SPECIAL INVITED SYMPOSIUM ON THE FOUNDATIONS OF NEOCLASSICAL ECONOMICS Jevons and Menger Re-homogenized?: Jaffé After 20 Years

I Introduction Twenty years have passed since William Jaffe lamented the focus of the economics profession on the achievement that, at the time, seemed the major contribution shared by the progenitors of the "marginal revolution" - the notion of diminishing marginal utility (1976, p. 511). Instead, he argued, differences that characterize the analyses of Walras, Jevons, and Menger are of interest - differences that "the passage of time has revealed more important than anything they may have had in common" (1976, p. 511).(1) The de-homogenization of Walras, Menger, and Jevons would, he maintained, enable us correctly to perceive and appreciate the significance of their separate contributions to economic analysis. The effort to de-homogenize Jevons, Walras, and Menger, however, may have obscured some key similarities among the early neoclassicals, most notably between Jevons and Menger. It is not my position that we need to re-homogenize Walras, Menger, and Jevons, but rather that close attention to the original texts (which Jaffe called for in 1976; see p. 523), reveals a much more complex view of human behavior in Jevons than has often been allowed, and one that has much in common with Menger's predisposition for process, for decision making under uncertainty, for mistakes, and for the significance of time in decision making. In what follows, I demonstrate that some of the key features of the Mengerian economic person, features that have often been used to portray him as the "odd man out" among the triumvirate, also characterize the Jevonian decision maker. While there is some evidence in Walras, also, of concern with the movement to equilibrium (with "groping"), his emphasis was clearly much more fixed on the nature of general equilibrium and the determination of equilibrium prices. Price determination did not constitute a key concern for Jevons or Menger, and while both considered the economy in terms of interrelated markets, neither attempted to describe those interrelationships mathematically. Perhaps, then, my argument may be that Jevons and Menger should be "re-homogenized," but that Walras should not? The article proceeds as follows. I begin by considering differences that Jaffe and others have emphasized among Walras, Jevons, and Menger. Here, my argument is that for the most part these are properly regarded as differences between Walras on the one hand and Jevons and Menger on the other. Section III investigates Menger's conception of economic man. In Section IV, I demonstrate some key similarities between Menger's economic being and the Jevonian decision maker. It transpires that both Menger and Jevons have been improperly characterized by Veblen (and others). For both Menger and Jevons, decision makers are plagued by error, indecision, and information gaps. Finally, Section V concludes with some remarks about the contrasting claims that have been made regarding the policy stance of Jevons and Menger. Such claims may have resulted in part from a misreading of the nature of economic man in Jevons on the one hand and in Menger on the other. II Differences Several interrelated differences characterize the economics of Walras on the one hand and of Jevons and Menger on the other. These differences provide some clues to the similarities outlined in Sections Ill and IV.(3) First, as Jaffe argued, the general equilibrium focus of Walras places him apart from both Jevons and Menger. The major driving force for Walras's research was the specification of a competitive market model. Alone among his contemporaries, in a Jubilee Celebration at the end of his career, Walras received the honor of being proclaimed the first to have "established the general conditions of equilibrium" (Jaffe 1976, p. 516). Accordingly, Walras was much less concerned with the elaboration of a theory of subjective valuation in consumption. He rarely used the word "consumption," preferring instead the term "possession. …