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Biography and Intellectual Development

Hicks was born in Warwick. He studied at Oxford (1922–1926) and taught at the London School of Economics (1926–1935). He was Professor at Manchester University (1935–1946), from where he moved to Oxford, first as Fellow of Nuffield College, and from 1952 until he retired, from teaching but not from writing, as Drummond Professor of Political Economy and Fellow of All Souls College. In 1935 he married Ursula Webb, a distinguished public finance specialist, and he collaborated with her in the preparation of numerous works on public finance, its theory and its application to various countries. Ursula Hicks, as she was subsequently known, died in 1985. John Hicks was a member of the Royal Commission on the Taxation of Profits and Income in 1951. He became a Fellow of the British Academy in 1942, a Knight in 1964, and was awarded the Nobel Prize in Economics (jointly with Kenneth J. Arrow) in 1972. He died in 1989.

Hicks was the product of a generation which was the last to produce in abundance all round economic theorists – economists who could turn their minds to almost any theoretical problem. Its leading lights, among whom Hicks is certainly to be counted, left their marks on most of the major new branches and issues of economics as these in turn attracted the interest of themselves and their contemporaries. Hicks’s powerful and original mind first made itself felt in what is now called microeconomics, particularly in The Theory of Wages (1932, 2nd edition 1963) and with R.G.D. Allen, ‘A Reconsideration of the Theory of Value’ (Economica, 1934) and in welfare economics. However his best-known work, Value and Capital (1939), goes beyond microeconomics to offer an economic dynamics and discussion of monetary theory which reaches into the new macroeconomics.

Before Keynes’s General Theory fundamentally altered the way in which economists viewed their subject, the theory of value, including the theory of the firm, shared the field with monetary theory. Hicks was first a value theorist, but he never neglected monetary theory, and it was an area to which he was frequently to return. It was a value theorist with an interest in monetary economics who provided in ‘Mr Keynes and the “Classics” ’ (Econometrica, 1937) an exposition of Keynes’s General Theory that was probably more directly influential than the original. There followed work on the trade cycle, A Contribution to the Theory of the Trade Cycle (1950); on growth, Capital and Growth (1965); and an unusual approach to capital theory, Capital and Time: A Neo-Austrian Theory (1973).

Each decade of Hicks’s life seemed to find him more eclectic and innovative than the last. Indeed, his willingness to speculate about and write on areas in which he had not seeped himself as a specialist was a notable feature of his later writing. Striking examples are A Theory of Economic History (1969), in which Hicks undertook the risks inherent in proposing a grand theory of economic history, and Causality in Economics (1979), in which he entered ground normally reserved for philosophers and statisticians. These works can be criticized, but as their author always commands a well-provisioned base camp in the economics which is his own, they are never merely amateurish. Hicks is an economist of outstanding breadth and erudition.

With hindsight it is remarkable that the author of such a formidable theoretical corpus should write (‘Commentary’ in the 1963 edition of The Theory of Wages, p. 306): ‘... at first I regarded myself as a labour economist, not a theoretical economist at all’. Lionel Robbins is given the credit for interesting Hicks in theory: ‘... he moved me from Cassel to Walras and Pareto, to Edgeworth and Taussig to Wicksell and the Austrians – with all of whom I was more at home at that stage than I was with Marshall and Pigou’ (p. 306). It would be foolish to attempt to explain why Hicks became the distinctive economist that he was to become. However the above snatches of autobiography probably go some way to explaining why Value and Capital turned out to be a book like no other that an English economist had written before.

Hicks’s huge output (for the papers see the three-volume Collected Essays on Economic Theory, 1981–1983) is all the more remarkable when one considers that he seldom simply reacted to the work of others. There are no papers by Hicks pointing out mistakes by other writers, and none which embody minor changes to or extensions of existing models. Naturally Hicks produced work which follows paths opened up by others. However when he did so, as in A Revision of Demand Theory (1956), or with the famous IS–LM model, his approach was so distinctive that the commentary is recognizably a contribution of Hicks. Other writers feature mainly in footnotes and even such a powerful contribution as Samuelson’s treatment of Walrasian stability earns no more than two pages in the Second Edition of Value and Capital. There is a streak of self-centredness and parochialism in Hicks which mirrors that to be found in other English economists of his generation and those before. It would be insufferable in an economist less gifted and genuinely self-critical.

