GERRIT GORTER
The present study of economics did not, of course, come out of thin air. Although thinkers in classical Greece already reflected on what we now call economics, it was largely in the eighteenth century that systematic thought on the subject began.
Two conceptual tools—the economic cycle and the idea of the invisible hand—date from that century and are still in use today, both in academic research and in education.
This site contains twenty-five portraits of important economists. Each offers a biographical sketch together with an indication of his (and, in one case, her) significance for the development of economic thought. They claim no more than to provide a first introduction to the lives and works of these pioneers.
These articles originally appeared in Dutch in the Tijdschrift voor het Economisch Onderwijs and were published on the website of Gerrit Gorter. The English translations are by Folkert Gorter.
Index
François Quesnay
Adam Smith
Thomas Robert Malthus
Jean-Baptiste Say
David Ricardo
Antoine Augustin Cournot
John Stuart Mill
Karl Marx
Walras
Carl Menger
Alfred Marshall
Vilfredo Pareto Eugen von Böhm-Bawerk
Knut Wicksell
Max Weber
Irving Fisher
Sam de Wolff
John Maynard Keynes
Joseph Alois Schumpeter
Joan Robinson
Jan Tinbergen
John Hicks
John Kenneth Galbraith
Milton Friedman
Paul Samuelson
John Hicks
England 1904–1989
The English economist John R. Hicks, born in 1904, did not develop any radically new theories himself, but played a vital role in further developing existing ones. He was also a gifted educator, able to render even the most complex ideas in a form that was accessible to the average economist. No surprise, then, that Hicks was knighted in 1964 for his contributions, and from then on was entitled to call himself Sir John Hicks.
Hicks was born in Warwick. His father worked as a journalist for the local newspaper, and Hicks had to finance part of his rather expensive education at Balliol College, Oxford, himself. He initially studied mathematics, but the subject did not satisfy him much. He later “switched” to philosophy, political science, and economics. A pivotal moment in his life was reading the work of the Italian economist Vilfredo Pareto. Hicks realized that Pareto had stopped too soon, and that it was his task to carry the work further — by making economic analysis clearer and more precise through its translation into mathematics.
After teaching briefly in various places (London, Cambridge, South Africa), he found his footing at the London School of Economics. There, he felt completely at home and was surrounded by stimulating colleagues such as Lionel Robbins, Friedrich von Hayek, and Abba Lerner. He would later go on to teach in Manchester and Oxford.
In a famous 1937 article, Mr. Keynes and the Classics, he laid the foundation for the renowned IS-LM model — a framework with which many economists have grown up. As is well known, Keynes sparked a minor revolution in economics by arguing that output follows (effective) demand, rather than the other way around — as claimed by the Classics, his predecessors. Keynes also had his own ideas about the money market, but it was Hicks who clearly articulated the relationship between the goods market and the money market. In the IS-LM model, equilibrium was established simultaneously in both types of markets in an almost classical manner — but the equilibrium had a distinctly Keynesian character: there was no guarantee that the resulting level of output would match the economy’s full productive capacity.
Incidentally, the IS-LM model did omit an important element of Keynesian theory. Keynes had always placed great emphasis on the role of uncertain expectations, which particularly affected investment. In the IS-LM model, by contrast, investment depends rather mechanically on the interest rate. The clarity and precision that Hicks aimed for came at a cost — namely, a reduced degree of realism.
Hicks became even better known, if that were possible, for his treatment of the income and substitution effects. In doing so, he made use of an existing tool: the so-called indifference curve, originally developed by, among others, the English economist Edgeworth. Price changes generally have multiple effects. For example, if rents go up, there will not only be a tendency for people to consider buying a home instead (the substitution effect), but the rent increase will also reduce their purchasing power (the income effect). Taken together, these two effects usually mean that a price increase leads to a decrease in demand. However, other outcomes are possible — for example, in the case of inferior goods. With his analysis, Hicks showed that the commonly used and often taken-for-granted demand curve — the idea that a higher price leads to lower demand, and vice versa — could be grounded theoretically by making use of indifference curves.
For his contributions, Hicks was not only knighted but also awarded the Nobel Prize in 1972 — which, incidentally, he had to share with the American economist Kenneth Arrow. He died in 1989.