rarelydo economic prices pertain;real prices are much more likely to occur.22 Fully rationaleconomic man was, for Menger, an enlightened creature who understoodhis realneeds, and the movement towardfull equilibrium, toward an economy characterizedby an arrayof economic prices, was a slow and uncertainprocess. But it was more. It was, as one scholar has noted recently, "theentire movement of human historyas nineteenth-cen-

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tury European liberals, echoing Condorcet,had visualized it" (Silverman of mankind," 1990, pp. 90-91)-or what may be termedthe "improvement to use a phrase that has been coined regardingJ. S. Mill as well as W. S. Jevons (Peart 1990).
IV Jevons's Economic Man
PROCEDURE in the TPEconsisted of analyzing ecoMETHODOLOGICAL JEVONS'S nomic phenomena on the basis of a few main causes (such as privateselfinterest)that could be identifiedas being primaryinfluences in economic the existenceandeven the importance decisionmaking,while acknowledging of a multitudeof additionalinfluences.In social science,Jevons argued,the of economic relationships hinderedprecise theoretical specifi"complexity" cationof laws: "assoon as we attemptto drawout the equationsexpressing the laws of demandand supply,"for instance,"we discoverthatthey have a our powers of mathematical treatment" (1874, complexityentirelysurpassing of cause,Jevons p. 759). As a consequence of such pronouncedmultiplicity manabstract endorsedMill's"comparatively and general"method, "treating kind fromsimple points of view, and attempting to detect generalprinciples of of action"(p. 760).23 This method involved the theoreticalinvestigation effects following from a few main causes of interest,while recognizingthe constituted existence of additionalcauses. In economics, privateself-interest the majorcause fromwhich to start:"we may startfrom some obvious psyto a smaller gain is preferred chologicallaw, as for instance,thata greater one, and we may then reasondownwards,and predictthe phenomenawhich will be producedin society by such a law"(1871, pp. 16-17). Yet Jevons acknowledged that consumers'actions resultedfrom a mulor "noxious"influences. He was, in titude of "extraneous,""capricious," of these lattercauses with pure selfaddition, aware that the intermixture would lead consumers to interest strayfrom his theoreticalconditions for utilitymaximization,and cause prices to deviate from marginalvaluations. And since what the economist actuallyobserves consists of choices made by individualsthat are the result of all-and not simply the main-causal factorsoperatingat once, observed behaviorwill rarelyif ever conformto the economist'ssimplifiedtheory.In practice,choices have the appearance of caprice, and violations of the utility-maximizing conditions (mistakes)

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occur.In the case of savingsdecisions,moreover, Jevonsinrepeatedly aremyopic,underestimate the importance sistedthatconsumers of future and undersave. consumption, consequently andsystematic areconspicuous mistakes inJevIndeed,nonsystematic ons's analysisof decisionmaking.He allowed,first,thatnonsystematic mistakes occurred with everytransaction, when, becauseof the interferor becausethey lackinformation or failto ence of "capricious motives," the information contained in pricesignals, consumers orproducers process He even went so faras to maintain makemistaken trades. in the 7PE that areunableaccurately consumers sometimes to assessthe utility associated withparticular actions: "themindoftenhesitates andis perplexed in makthisindicates eithervarying estimates of ing a choiceof greatimportance: the motives,or a feelingof incapacity to graspthe quantities concerned. I shouldnotthinkof claiming forthemindanyaccurate of power measuring and addingand subtracting (1871, feelingsso as to get an exactbalance" p. 13). As a consequence of Jevons's thattransactions involvea set recognition of circumstances muchmorecomplex thanhistheoretical of utility analysis maximization between"theoretically marallowed,the distinction perfect" kets and the realworld-markets "inpractice"-wasof paramount imIn he the TPE three market that "more portance. recognized imperfections or less"characterize decisions in practice: lackof information, lackof comandthe existenceof capricious motives.24 petition, Inthetheoretically information is complete andaccurate. market, perfect In practice, "more or information less" mirrors this prehowever, only Thekey feature of a perfect market was not,Jevonsmaintained, sumption. itslocation, butinstead consisted of thecommon andcomplete knowledge heldby participants in its exchanges.25 "Inpractice" the theoretical is only conceptionof perfectinformation "more or less completely carried out"(1871,p. 86).Notsurprisingly, some were said to be characterized markets flows than by betterinformation others(p. 87). Anyexceptionto "wideandconstant information" (p. 87), meant that trades would occur that Jevonsargued, violatehis equilibrium for exchange,producing conditions "unnatural" relative prices.Conspiracies designedto conceal information were singledout as one cause of the "ordinary conditions of themarket," bearoverthrowing causing "prices no relation to the ing proper existing supplies" (p. 86).

