November 1927, D3/12/4: 2 (1); A5.2.i
Degeneration of cost + value
A. Smith + Ricardo, + Marx indeed [began to] corrupted the old idea of cost, – from food to labour. But their notion was still near enough to be in many cases equivalent.
The decomposition went on at a terrific speed from 1820 to 1870: Senior’s abstinence and Mill’s mess of the whole thing. Cairnes brought it to the final stage “sacrifice” (did Marshall take it from Cairnes? See his Princ. note p. 339; seems not)
Simultaneously a much bigger step was taken in the process of shifting the basis of value from physical to psychical processes: Jevons, Menger, Walras.
This was an enormous breach with the tradition of Pol. E.; in fact, this has meant the destruction of the classical P. E. and the substitution for it, under the old name, of the Calculus of Pleasure + Pain (Hedonistic).*
[* It is unfortunate that so much time has been taken to change the name of P. E. into Economics: but it is appropriate: it marks the cleavage, or rather the abyss, between the two.]
When the Jevonsians turned back to write their own history, they found with pride (it ought to have been with dismal) that they had no forerunners amongst P. E.; their forerunners were mainly two or three cranks, an engineer Dupuit, a mathem. Cournot, a prussian Civil Servant Jevons [Gossen], who had only cultivated P. E. as a hobby.* They had not the slightest knowledge of the works of the Classical economists. They drew it out of their fancy. In fact, no competent P. E.mist, with a conscience of his tradition, would have degnato to entertain those w views.
[* I do not mean by this that cranks can never find new theories: on the contrary, when a big breach with tradition is required, their intervention is usually necessary. What I mean to prove is that there has actually been a breach with tradition, and the intervention of the cranks is an element of the evidence; and that Marshall’s attempt to bridge over the cleavage and establish a continuity in the tradition is futile and misguided.]