THE ECONOMICS OF W.S.JEVONS Sandra Peart London and New York First published 1996 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1996 Sandra Peart All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by an electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Peart, Sandra. The economics of W.S.Jevons/Sandra Peart. p. cm.—(Routledge studies in the history of economics; 9) Includes bibliographical references and index. 1. Jevons, William Stanley, 1835–1882. 2. Economists—Great Britain—Biography. 3. Economics—Great Britain—History—19th century. I. Title. II. Series. HB103.J5P4 1996 95–51459 330.157–dc20 CIP ISBN 0-203-02249-1 Master e-book ISBN ISBN 0-203-20445-X (Adobe eReader Format) ISBN 0-415-06713-8 Truth is the iron hand within the velvety glove, and the one who has truth & good logic on his side will ultimately overcome millions who are led by confused and contradictory ideas. (William Stanley Jevons, Miscellaneous Notes on J.S.Mill’s Logical Method, JA6/5/43) CONTENTS Acknowledgements xi Abbreviations xii 1 INTRODUCTION 1 General themes Appendix 1.1 Chronology of Jevons’s life 7 Appendix 1.2 Chronology of Jevons’s works 12 Part I Macroeconomic concerns: growth and stability 2 JEVONS’S THEORY OF ECONOMIC GROWTH 18 Introduction: the early years 18 The Coal Question 20 On population growth 21 The empirical analysis and policy recommendations 29 Conclusions 32 Appendix 2.1 Coal consumption 37 Appendix 2.2 Population data 39 3 SUNSPOTS AND EXPECTATIONS 41 Jevons’s theory of economic fluctuations Introduction 41 Early recognitions of the role of expectations 43 Jevons’s early analysis of fluctuations 47 Jevons’s sunspot theory 51 Economic policy and fluctuations 56 Critical evaluations of Jevons’s sunspot theory 59 viii Conclusions 62 Part II Microeconomic theory 4 JEVONS’S THEORY OF POLITICAL ECONOMY 65 Origins, scope and purpose Introduction 65 Jevons’s intellectual heritage: the ‘Prefaces’ of 1871 67 and 1879 Jevons’s Brief Account of a Mathematical Theory 70 Scope and purpose of the Theory of Political Economy 73 Conclusions 79 5 JEVONS’S THEORY OF EXCHANGE 81 Introduction 81 The laws of utility 82 The theory of exchange 88 Implications and ‘practical manifestations’ of the 97 theory Conclusions 101 Appendix 5.1 Physics and neoclassical economics 103 6 PRODUCTION 104 Introduction 104 Disutility: the theory of labour 106 Relation to the ‘recognized doctrines of political 112 economy’ Theory of rent 115 Capitalization 117 Conclusions: the profit-wage relationship 120 Part III Economic policy 7 JEVONS AND UTILITARIANISM 124 Introduction 124 Bentham, J.S.Mill and utility 125 ix Jevons’s denial of Mill’s standard 131 Presumptive guidelines for economic policy 135 Jevons’s debt to Mill 138 Conclusions 140 8 JEVONS’S ANALYSIS OF POLICY 141 Introduction 141 Specific applications of policy analysis 142 Trade unions and co-operation 146 On education: the problem of intertemporal decision- 148 making Late nineteenth-century developments on utility 150 measurement Conclusions 152 Part IV Methodology 9 THE RISE OF EMPIRICAL METHODS 156 Jevons’s methodology of economics Introduction 156 Of causation and chance 158 The methodology of J.S.Mill 160 Jevons’s methodology 166 Conclusions 174 10 JEVONS’S EMPIRICAL STUDIES 176 Introduction 176 The variation of prices 177 The condition of coinage 183 The Davenant Law 185 The sunspot cycle 187 Some reactions to Jevons’s methodology 191 Conclusions 193 Appendix 10.1 Jevons’s commodity groups, enlarged sample 195 x Appendix 10.2 The currency wear calculations 200 Appendix 10.3 The Davenant Corn Law 201 Appendix 10.4 Jevons’s 1875 Buys-Ballot Table 202 11 CONCLUSION 204 Notes 214 References 283 Index 295 ACKNOWLEDGEMENTS It is a pleasure to express my gratitude to those persons who helped shape this work. I am indebted to my thesis supervisor, Samuel Hollander, for his unwavering encouragement of my early research. I have always been warmly received at the History of Economic Thought Workshop in Toronto. Discussions on those occasions with Nancy Churchman, Bob Dimand, Mary Ann Dimand, Allan Hynes, Richard Kleer, and Brenda Spotton, improved the formulation of my ideas. I offer my gratitude also to those who have read portions of my research: Tim Alborn, Nahid Aslanbeigi, R.D.C.Black, Sam Bostaph, Martin Gross, Craig Heinicke, Suzanne Helborn, James P.Henderson, Abraham Hirsch, Susan Howson, Richard Kleer, Judy Klein, David Laidler, Bruce Larson, Trevor Levere, Ingrid Rima, Margaret Schabas, W.D.Thweah, Michael White, and Nancy Wulwick. Dr Peter Nockles and his staff at the Jevons Archives proved indefatigable in their willingness to carry around boxes of material at my