The Theory of Wages

Writing later (1963) of the first edition of The Theory of Wages its author remarks that ‘... there has been no date this century to which the theory that I was putting out could have been more inappropriate.’ However, Hicks was careful not to attribute the shortcomings of his first book to the misfortune of publishing in the worst year of the depression and a few years ahead of the reassessment of the theory of the firm brought about by the writings of Chamberlin and Joan Robinson and, worse fortune still, ahead of the General Theory. In this he was right. The Theory of Wages set out to examine the determination of wages under supply and demand in a competitive market. This admittedly limited task is important, and had it been perfectly accomplished it would not be sensible to criticize the resulting work for not solving other problems, such as wages under imperfect competition or the consequences of nominal wage bargaining, weighty though those problems might be. However the truth is that there were shortcomings in Hicks’s treatment even given its chosen emphasis. It was not as good a book as Hicks was later to show that he could write, though it was surely a better book than the later Hicks’s embarrassment at its shortcomings allowed him to admit.

G.F. Shove (whose fairly hostile review Hicks reprinted in the Second Edition) identified a number of the shortcomings. Notable among these is the relatively weak treatment of the supply side of labour markets and the consequently limited ability to treat unemployment. Shove also seems to accuse Hicks of failing to provide a treatment of the general equilibrium of many labour markets, which must be counted a rather common failing among labour economists. Shove, not surprisingly, was clear on minimum cost and the adding-up problem where Hicks’s account needed improvement – it was after all Shove’s bread and butter at the time. A point which Shove missed is that Hicks always discussed differences in the productivity of different workers as equivalent to differences in the quantity of effective labour provided per hour of work. In other words, like Marx before him, he fudged the problem of aggregating different types of labour.

These legitimate criticisms apart, there were very considerable merits. By concentrating on the long-run determinants of wage rates Hicks was able to examine some of the most interesting influences at work. He saw changes in the demand for labour as consisting of two components quite analogous to the income and substitution effects in demand that he was to investigate later. A lower wage rate leads to an expansion of output, because the cost curve has fallen, which induces a higher demand for labour. In addition a lower wage rate induces the adoption of more labour intensive methods of production, which increases the demand for labour for a given output. The analysis of this last effect lead to the discovery of the new concept of the elasticity of substitution, not quite as neat in Hicks’s formulation as in Joan Robinson’s later presentation, but this was the original. In general, Hicks’s definition of the elasticity of substitution is different from Joan Robinson’s, but the two are equivalent in the two-factor case. Many topics discussed only briefly and not deeply analysed were far ahead of their time. There is the idea that because capital tends to accumulate faster than labour, technical progress tends to be labour saving – the induced bias of technical progress as we would now say. There is the first ever attempt to model a labour dispute which may culminate in a strike, and more besides.

In a passing discussion in The Theory of Wages its author records a fascinating fact. Many wage rates in inter-War Britain were tied to the value of the output concerned, and for that reason were automatically flexible. Once account is taken of such arrangements, the remaining pure flexibility of money wages is exceedingly small. This provided an opportunity, not taken, to bring Hicks’s analysis to bear on an event that must have impressed itself on the young Oxford undergraduate: the 1926 miners’ strike that lead to the failed General Strike. Britain restored Sterling convertibility in 1925 at the pre-war rate of $4 to the pound. The resulting over-valuation of Sterling made much British industrial activity internationally uncompetitive. At the time the world price of coal in dollars had fallen sharply, with the consequence that British coal was worth less in dollars, and even less in over-valued Sterling. The coal miners’ contracts required sharp cuts in their wages, for which reason they went on strike. Tying miners’ wages to the price of coal implied too much wage flexibility in these circumstances. Britain’s coal-mining sector needed to contract, which should have raised the marginal product of labour in terms of coal, where the existing contracts held that number constant.

Value Theory

This area and welfare economics are fields to which Hicks contributed the writings that would have made him a great economist if he had done nothing else. In making the 1972 Nobel Prize award to Hicks jointly with Arrow the Committee mentioned ‘general equilibrium and welfare economics’. The reference in Hicks’s case was clearly to Value and Capital on the one hand, and to the various papers which established the Kaldor-Hicks criterion in welfare economics on the other.

