The Criticism of Modern Civilization
Rutherford, Malcolm, Journal of Economic Issues
The paper presented below is an address given by Wesley Mitchell to the Kosmos Club of the University of California (with which he was closely involved) in the fall of 1909. It is one of two Wesley Mitchell papers discovered in their original handwritten form among the Joseph Dorfman papers in the Rare Book and Manuscript Library of Columbia University. Mitchell, of course, gave a large number of addresses during his career, and copies of many of these can be found in the Dorfman and Mitchell papers, but this particular address has some special interest for students of Mitchell's thought and the history of American institutional economics more generally.
From late in 1902 until 1912, Mitchell was a member of the Department of Economics at Berkeley. He arrived there from the University of Chicago with the proofs of his History of the Greenbacks and a plan for a second volume. This second book appeared in 1908 as Gold, Prices, and Wages under the Greenback Standard, but while working on this manuscript he also began to develop a range of broader interests including ethnology and philosophy. In winter 1905-06, he expressed a desire to "be at something larger in its scope and more penetrating in its interest than this detailed work with a passing episode in monetary history" [Lucy Sprague Mitchell 1953, 165], a desire that translated itself into his efforts between 1907 and 1910 to produce a manuscript dealing with the history and functioning of the "money economy." Early in 1910, Mitchell abandoned this project as something too large and unmanageable and instead focussed his attention on the specific problem of business cycles. Nevertheless, it was in this phase of Mitchell's intellectual life that he developed the institutionalist aspects of his thought, aspects that were to remain key elements in all of his later work.
During his time at Chicago, Mitchell had come into contact with John Dewey and Thorstein Veblen. Veblen was on the faculty at Chicago from 1892 until 1906 when he moved to Stanford, where he remained only until 1909; however, he had considerable contact with Mitchell while there. Veblen also presented his paper "The Evolution of the Scientific Point of View" to the Kosmos Club in May 1908. Both Veblen and Dewey were important intellectual influences on Mitchell and had much to do with the growth of his interest in broader institutional and philosophical concerns, but many aspects of the money economy project show Veblen's influence in particular. Mitchell conceived his project on the money economy as ranging over a vast number of interrelated issues. He wanted to discuss the evolution of the use of money; the impact of the growing use of money on both social and economic institutions, including the decline of feudalism, the rise of business enterprise, the development of the banking system, and the transformation of household organization; the relationship between the habitual use of money and the development of economic rationality; the link between developed monetary institutions and phenomena such as business cycles; and also questions of welfare and welfare comparisons across different institutional states of affairs.
Although Mitchell never produced a completed manuscript, parts of this grand project can be found in his essays on "The Rationality of Economic Activity" [Mitchell 1910a; 1910b], "The Backward Art of Spending Money" [Mitchell 1912], "The Role of Money in Economic Theory" [Mitchell 1916], "Making Goods and Making Money" [Mitchell 1922], as well as in his works on business cycles [Mitchell 1913; 1927]. The address reproduced below, as its title makes obvious, deals with the issue of welfare comparison and gives us a clear picture of the state of Mitchell's thinking on this issue at the time he was working on the money economy project. The published papers of Mitchell's that deal with this issue come from significantly later in his career and are placed in the somewhat different context of the problem of national planning [Mitchell 1935; 1936]. …