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In addition, the conditions of theoreticalperfection rarelyhold true of real-worldtrades, because what is observed is a conglomerate of "accident[s]" influencingbehavior.The theoreticalanalysisof exchange presupposed individualsmotivatedby privateself-interestalone: "Everyindividual must be considered as exchanging from a pure regard to his own requirementsor privateinterests"(1871, p. 86). In practice,however, Jevons acknowledged the importanceof altruismand other extraneous motives (cf. p. 141). In practiceJevons also recognized that the operation of what he termed motives"overwhelms or disguises the theoreticalresponses to, "capricious for instance, an increase in price, and discontinuitiesresult:
We cannotusuallyobserveany preciseand continuous variation in the wantsand deeds of an individual, because the action of extraneousmotives,or what would seem to be caprice,overwhelms minutetendencies.As I have already remarked (p. does not varyhis consumption of sugar,butter, or eggs from 15), a single individual week to week by infinitesimal to each smallchangein price.He amounts, according untilaccidentdirectshis attention continueshis ordinary to a consumption probably rise in price,and he then, perhaps,discontinues the use of the articles for altogether a time(1871,p. 89).26

Individualactions,Jevons reiteratedin the introductionto his TPE,might frequently "have the appearance of caprice,"because of the "numerous and complicated""motivesand conditions"influencingthem (p. 15).27 In the discussion of the "hierarchy of motives"we find evidence of Jevons's belief that, especially among the uneducated laboring classes, economic decisions might persistentlybe incorrect.Jevons circumscribedhis purpose in the TPEby noting that he treated only "the lowest rank of feelings"-those feelings aimed at supplying "the ordinarywants of man at the least cost of labour"(1971, p. 38). His purportedtask was therefore not to assess what people should desire or consume, but instead simply to analyze what they do consume: "The food which prevents the pangs of hunger,the clothes which fend off the cold of winter,possess incontestable the meaning of the word by any utility;but we must beware of restricting moral considerations.Anythingwhich an individualis found to desire and to labour for must be assumed to possess for him utility.In the science of Economics we treat men not as they ought to be, but as they are" (1871, p. 38; cf. p. 39).28 LikeMenger,however, despite disclaimersregardingthe sovereigntyof

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consumer of Jevonspossesseda firmnotionof a hierarchy preferences, he attempted to keep his investigation neutral goods.Although regarding the desirability of actions, his own judgments aboutwhattypesof choices shouldprevailare evidenteven in this treatment of the so-calledlower Atthe loweststageof motives(thosemostpurely selfpleasures. privately a manoughtto satisfy andmoderate" desires. interested), onlyhis "proper sincea "higher calculus of moralright andwrong" is required "to Further, how he best show may employthatwealthforthe good of othersas well as himself," the passageimpliesthatuncoordinated actionsof individuals theirown, but not necessarily welfare.Then,if may maximize society's, "theclaimsof a familyor of friends fallupon"the consumer, "itmaybecomedesirable thathe shoulddenyhis own desiresandeven his physical needs theirfull customary (1871,pp. 25-6). LikeMenger, gratification" towardpleasuresthat are lasting Jevons also revealsa predisposition as opposedto fleeting andintense; andlikeMenger, too, thoughmoderate, he supposedthatconsumers makethe wrongchoice in such frequently cases (see his essay on utilitarianism and Peart1990).Suchargu[18791 ments left the door open for important (see Secpolicy interventions tionV). In his discussion of intertemporal decisions, Jevonspreconsumption thatboth in theoryand in practice consumers are sumed,like Menger, benefits from future He systematically myopic, undervaluing consumption. described a situation wherethe usefulnessof a good is distributed over time.Then,"Ifwe reckonall futurepleasures and painsas if they were theutility-maximizing solution wasformally idenJevonsargued, present," ticalto the case of a good distributed acrossdifferent uses (1871,p. 71).If a good is used over n days,and viis the marginal with utilityassociated each day'suse, the distribution madeby a "beingof perfectgood sense
and foresight"29 will be such that i = 2 = v3 = . . . = vn(p. 71). This is