Hicks’s paper with R.G.D. Allen, ‘A Reconsideration of the Theory of Value’ (1934) was written when both authors were at the London School of Economics, but its pedigree goes back to Slutsky, who had discovered the income and substitution effects in demand as early as 1915. However Slutsky’s work was almost entirely unknown to economists in the West, and this included, as Hicks informs us, himself and Allen (‘... I never saw Slutsky’s work until my own was very far advanced, and some time after the substance of these chapters had been published in Economica by R.G.D, Allen and myself’ (1939, p. 19).

Value and Capital is a work so rich in ideas that a short account of it cannot hope to do it justice. It showed that the basic results of consumer theory could be obtained from ordinal utility; it expounded what became known as the ‘Hicksian substitution effect’, obtained by varying income as relative prices changed so as to maintain an index of utility constant; it developed the parallel results for production theory; and it popularized among English speaking economists the notion of a general equilibrium of markets. Unlike Arrow, his fellow Nobel laureate, Hicks did not take the existence argument beyond equation and variable counting. There was about the Walrasian approach, Hicks concluded, ‘... a certain sterility’ (1939, p. 60). The way to overcome this was to consider the ‘laws of change’ of a general equilibrium system. This lead Hicks to the first ever attempt to analyse the stability of a system of multiple exchange.

It is fascinating that both Hicks and Samuelson, working entirely independently, both came up with the idea that dynamics might rescue general equilibrium theory from emptiness. Paul Samuelson in various papers of the 1940s and in his Foundations of Economic Analysis (1947) adopted an entirely different approach from that of Hicks. Consider a system of M markets with prices p1, p2, ..., pM and excess demands for the goods X1, X2, ..., XM. Making the dependence of excess demands on all prices explicit, this system can be written as:

$$ {\displaystyle \begin{array}{l}{X}_1\left({p}_1,{p}_2,\dots, {p}_M\right)=0\\ {}\ {X}_2\left({p}_1,{p}_2,\dots, {p}_M\right)=0\\ {}{X}_M\left({p}_1,{p}_2,\dots, {p}_M\right)=0\end{array}} $$
(1)

In equilibrium prices are such that all excess demands are zero. Now consider one good, which may be taken without loss of generality to be good 1. Select any value for p1 and suppose that there are unique values of the remaining prices such that the excess demands for goods 2 to M are zero. If the excess demands for the other goods are always maintained at zero by changes in their prices, all other prices become implicit functions of p1. The Hicks stability condition is then the one that would be required of a single market – X1 should decrease with p1. Full stability requires that this condition should be satisfied for each good in turn.

At first sight the condition appears to be asymmetrical but as the condition must be satisfied by all goods, there is no genuine asymmetry involved. However each test does involve a certain kind of asymmetry, and this is what Samuelson objected to.

When we look at good 1 we implicitly assume that prices in other markets react more rapidly to disequilibrium than does the price of good 1. When we look at good 2 we make the same implicit assumption for the price of good 2, and so on. What Samuelson did was to make the time rate of change of each price a function of the excess demand in its own market hence arriving at the system of simultaneous differential equations:

$$ {\displaystyle \begin{array}{l}\\ {}\begin{array}{c}\hfill {dp}_1/ dt={X}_1\left({p}_1,{p}_2,\dots, {p}_M\right)\hfill \\ {}\hfill {dp}_2/ dt={X}_2\left({p}_1,{p}_2,\dots, {p}_M\right)\hfill \\ {}\hfill \cdots \hfill \\ {}\hfill {dp}_M/ dt={X}_M\left({p}_1,{p}_2,\dots, {p}_M\right)\hfill \end{array}\end{array}} $$
(2)

The Hicksian stability condition can be shown to be neither necessary nor sufficient for the stability of (2). Hicks however defended his own approach, on the ground that it answers a different but interesting question, in the Second Edition of Value and Capital (Additional note C).

