On the fiftieth birthday of my Foundations of Economic Analysis, a deluxe edition of it was embalmed in the German Klassiker der Nationalokonomie series alongside of Adam Smith, Eugen von Bohm-Bawerk, Irving Fisher, and many other illustrious suspects. With it, as customary, was published a slim volume in German, a Vademecum, with review essays by Jurg Niehans, Carl-Christian von Weizsacker, and a foreword by the editor Bertram Schefold. By invitation, like Tom Sawyer at his own funeral, I provided for German translation my own recollections under the title "How Foundations Came to Be." Here is the English original, slightly abridged; for some technicalities, readers are referred to the full German text. I remembered much, and, with the perspective of time, learned not a little.

A FLAGRANT ERROR dogged James Steuart, Adam Smith, David Ricardo, John Barton, John Stuart Mill, Karl Marx, and classical writers generally. Modern commentators on classicism are enough tempted by the fallacy to generally overlook it as a vital flaw in the earlier writers. This fallay can be called classically classical-not in the sense of being the greatest error in the classical paradigm (an award that would be hard even to define) but-in the sense that modern scholars ignorant of pre-1900 literature would be little tempted by it. I do not denigrate or patronize a great writer of the past, such as David Ricardo, when I objectively delineate his hits and misses. The fallacy can be simply put. Fixed capitals are prejudicial to wages and the demand for labor; circulating capitals (wage fund items that represent outlays paid to workers at the beginning of a period of production, which are not recouped until the end of that period of production and which of course bear an interest or profit rate during the transition) are allegedly favorable to the real rate and to the demand for labor. Fixed capitals are durable produced inputs that render their services over a number of different production periods. Circulating capitals are produced inputs used up within one period of production; they are relatable to, but distinguishable from, wage fund advances paid to workers at the beginning of a period of production, to be recouped at its end along with an interest or profit return. In the minds of heterodox economists and the lay public generally, a technological change that made machinery newly viable was supposedly the kind of invention that could put people out of work temporarily, reduce market-clearing rates, and in long-run equilibrium at an unchanged subsistence rate call for a significantly reduced population. By contrast, therefore, a new invention that displaced machinery in favor of various raw materials as inputs, would supposedly raise the short-run real and increase the demand for labor. So powerful was the grip of what I shall dub the Classical Fallacy that it was being reminded of it in 1819-21 that appears to have enabled Ricardo to recant, in his famous Third Edition chapter on machinery, his previous boner that every viable invention can be expected to raise every factor's return. From today's wisdomor indeed the wisdom of 1900-that previous position of Ricardo was nonsense. There is no Invisible Hand that seeks out machines or new techniques only if they benefit everyone.I

It is high praise when so expert a * scholar as Samuel Hollander (1980) hails my canonical classical model (1978) as likely to become locus classicus for the next generation of textbook writers. Like Fletcher I care not who makes a nation's laws if I can shape its textbook writers' songs. But with power comes responsibility. I must weigh and respond to the doubts Dr. Hollander raises about some positions I took in the three-seventeenths of my positivistic text that digresses to interpret particular historical controversies. I shall be brief and deal only with most essential points.

THE TIME is ripe for a fresh, modern look at the concept of complementarity. Whatever the intrinsic merits of the concept, forty years ago it helped motivate Hicks and Allen to perform their classical reconsideration of ordinal demand theory. And, as I hope to show, the last word has not yet been said on this ancient preoccupation of literary and mathematical economists. The simplest things are often the most complicated to understand fully. For this reason, I have redrafted the present paper along the following lines: The main discussion is primarily literary. Then comes a mathematical section. Finally, I give a brief survey of the history of the subject.