the distribution, "which shouldbe made,and wouldbe Jevonsasserted, madeby a beingof perfect Tosecurea maximum goodsenseandforesight. of benefitin life,all future or pains,shouldact events,all future pleasures with us the force as if same were allowance upon they present, beingmade fortheiruncertainty. Thefactor theeffectof remoteness should, expressing in short,alwaysbe unity,so thattimeshouldhaveno influence" (p. 72).30 thatconsumers arenotconstituted inthis"perhowever, Jevonsinsisted, fect way,"since futurepleasures are discounted relative to presentones

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(1871, p. 72): "But no human mind is constituted in this perfect way: a future feeling is always less influentialthan a present one" (p. 72). This flaw implied that,without intervention,individualsdo purportedcharacter not save enough for the future, a problem that Jevons returnedto time and again in his analyses of poverty and overpopulation (1865; 1883; Peart 1996a). Thus, a numberof differenttypes of "mistakes" emerge injevons's analcauses; those associysis: those due to "caprice"and other "extraneous" ated with consumersbeing incapableof makingfinely calibrated decisions; those reflecting individuals'inabilityto accuratelyassess satisfactionsacto cruingfrom consuming specific bundles of goods; mistakesattributable benefits associated with parconsumers'ignorance concerning the "true" ticular goods; and, most serious, consumers' lack of appreciationof the "true"benefits of future consumption. Jevons apparentlypresumed that some types of mistakes were empiricallyless importantthan others: the effects of caprice, for instance, were presumed to be small, and also to balance over time. Yet other mistakes,such as those associatedwith intertemporalconsumptionas well as systematicundervaluingof specific goods (e.g., libraries),could not be glossed over so simply, and requiredformal considerationby economic theorists.These latteralso formedthe analytical basis forJevons'smany policy recommendationsin favorof educatingconsumers as to the errorof their spending ways.
v

Conclusion
AND MENGER both used to analyze economic choices THE PROCEDURE JEVONS decision making,and out"correct" "incorrect" and between distinguished and the lined the results for economic agents economy that flow from a series of correct (equilibrium)choices. Such a procedure carrieswith it a mixed policy message that may have contributedto some confusion concerning the overall policy stance of these writers. Menger'sview of the economic system saw it governed by consumer valuationsin the case of the economic model in which the effects of error and other complicationsare nonexistent, ignored, or presumedto balance. conreflect the underlying realities of "correct" If prices that "correctly" sumer valuationswere to prevail-"economic prices"-then the resource

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wouldreflect the (correct) wishesof sovereign allocation thatwouldresult thatmarkets willtendtoward consumers. seemsto havepresumed Menger an array of economicprices,but he clearly maintained that,forthe most in place part,such an arrayof pricescannotbe assumedto be already His awareness of errors and other (Kirzner 1990,p. 103). entrepreneurial aberrations servedto separate the real-world economyfromhisconsumermodel. governed"economic" Much the samemaybe saidof Jevons,who, likeMenger, hasalsobeen as an extremelaissezfaireliberal on the one handand an ininterpreted terventionist on the other.ForwhileJevons's theoretical analysis pertained to equilibrium andpresupposed he clearly information, exchanges perfect maintained that, in practice,tradesare effectedby myopic,poorlyinor simply Thestrong consumers. laissezfaire formed, impatient, capricious in his TPE flow fromthe assumptions of perfectinforpolicystatements mation andrationality, buttheydo not holdup generally as representative of "Jevons's economics." Onetentative conclusion thatemerges fromtheforegoing representation of JevonsandMenger followsfromtheirdiffering of the soconceptions calledmovement toward Both and view conJevons equilibrium. Menger and myopic.ButMenger sumersas impatient sees consumers as actively their own decision-making improving processes,while Jevons regards themas somewhat lessableto effectsuchimprovement without education.

