One of Joan Robinson's favorite sayings was: “As I never learnt mathematics, I have had to think.” A by-product of this characteristic is that her writings abound with striking intuitive propositions, often tossed off as asides from the flow of the main argument. We mention this aspect of Robinson's personality as the introduction to the history of one such aside.

Frank Knight was a “grand theorist.” Like other grand theorists from Adam Smith to Friedrich A. Hayek, his interests extended beyond economics. In economics, his major writings focused on the most general problems of the discipline, his goal being to show the merits and limitations of the free enterprise system. He took a special interest in intersubjective uncertainty and the accompanying problem of agency. To benefit from an economic transaction an individual must rely on others (agents, broadly speaking) to perform actions even though he or she cannot be certain that the others will decide to perform the actions. Agency, in the broadest sense, is present in all relationships that are properly defined as economic. Knight apparently recognized that both the classical liberal's trust in free enterprise and the interventionist's distrust stem from their different views of the agency problem and of how best to solve it. Accordingly, he made the problem a centerpiece of his investigation of free enterprise in his celebrated Risk, Uncertainty and Profit (1921). The agency problem also plays an important role in the modern, or new institutionalist, theory of the firm. The new institutionalists aim to show that some observable economic relationship, rule or procedure in an organization, most notably a Coasean firm, is a result of the efforts of individuals to deal with the agency problem.

Professor Kenneth Arrow has now added his views to the current Ricardian controversy in a provocative survey of alternative judgments regarding David Ricardo's contribution (Arrow 1991). Arrow's primary thesis appears to be that “the main thrust of Ricardo's system is a bold attempt to determine values independent of demand considerations” (Arrow 1991, p. 75), a position which has already come under attack (Caravale 1991; Hollander 1991). Our aim, however, is not to examine Ricardo's treatment of demand directly, but to question the fundamental suppositions upon which Arrow's analysis rests and the resulting conclusion that emerges.

Although the capitalist entrepreneur played a significant role in the early classical explanation of capital markets and economic development, mainstream opinion in the history of economic thought merely holds that eighteenth-century economists failed to distinguish the entrepreneurial function from that of supplying financial capital. Accordingly, one considers the conception of the capitalist entrepreneur an erroneous view—characterized by the confusion between profits and interest—that Jean-Baptiste Say corrected at the turn of the century (Schumpeter 1954, p. 555; Koolman 1971, p. 276). Moreover, this conception has been mainly ascribed to British authors (Perroux 1929, p. 1665; Cole 1942, pp. 120–1; Hoselitz 1951, p. 212; Blaug 1985, pp. 459–60), a claim which certainly goes back to Say's opinion that:

David Ricardo's “On Machinery” chapter continues to interest theorists and historians of economic thought (Blaug 1958, Hollander 1979, Kurz 1984, Samuelson, 1988, 1989, Morishima 1989, Negishi 1990). Yet the addition of the chapter to the third edition of Ricardo's Principles of Political Economy and Taxation arguably overturns much of the view for which Ricardo is so well known (Davis 1989). In the added chapter Ricardo allows, contrary to his original view in the first two editions, that the introduction of machinery is indeed injurious to the class of laborers. More interestingly, because machinery substitutes for labor, wages cannot rise and profits are no longer threatened by rising rents. Effectively the contest between capitalists and landlords of the first two editions of the Principles is replaced in the final edition by one between capitalists and laborers. However, not only does the “On Machinery“ chapter substantially change the distributional argument customarily attributed to the Principles, but it also permits an examination of Ricardo's thinking about distribution in two distinct, but related frameworks. The discussion here compares the distributional analysis in the first two editions with that of the third to explain the general nature of the Ricardo's theory of profit. It does so by providing a novel interpretation of Ricardo's characterization of profit as a residual, and by emphasizing the historical context in which distribution occurred in the beginning of the nineteenth century.

Karl Marx was the greatest champion of the labor theory of value. The logical problems of this theory have, however, split scholars of Marx into two factions: those who regard it as an indivisible component of Marxism, and those who wish to continue the spirit of analysis begun by Marx without the labor theory of value. In the debate between these two camps, the former has attempted to draw support from Marx's concepts of value, while the latter has ignored them, taking instead as their starting point the truism that production generates a surplus. Nevertheless, a careful examination of the development of Marx's logic uncovers the profound irony that, after a chance rereading of Hegel, Marx made a crucial advance which should have led him to replace the labor theory of value with the theory that commodities in general are the source of surplus. Marx's value analysis is thus consistent, not with those who would defend the labor theory of value, but with those who would transcend it.

William Stanley Jevons (1835–1882) was one of the great Victorian polymaths. His published writing spans chemistry, meteorology, geology, astronomy, geometry, physiology, political economy, sociology, logic and the philosophy of science. The extraordinary range and volume of this output was not the result of dabbling in the tradition of the Victorian “gentleman scientific amateur.” Dependent in large part on extensive experimental practice, Jevons's work was published in prominent physics journals and his Principles of Science (1874) was considered by one physicist to be a state of the art summary of scientific method and principles (Clifford, 1875, p. 480). Jevons's versatility was evident throughout his life. His article on “reflected rainbows,” which drew on a controversy in art and optics, was published in the month of his death.

In Takashi Negishi's “Ricardo and Morishima on Machinery,” JHET, 12, Fall 1990, some quotations were made originally in German by the author, and translated into English by the editorial staff. While appreciative of the efforts of translation, the author would like to make the following change: production of the raw materials should read gross products on page 155, line 19 from the bottom of the page.