Parts III and IV of Value and Capital record the effect of a road-to-Damascus- like change of vision by Hicks. It seems that while preparing his great work on price theory, Hicks read Keynes, and, to borrow a modern term, it blew his mind. He could no longer find any real satisfaction in the static formalism of Walrasian equilibrium theory, and what he then did shows the full extent of his originality. In these later Parts of the book that eventually resulted he adapted the static theory of the earlier parts to create an economic dynamics which borrowed equally from the Marshallian-Keynesian tradition of the short period and the Walras-Wicksell tradition of long-period equilibrium. The key idea was the concept of temporary equilibrium – an equilibrium of current markets in which future markets make their influence felt indirectly, through the expectations held by agents, which influence their behaviour in current markets. From this emerged the concept of the elasticity of expectations, an idea which proved to be crucial in much later work on macroeconomic theory.

Welfare Economics

Hicks’s writings on welfare economics are largely accounted for by work on four closely connected fields of interest: the foundations of welfare economics, including the famous compensation test; the valuation of social income; the definition and measurement of consumer surplus; and, lastly, the measurement of capital.

Hicks was one of the pioneers of the ‘new welfare economics’, an approach which owed its inception to Kaldor’s ‘Welfare propositions in economics and interpersonal comparisons of utility’ (Economic Journal 1939). The problem at issue is inescapable and fundamental to the justification of the recommendations of economists. By the time the debate arose, cardinal utility was no longer generally accepted and the need was felt to differentiate between ‘scientific’ propositions and ‘value judgements’. The notion of a ‘Pareto improvement’ – a change that would make no individual worse off, and at least one better off – was familiar but was seen to be limited as a basis for recommendations, as nearly all actual changes made at least one person or group worse off. In Robbins’s telling example, economists could not state scientifically that the abolition of the Corn Laws was a good thing because this reform made landlords worse off.

Hicks’s suggested solution to the difficulty was the same as that proposed by Kaldor – a compensation test. A reform should be counted an improvement if the gainers could afford to compensate the losers and still be better off. In ‘The Foundations of Welfare Economics’ (Economic Journal, 1939), Hicks discussed the question of whether compensation must be paid for the improvement to count without a sense of how crucial this question was to prove to be. It was of course central to the issue posed by the Scitovsky example, which showed that the Kaldor-Hicks rule could lead to contradictory recommendations if compensation were not paid. A well-argued solution to this problem was proposed by I.M.D. Little (1950), but this required explicit value judgements concerning whether income distribution had improved or not in a movement from one position to another, hence negating the original intention of the exercise, which had been to remove value judgements from welfare economics.

Hicks seemed to see these developments as fairly unimportant qualifications to the original idea. In ‘The Measurement of Real Income’ (1958), he writes of the ‘new welfare economists’; ‘They were indeed over-confident in their belief that they had found a means of direct comparison which will always work. But I still maintain that they did find a means of direct comparison which will often work’ (reprinted in Collected Essays, Vol. I, p. 168). For a statement of Hicks’s mature views on these questions see ‘The scope and status of welfare economics’ (1975). Perhaps the most interesting thing to notice about Hicks’s long involvement with the foundations of welfare economics is that he seems never to have wholly accepted the conclusion upon which the majority of economists have been willing to settle. Briefly put, this view says that value judgements are an inescapable element in welfare evaluations and this should be accepted and the judgements made explicit. Hence the design of policy by the means of the maximization of an explicit social welfare function – the welfare weights of cost-benefit analysis – never engaged Hicks’s interest.

It is evident that the problem of the measurement of income is closely allied to the issue of welfare improvements and Hicks, as would be expected, contributed to this area as well. Hicks discussed social accounting in his text book The Social Framework (1942), and the valuation of social income in a paper of that title in Economica (1940).

Hicks concluded that the measurement of income could mean measurement in terms of utility or measurement in terms of cost, and that the two measures were in general different. The most interesting issue to which this gave rise was the problem of how to treat indirect taxation and government expenditure on goods and services in the valuation of social income. This led Hicks into controversy with Kuznets (Economica, 1948; see also Essay 7 in Volume I of the Collected Essays). The usual practice is to measure prices at factor cost and to value public services at cost.

Hicks’s original position may be briefly summarized as follows:

(i) As there is no market test where public goods are concerned the taxation which pays for them is not a reliable measure of their value to the consumer; and (ii) even if consumers were to be regarded as implicitly choosing public expenditure exactly as they choose private expenditure, the appropriate price weights would not be average costs but marginal costs. For a mature statement, see the Addendum to Essay 7 in Volume I of the Collected Essays.

