The conclusion to which I am ever more clearly coming is that the only hope of attaining a true system of Economics is to fling aside, once and for ever, the mazy and preposterous assumptions of the Ricardian School. Our English Economists have been living in a fool’s paradise.
(TPE, pp. xliv-xlv)
As is well known, Jevons was self-consciously revolutionary in his Theory of Political Economy, urging, in the first edition, that ‘our conception of Value’ be reconsidered, along with other ‘purely delusive’ doctrines (p. vi). Our first task in this chapter is to examine his criticisms of Classical political economy, as well as those to whom credit is granted for having correct economic notions. He allowed that Classical economists had no trouble recognizing and interpreting economic facts, such as those underlying the laws of supply and demand, but he insisted that their explanations of economic phenomena (specifically, of value) were incorrect. In contrast to a Classical preoccupation with value derived from labour, Jevons’s theory is said to be derived from Benthamite considerations of pleasure and pain. In addition, value could be conceptualized only in relative terms, or in terms of the ratio of quantities exchanged; Classical economists erred, Jevons maintained, when they neglected this important point.
While Jevons was highly critical of the ‘Ricardo-Mill’ school of economics, credit is given in the second edition of the TPE to a number of precursors, including Bentham, Dupuit, Cournot, and Gossen. Dupuit is singled out for having discovered the law of diminishing marginal utility, and Jevons recognized striking parallels with Gossen’s theory; in fact, he felt it necessary to assert that he had not encountered the German economist’s work until after the publication of the first edition.
We examine below (pp. 78-81) Jevons’s Mathematical Theory [MT], read before the British Association in Cambridge in 1862, and published