Notes 1. Jaffeacknowledged thata few authors had already alludedto suchdifferences; see forthethen-common (1954,p. 918)andHicks,who showedlittleenthusiasm Schumpeter of treating the threerevolutionaries as one (1934,p. 338). practice 2. Thereis no reasonto supposethatthismustbe an all-or-nothing Jevons proposition. sharessome featureswith his contemporaries, most notablywith Menger, and he also ardepartsfromthem in otherrespects.But the "homogenization/de-homogenization" Thisis because,following gumentprovidesa usefulstarting pointfor our investigation. Jaffe'scall for de-homogenization as a resultof thatcall),com(thoughnot necessarily monalities betweenMenger andJevonshavebeen neglected.Itis thosecommonfeatures thatthis investigation seeks to highlight. for why MengerandJevons 3. I do not claimto have, as yet, found theexplanation hold similar beliefs about consumerbehavior.But it does seem reasonable to suggest thattheirfocus on exchange,in contrast to Walras's emphasison pricedetermination,

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into the natureof consumerdecisionmaking.Thus led them to delve more insistently for the similarities thatfollow. the contrast outlinedhere is at leasta partial explanation on this matter, thatit is in thiscontext 4. In oppositionto Schumpeter Jaffemaintains invokedmarginal thatWalras utility.See 1976,p. 516. to the Theory 5. See Black'sintroduction (1970),where he sugof PoliticalEconomy in this regard is less thansatisfactory. gests thatJevons'streatment made by MarkBlaug(1990) in this contextis particularly 6. The distinction helpful. Walrasian He arguesthatone mightcharacterize economics,wherebythe economyis whereas as "general economics, equilibrium" equations, depictedas a set of simultaneous ecothe analysisby Menger(and, I would add,Jevons)is best called"total equilibrium to Marnomics"wherebyeverything else; both are contrasted depends on everything or "one-at-a-time economics" (p. 186). analysis, shallian-style equilibrium partial the focal point of value theoryfromlong-run 7. Blackarguesthatthe TPE"shifted deterto short-run 'normal' values determined by cost of production exchange-ratios mined by the psychologyof the partiesmakingthe exchange"(1970,p. 11). I would modify this somewhat to argue that Jevons's TPEattemptsto explain price-taking exchange.In Menger,too, the focus is on exchange:"Acorrecttheoryof price must insteadbe directedto showinghow economizing men, in theirendeavorto satisfytheir of goods) for needs as fullyas possible,areled to give goods (thatis, definitequantities othergoods"(1871,pp. 193-4). where 8. See Blaug(1985,p. 312). The trading body was used to rule out situations in The device are indeterminate. arose, correspondence part,as a resultofJevons's prices to two traders, Jenkins,where diagrams Jonesand referring earlyin 1868with Fleeming See the Brown,are used, andJenkinsrightly objectedthatpriceswere not determinate. 4 and 11, 1868,in Jevons(1972-81, Vol. 3, lettersfromJenkinsto Jevons,datedMarch pp. 167-78), as well White(1989,pp. 4430. Walras andMenger also reliedon abstraction. 9. BothWalras (1874, See, forinstance, for that"Ishallpresenta simplecase [of exchange] remarks p. 84), as well as Menger's observethe relationship we wishto consider thispurposein whichwe canmostcarefully undisturbed (1871, p. 182). The differenceis one of degree: by secondaryinfluences" and explicitly consider andJevonsappearconvincedthatpricesvaryconstantly Menger alludesto the issuebutforthe mostpartis unconcerned thatphenomenon, whileWalras of the "adjustment 3rdeditionof the process"in Walras's by it. Fora rareexamination thatregretssubsequent (1995). Elements, changesto latereditions,see Walker would balanceacross 10. Jevons sometimespresumedthat the effects of "caprice" will be correct: "The use of an so thaton average,an aggregate individuals, specification average,or, what is the same, an aggregateresult,depends upon the high probability in thelongrun,as oftenin one direction anddisturbing causeswilloperate, thataccidental eachother" discussion as the other,so as to neutralize (1871,p. 16;cf. p. 90). ForJevons's of his of thismethod,see 1874,pp. 334-98. Peart(1995)containsa detailedexamination of thisissue, see note 15 below. in thisregard. ForMenger's treatment assumptions than rather 11. Moss has arguedthatMengercalled his a theoryof price formation in order to underscorethe indeterminateness of the outcome of price determination exchange(1978,pp. 26f;cf. Menger1871,p. 194).