Between 1941 and 1946 Hicks published a number of papers on consumer surplus in the Review of Economic Studies that did much to revive interest in a concept which had seemed to lose its validity when measurable utility went out of fashion. His most important contribution to the controversial question of the measurement of capital, significantly entitled ‘Measurement of Capital in Relation to the Measurement of Other Economic Aggregates’, is in F.A. Lutz and D.C. Hague (1961).

The Keynesian Revolution and the Theory of Money

Hicks’s first response to the General Theory is described in detail in ‘Recollections and documents’ (Economica, 1973, included in Economic Perspectives, 1977).

However the response for which he is best known was an expository piece ‘Mr Keynes and the “Classics” ’ (1937) that perfectly fulfilled the innate demand for a more readily accessible account of the essentials of Keynes’s argument. It is important to make clear that what was provided was more than an haut vulgarization of Keynes, because the paper has been widely criticized for vulgarization and still more for seriously misrepresenting what the General Theory is about. This case has never been rigorously argued and it is hard to see how it could succeed. Hicks reproduced rather faithfully Keynes’s various specifications, but by working with a two-sector model produced a framework which resulted in a simple diagram – the IS–LM diagram – which became to macroeconomic textbooks what the benzene ring diagram is to textbooks of organic chemistry. It is no surprise therefore that Keynes on reading the paper wrote to Hicks that he had ‘... next to nothing to offer by way of criticism’. Certainly there is more in the General Theory than just the IS–LM model. In particular there is the idea of a long-term under-consumption problem, no less worrying for being loosely formalized. Nevertheless, the IS–LM framework is there, as is what Samuelson later called the neoclassical synthesis, however much Keynes’s latter-day disciples may dislike it.

In fact Hicks’s way of presenting the argument is in some ways superior to that adopted in the General Theory because the original IS–LM model brings out very clearly how the relative price of capital and consumption goods enters into the determination of the solution – a point which is somewhat obscure in Keynes. How ironic therefore that one of the arguments later advanced against the IS–LM model, admittedly with simpler versions than Hicks’s in mind, was that it omitted an essential feature of Keynes – relative prices of capital and other goods.

Hicks’s IS curve is based on the striking observation that if the capital stocks in the two sectors of the economy are given, and if the money wage is known, then outputs in the two sectors depend on the nominal prices of their products through short-term profit maximization conditions. Given these outputs and prices, the value of nominal total income follows. The output of the investment sector depends on the rate of interest through the marginal efficiency of capital relation. Then, given the rate of interest, the nominal price of the investment good follows and the part of income generated in that sector. Now choose an arbitrary value, which can be thought of as a guess at the level of total nominal income. As the part of nominal income generated in the investment goods sector is known, given the rate of interest, the guess implies a certain level of nominal income to be generated in the consumption good sector. We now have a value of total income and a value of total consumption, both in nominal terms. If these values are consistent with the consumption function our guess for the value of total income was correct and we have discovered the level of income on the IS curve for the rate of interest with which we were working.

We have discussed only the IS curve but the LM curve is relatively uncomplicated – there is less going on behind it. The beauty of this elegant and lucid way of expounding Keynes’s model is that it brings out clearly the vital role played in the model by aggregation assumptions which have the effect that the model decomposes, so that parts of it can be dealt with in partial isolation from the complete system. The simple specifications of the determinants of investment and the consumption function produce this result. The role played by income and working in terms of nominal values – which are equivalent to wage units, as the nominal wage has been taken as given – are all brought out clearly.

In the hands of others the IS–LM model often became merely a model of an economy with all prices fixed and was often misused, as when it was applied to long-run questions for which it is not suitable. However it made the General Theory intelligible to a whole generation, not because it left out the subtleties, it was never intended to substitute for the text, but because it perfectly captured the part of Keynes’s message which is most amenable to formalization.

A Contribution to the Theory of the Trade Cycle (1950) provides an example of the type of model that explains cycles as the outcome of the interaction between the multiplier and the accelerator. These systems are linear in their simplest formulations when they lead to cycles which are almost certainly either damped or anti-damped. Three different ideas have been proposed to yield an outcome in conformity to the stylized model of a capitalist economy with regular cycles of constant amplitude.

