The lecture focuses on the reasons that new ideas are accepted or rejected by a science. A distinction is drawn between prescientific and scientific stages of a discipline. The diverse fates of new ideas are illustrated by a variety of episodes in the history of economics, including the economics of information and the theory of economic regulation.

The criterion employed to judge successes and failures has been the acceptance or nonacceptance of Smith's theory by his immediate successors. This judgement has been supplemented with a more personal one of scientific fruitfulness. He had one overwhelming and proper success--the theorem on resource allocation under competition--and several minor successes. He also had one modest success that was improper (i.e., unfortunate)--the distinction between productive and unproductive labor. Smith's most important analytical failure was the hierarchy of employments of capital. Three failures that should have been successes receive special attention: his wage theory, his rent theory, and the analysis of the division of labor. The reasons for the differing fates of these theories are examined.

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