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12. Jevons also used the marketsfor grainand securitiesin his discussionsof the of markets "inreality." operations commodities thatcanbe exchanged eachotherin certain definite 13. Cf.:"Thus against of some othereconomicgood, for instance), (a sum of money and a quantity quantities in short, commodities thatcanbe exchangedforeachotheratwill by a saleor apurchase, do notexist-even on givenmarkets thatareequivalents in theobjective senseof theterm, of the and at a given point in time.Andwhat is more important, deeperunderstanding causesthatlead to the exchangeof goods andto humantradein generalteachesus that of this sortare utterlyimpossiblein the very natureof the case and cannot equivalents exist in realityat all. In this respect,Mengergoes a step beyondJevons:Mengerinsists thatpricesvaryat a point in time and throughtime,whileJevons'semphasisis on the latter.See the evaluations (1972,p. 436) andJaffe by Vaughn(1990, p. 383), Streissler (1976,pp 519-20). 14. An additionaldifference of degree exists, now between Jevons and Menger. found the notion of equilibrium morecompellingthandidMenger, Jevons apparently and thus insisted upon describingthe conditions for equilibriumtrades in mathematicalterms.The evidence does not suggest, however, thatJevons was convinced that such equilibriawere long lasting, or wide ranging.Instead,he seems to have been convinced (see above, p. 316-17) that what we observe around us is largely trades. His rationalefor treatingequilibriumtradeswas a desire to nonequilibrium treatthe simplerproblem(equilibrium) before tacklingthe moredifficultone (movement towardequilibrium), as opposed to an argument thatthe formerareempirically significant(Peart1996a,pp. 90ff). 15. Perhapsfor this reason,Mengerarguedthataveragepricesmightserve approxi"Where correctness of the estimates matelyas a basisforvaluation: only an approximate is required, averagepricescan properlyserve as the basis of valuation,since they are for thispurpose.Butit is clearthatthismethodof valuinggoods most suitable generally insufficient andeven erroneous, even forpractical mustproveitselfcompletely life,wherever a higherdegreeof precision becomesnecessary" (1871,p. 274).In general,he was waryof aggregation. is the improvement of things,andof our 16. Thus,forMenger, technological progress or a changein the information contentof goods (Streissler 1972,p. 431; understanding, cf. p. 432).Agentsareportrayed as activeproblem solvers.See the assessment by Mitford (1990,p. 218). of Menger's time: economicmanis thathe livesin andplansthrough 17. A key feature "Theideaof causality, fromthe ideaof time.A processof change however,is inseparable involvesa beginningand a becoming,and these are only conceivableas processesin time"(1871,p. 61). of such choices(1871,p. 148),citedabove (pp. 313-14). 18. Mengerdisapproved uses the phrase"economizing individual[s]" 19. Menger repeatedly. 20. People may be mistaken both with respectto theirabilityto appraise their"own of the quantities statesof mind"and to "their available to knowledgeof the magnitudes them and of the different qualitiesof goods"(1871, p. 148).As an economybecomes morecivilized,fewerimaginary goods are consumed(see 1871,pp. 53-54).