The underlying solution may be anti-damped and buffers, in the form of a floor on or a ceiling to the level of economic activity, may be added to keep the solution within bounds. The system may be made non-linear, which is equivalent to buffers which make their influence felt continuously rather than abruptly. Finally, the underlying solution may be damped, in which case the cycle will have to be kept alive by the frequent intervention of random shocks. Hicks’s main model embodies the last type of approach.

From 1937 Hicks continued to write regularly on questions of macroeconomics. Volume II of his Collected Essays contains a selection of his best work in this vein. Essay 18, ‘Methods of dynamic analysis’, proposes the distinction between the fixprice and the flexiprice economy which was to be developed in Capital and Growth. In his Yrjö Jahnsson lectures, The Crisis in Keynesian Economics (1974), Hicks offers reflections on the Keynesian theory and particularly on the impact of inflation on a Keynesian model.

Hicks never remained far from monetary theory. Critical Essays in Monetary Theory (1967), shows the richness of his early writings on monetary economics, while Essay 19 in Volume II of the Collected Essays gives a good indication of his later work. It is tempting to say that if Hicks had written nothing but his work on monetary economics he would be counted a considerable economist. However the truth is that he could not have written on monetary economics as he did write had he not been the broad economic theorist that he was. Hicks always placed monetary theory centrally in equilibrium theory. This was the distinctive idea of his first paper on the subject, ‘A Suggestion for Simplifying the Theory of Money’ (Economica, 1935), and it is a theme which he was to carry through all his later work.

Growth and Capital Theory

Hicks’s two other books with ‘Capital’ in their titles, Capital and Growth (1965) and Capital and Time: A Neo-Austrian theory (1973a), have little else in common. Capital and Growth was Hicks’s response to the frantic interest in growth theory which infected the 1960s. It was a characteristically personal response in which Hicks tried to apply the framework for dynamic analysis that he had developed in Value and Capital to the construction of a growth model.

The analogue of the static problem of Part I of Value and Capital was now the steady state growth path, but once again Hicks found the most interesting question to be the dynamic adjustment to equilibrium, and once again he attacked this problem with an approach which was all his own. The ‘traverse’ was the history of the movement of an economy from one steady state to another. This approach to growth theory was not very influential and the reason was not so much that the new interest in growth had extinguished interest in equilibrium theory. Rather it was that equilibrium theory and its sister economic dynamics had moved on a great deal since Value and Capital. Hicks, who had taught a generation how to do general equilibrium economics, was no longer talking a language that most economic theorists found congenial.

Capital and Time was not the product of the latest fashion in economic theory but was surely the result of long meditation starting from that wonderfully fruitful comparative ignorance of Marshall and Pigou as against the Austrians and other continentals, noted above. Hicks always conceded a place to the old classical idea that capital accumulation means more ‘waiting’. In Value and Capital (1939a, pp. 197–8) however, he pointed out that the conclusion that the rate of interest is the marginal product of waiting is a special case of more general rules which apply to an intertemporal equilibrium. This conclusion, that Austrian models of capital are special cases of the more general von Neumann model of capital accumulation, remains valid. However special cases permit of special results, and Hicks’s analysis of the Austrian model was remarkably successful in showing how that framework permits some strong and definite conclusions to be drawn.

Other Topics

We consider only A Theory of Economic History (1969) and Causality in Economics (1979), as these constitute the most audacious of Hicks’s expeditions far from the mainstream of economic theory. A longer review of Hicks’s work would have to find space to discuss his writings on economic policy (for a sample of which see Essays in World Economics, 1959) and on the history of economic thought (for some of which see Volume III of the Collected Essays), but here we merely note that these are serious omissions from the present survey.

We begin with Causality in Economics. This book was not the eventual product of long years of mental rumination, but the result, its author tells us frankly, of dissatisfaction with the 1974 International Economic Association conference on ‘The Micro-foundations of Macroeconomics’ which Hicks attended. It is book of interesting ideas on economics which are reluctantly regimented by a Sergeant-Major called ‘causality’. This gentleman turns out to be only remotely related to the ‘causation’ of Aristotle or Kant. Hicks’s definition of causality is reminiscent of Hume, but without the idea that the validity of induction is importantly involved.

