November 1927, D3/12/4: 2 (2); A5.2.ii
What had happened in the meantime, to change so much the mind of the economists, and induce them to scrap all that had been done up to that time? (It was in fact scrapping the whole: Jevons, Preface, + Cannan, Theories, 379–383, “must be visited with almost unqualified condemnation” are right, from the point of view of Economics).
Socialism has been the cause of all this. In fact, classical P. E., with its surplus to be arbitrarily divided, leads straight to Socialism. When after the death of Ricardo the first timid attempts of using socialistically his Theory of value were made (Hodgskin, Thompson: the were misguided if (?) they used the moral argument that labour produces everything as Proudhon, but not Marx did), Senior + Mill + Cairnes fol rallyied to the defense by making cost psychological.
But when the mass attack of Marx, and the threat of the rampant International [and the Paris Commune] came, simultan a much more drastic defence was called for: not only sacrifice, but utility, ‒ and simultaneously J. M. W. and their success. The classical economy was becoming too dangerous as a whole, it had to be scrapped bodily. It was a burning house which threatened to set to fire the whole structure and foundations of capitalist society ‒ it was forthwith removed.
(Mention Rae, Ferrara, [Carey?] Scharling cost of reproduction as a link between disutility + utility, to justify the passing from one to the other)