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21. Thisattitude, of course,has a long history.SeeJ. S. Mill's very similar positionin as well as the treatment inJevons,discussedbelow, andMarshall Utilitarianism, (1890), of such claims, Fisher(1892), and Pigou(1920). For a discussionof the pervasiveness see Peart(1996b). 22. As notedabove,Menger foresawthatovertimesucherrors woulddiminish; hence he was convincedthat"real world"pricesmustmove closerto "economic" pricesover time.See Menger (1871,p. 70), andVaughn(1990,p. 384). 23. Sucha procedure, however,yieldedlimitedpredictive power(1874,p. 760). 24. Distinctions becomeblurred. sometimes Jevonson amongthesethreephenomena as a capricious occasionrefersto lackof competition motive,or as a causeof imperfect information to as a cause of iminformation. is sometimesreferred Further, imperfect In fact,lack of competition is rarelydiscussedas a distinct considperfectcompetition. eration.Edgeworth, who took Jevonsas his starting point (Creedy1992,p. 174), comof competition mencedhis discussionwith the consideration (1881,pp. 170. He argued thatJevons'sLawof Indifference only when thereis "perfect pertained competition" (p. of Jevonsfor not havingdealtwith the problemof the number 109),and he was critical of people in the market (Creedy1992,p. 120). his famous"trading bodies"(1871, 25. Jevons makesa similar argument concerning was verymuchconcerned withhow the number pp. 88-89). As notedabove,Edgeworth of traders affectedcompetition, with the natureof Jevons's"trading and, consequently, bodies."Hisdescription is apt:"[Jevons's] coupleof dealersare,I takeit, a sortof typical of 'Indifference,' whose originin an 'openmarket' is so couple, clothedin the property and "inthe lucidlydescribed. . ." (1881, p. 109). Eachis 'a "representative particular," thereis "presupposed a classof competitors" he refers background" (p. 109).Elsewhere to "individuals clothedwith the properties of a market" (p. 31, nl). 26. Theremay actually be two conceptually different issues here:lumpinessof conunitsand extraneous motives. sumption 27. Jevonsdidnot oftenelaborate uponthe motiveshe hadin mind,butin one passage he focusedon "motives moreorless extraneous to a theoryof Economics"-knowledge," "forceof character," and "feel"adroitness," "disposition," "persistence," "experience," also referred to such motives (1871,pp. 124, 125).Menger ings of justiceor kindliness" as "extraneous" to economics. an exampleof thistype of analysis: 28. Jevons'sdiscussion of gambling constitutes "If a personwith a certainincome prefersto runthe riskof losing a portionof it at play, rather thanspendingit in any otherway, it mustno doubtbe concededthatthe political economist,as such, can make no conclusiveobjection.If the gamesteris so devoid of othertastesthatto spend money over the gaming-table is the best use he can discover for it, economicallyspeaking,there is nothingfurtherto be said. The questionthen becomesa moral,or a politicalone"(1871,pp. 160-1). Evenhere,Jevons'sdisapproval is evident:gamblersare "devoidof other tastes."The treatment by Walrasis similar, "From otherpointsof view the questionof whethera thoughsomewhatmoreextreme: to killhis familyis a very drugis wantedby a doctorto curea patient,or by a murderer seriousmatter, but fromour point of view, it is totallyirrelevant. So faras we are con-

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case than cerned,the drugis usefulin bothcases, andmayeven be moreso in the latter in the former" (1874,p. 65). to decisionsmadeat a pointin time(1871,p. 60). 29. A similar phrasepertains is similar: the "prudent" treatment consumer 30. Marshall's being saidto "endeavour to distribute his meansbetweenall theirseveraluses, presentandfuture,in such a way thattheywill havein eachthe samemarginal Marshall (1890,p. 119).LikeJevons, utility" thatconsumersmake two "deductions" value of a good": maintained fromthe "future of obtainingfuturepleasures,and a the first,which is justified, due to the uncertainty second, which is not, due to lack of prudence,or impatience(1890, p. 120). On the of the savings decision by Jevons, Fisher,Marshall, similartreatment and Pigou, see Peart(1996b). view thatMenger favorslaissezfaire,as well as therecentchallenge 31. Onthemajority to thatargument, see Kirzner (1990,p. 94);foran overviewof conflicting interpretations of Jevons'spolicystance,see Peart(1990). References 4th ed. New to Theory Black,R. D. Collison.1970.Introduction of PoliticalEconomy. York:Penguin,pp. 7-40. in Retrospect. 4thed. Cambridge: Theory Blaug,M.1985.Economic Cambridge University Press. . 1990.Comment on O'Brien's "Lionel Robbins Connection." In and the Austrian andHisLegacy Annual to History in Economics. CarlMenger supplement ofPolitical Vol. 22. Editedby B. J. Caldwell.Durham, NC:Duke University Press, Economy,
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