The Theory of Social Economy - Vol. 1

The Theory of Social Economy - Vol. 1

The Theory of Social Economy - Vol. 1

The Theory of Social Economy - Vol. 1

Excerpt

A progressive science will always find it necessary, in order to make room for new investigations, to leave out such old matters and old discussions as are no longer of essential importance, and to find ways for introducing the student as directly as possible to the questions of actual interest. This need certainly exists also for the science of economics. From the first beginnings of my studies of this science I have felt that it ought to be possible to do away with the whole of the old theory of value as an independent chapter of economics and build up the science from the beginning on the theory of prices, and that we in this matter would be able to rid ourselves of a lot of unnecessary discussions, mostly of a rather scholastic nature, which had burdened earlier treatises on economics. I made a first attempt to draw up the outlines of such a presentation of economics in the paper Outlines of an Elementary Theory of Prices (published in German, 1899). Since that time, I have worked further on the program laid down. In The Nature and Necessity of Interest (London: Macmillan, 1903), the treatment of interest as a price was carried through. The abolition of a separate theory of value, and the direct construction of economic theory on the basis of a theory of prices, naturally required a theory of money adapted to the new system of economics. In the general economic theory we must reckon all values in a unit of money. The value of this unit itself cannot be determined there. To do this is the separate function . . .

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