Causation is seen as conjunction of events, possibly in a complex form. This idea is an old one and was very effectively criticized by the Cartesians but their contribution is not considered. As an essay in philosophy Causality in Economics cannot be taken seriously. The economics of course is of a higher standard. The last chapter provides a statement of Hicks’s views on the meaning of probability and on econometric methodology. These are obiter dicta, not the fruits of profound investigation.

A Theory of Economic History is as ambitious a sortie into foreign territory as Causality in Economics, but is the product of more thought and reading and must be regarded as much more successful. The main idea, that economic history is tied up with the development of the market, is one that few would question. However most historians would be tempted to take cover behind a safe position according to which developments of ideas, knowledge, social institutions, etc., would all be seen as progressing in parallel with the development of the market, which consequently would enjoy no special status as a motive force. Put simply, Hicks’s account gives a much more leading role to the market, although he does not of course go so far as to argue that the market drives history.

Such a strong argument could not fail to attract criticism, particularly from professional historians. A long book would have done the same but a very short book was a particularly provocative target. As the argument gave a lot of attention to the ancient world this proved to be a contested area. However while A Theory of Economic History was criticized it received respectful criticism. It may be only a way of looking at economic history but it was generally judged to be a good way. Hicks’s reply to his critics may be found in Economic Perspectives (1977, pp. 181–4).

Retrospect

Schumpeter argued that the ideas of a great economist are more or less in place by the age of 40 – the rest is nurturing and polishing. At first glance Hicks appears to be an exception. He was 65, for example, when his theory of economic history was announced to the world. Yet probably on closer examination he will be seen to conform to the Schumpeter pattern. In the case of the A Theory of Economic History he tells us in the foreword that he had nursed the idea for years. There is indeed a powerful sense of direction to Hicks’s intellectual journey. He often returns to old themes and new themes are examined from older perspectives. Probably after 40 Hicks was only nurturing and polishing, but it is no contradiction of that claim to say that the second half of his life produced some of his most creative work.

It remains to mention some particular qualities of Hicks the man. First, he wrote beautifully, in a style that is very correct from the formal point of view, yet almost conversational in its flow and ease. Secondly, his greatness justified a little vanity, and he was not wholly free of that minor vice. That said, he was always approachable, and he never attempted to win an argument by pulling rank or flaunting his formidable distinction.

Selected Works

  • 1932. The theory of wages. 2nd edn. London: Macmillan, 1963. 1934 (With R.G.D. Allen.) A reconsideration of the theory of value. Pts I–II. Economica I, Pt I, February, 52–76; Pt II, May, 196–219.

  • 1935. A suggestion for simplifying the theory of money. Economica 2 February, 1–19.

  • 1937. Mr. Keynes and the ‘classics’. Econometrica 5 April, 147–59. 1939a. Value and capital. Oxford: Clarendon Press.

  • 1939b. The foundations of welfare economics. Economic Journal 49, 696–712. 1940. The valuation of the social income. Economica 7 May, 105–24.

  • 1942. The social framework. Oxford: Clarendon Press.

  • 1948. The valuation of the social income: A comment on Professor Kuznets’ reflections. Economica 15 August, 163–72.

  • 1950. A contribution to the theory of the trade cycle. Oxford: Clarendon Press. 1956. A revision of demand theory. Oxford: Clarendon Press.

  • 1958. The measurement of real income. Oxford Economic Papers 10 June, 125–62. 1959. Essays in world economics. Oxford: Clarendon Press.

  • 1961. Measurement of capital in relation to the measurement of other economic aggregates. In The theory of capital, ed. F.A. Lutz and D.C. Hague. London/New York: Macmillan/St Martin’s Press.

  • 1965. Capital and growth. Oxford: Clarendon Press.

  • 1967. Critical essays in monetary theory. Oxford: Clarendon Press. 1969. A theory of economic history. Oxford: Clarendon Press.

  • 1973a. Capital and time: A Neo-Austrian theory. Oxford: Clarendon Press. 1973b. Recollections and documents. Economica 40 February, 2–11.

  • 1974. The crisis in Keynesian economics. Oxford: Basil Blackwell.

  • 1975. The scope and status of welfare economics. Oxford Economic Papers 27, 307–26.

  • 1977. Economic perspectives. Oxford: Clarendon Press. 1979. Causality in economics. Oxford: Basil Blackwell.

  • 1981–3. Collected essays on economic theory. Oxford: Basil Blackwell.