request. This research has received much financial support along the way. My graduate studies were generously supported by the Social Sciences and Humanities Research Council of Canada, as well as the University of Toronto, and the Ontario Government. The College of William and Mary, and Baldwin-Wallace College both provided assistance in the form of grants to support the research. A George Gund Foundation grant supported the very efficient and always cheerful help of my research assistant, Ms Suzi Hunt. The National Endowment for the Humanities supported the research, and provided funds for travel to the Jevons Archives, in Manchester, England. Craig Heinicke, and, for the past twenty-two months, Nathan Casey Heinicke- Peart, have been a source of strength and joy; to them I owe the deepest debt of gratitude. ABBREVIATIONS ASF A Serious Fall in the Value of Gold Ascertained, and its Social Effects set forth (1863) BAAS British Association for the Advancement of Science CR Contemporary Review CW Collected Works of John Stuart Mill (1962-) HES History of Economics Society HOPE History of Political Economy ICF Investigations in Currency and Finance (1884) JA Jevons Archives JEL Journal of Economic Literature LPMJ The London, Edinburgh and Dublin Philosophical Magazine and Journal of Science Manchester The Manchester School of Economic and Social Studies School MME Money and the Mechanism of Exchange (1875) MSR Methods of Social Reform, and other Papers (1883) MT ‘Brief Account of a General Mathematical Theory of Political Economy’ (1862) P&C Papers and Correspondence of William Stanley Jevons (1972– 81) PE The Principles of Economics and Other Papers (1905) PPE Principles of Political Economy by John Stuart Mill (1865) PS The Principles of Science (1874) SRL The State in Relation to Labour (1882) TCQ The Coal Question: An Inquiry Concerning the Progress of the Nation and the Probable Exhaustion of our Coal Mines (1865) TPE The Theory of Political Economy (1871) 1 INTRODUCTION General themes ‘William Stanley Jevons, Thinker’. Such is the title of a newsclipping that commemorates the fifty-year anniversary of Jevons’s death (JA6/50/43). Reviews of his Letters and Journal, published posthumously in 1886, find that he was ‘above all things, a mathematician’, ‘undoubtedly the foremost logician of his time’, or, quite simply, ‘A Great Statistician’.1 Jevons was also, of course, a ‘pioneer of modern economics’2 and economists today most often come to know his work with marginal utility theory. But his interests encompassed policy issues as diverse as child care for working mothers and slum landlords, as well as the methodological procedures appropriate to the discipline. Jevons’s research into the coal question and British manufacturing supremacy, and the effect of gold discoveries on the value of gold, was highly acclaimed during his lifetime; Léon Walras learned of Jevons’s work on index numbers long before he became acquainted with the theory of exchange.3 From an early age, Jevons was driven by an intense desire to be, as he put it in an 1857 letter to his two sisters, Henrietta and Lucy, a ‘powerful good in the world’.4 Early on, also, his talent for measurement became evident and was recognized by peers. Social science, ‘the study of Man in society’, attracted his efforts; and in social science he called for measurement, approximation, and quantification of hypotheses. He developed new techniques of data combination and manipulation, insisting that the scientist attack observations using ‘wide averages’.5 Jevons’s contributions, both in terms of methodological recommendations contained primarily in The Principles of Science (Chapter 9), as well as the actual procedures he used in empirical studies (Chapter 10), proved fundamentally important to the subsequent development of empirical techniques in economics.6 William Stanley was born and raised in Liverpool, at the heart of industrial England.7 The family was cultured, Unitarian, and, at least until 1848, well-to-do. His father, Thomas Jevons [1791–1855], worked in the iron trade and was an innovator in the use of iron for shipbuilding;8 in 1834, Thomas published a work on reforming the criminal justice system, and in 1840, he published a piece on the Corn Laws.9 2 INTRODUCTION Jevons’s mother, Mary Anne Roscoe [1795–1845], shared a cultured life with her father, William Roscoe [1753–1831], until her marriage to Thomas in 1821. She published two books of her own poetry, and introduced William Stanley to the subject of political economy when he was just eight years old, using Archbishop Whately’s textbook, Easy Lessons on Money Matters for the use of Young People.