Journal Article The Numerical Representation of Ordered Classifications and the Concept of Utility Get access Paul A. Samuelson Paul A. Samuelson Cambridge, Massachusetts Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 6, Issue 1, October 1938, Pages 65–70, https://doi.org/10.2307/2967540 Published: 01 October 1938

Journal Article Theory and Practice in Socialist Economics Get access A. P. Lerner A. P. Lerner London Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 6, Issue 1, October 1938, Pages 71–75, https://doi.org/10.2307/2967541 Published: 01 October 1938

Abstract The article attempts to stimulate a more systematic method of evolving standard, but evolutionary, rules of accounting. The conclusion follows from two premises. First, rules of accounting have become, in large measure rules of law. Second, that the present methods by which accounting theory is translated into the accounting rules or, if one chooses, into accounting practices, which thus enter the legal system, are not wholly satisfactory, especially in view of the results which now follow from that translation. By consequence, the task of developing a systematic yet flexible means of arriving at and recording the sound doctrine as it appears in the light of the knowledge of the day, takes the foreground as a major problem in the profession of accounting. Economist John Bauer, indicated that accounting development had paralleled, roughly, the enormous growth of business over the past half-century; and he concluded by insisting, also accurately, that the growing control of government over business furnished a powerful spur toward extending the best private practice to all business units in similar fields.

Keynes I. Saving and investment may differ, 589.— Significance of the concepts as used here, 591.— Valueless for monetary policy, 594.— Robertson. The “day,” 595.— Consequences of this change, 597.— Applicable only under certain conditions, 598.— Similar concepts, 600.— The ex ante and ex post concepts. Myrdal, 602.— Usefulness of these concepts, 604.— Comparison with Robertson, 604.— Active and passive investment and saving, 607.— Keynes II. Saving always equals investment, 608.— Association with the multiplier, 608.— Comparison with classical view, 611.— Conclusions, 613.

I. Why S = I, 297.— Difficulties of seeing this: the confusion between stocks and flows, 299; the paradox of individual freedom and social necessity, 300; the habit of labeling expenditure as "out of" particular income receipts, 302; the failure to recognize the mathematical or analytical nature of the proposition, 304; a misunderstanding of arguments about equilibrium, 305. — II. Miss Curtis' condition that "all income is spent, " 305; her failure to see the place of "wishes" in economic analysis, 307.— III. An attempt to salvage one of Miss Curtis' results, 308.

IT IS MORE THAN HALF a century since the first formulations of utility analysis by Jevons, Menger, and Walras. In that time there has been much controversy for and against this concept. Although much of the discussion has not gone beyond a quasiphilosophical defense or rejection of the utility concept, it is nevertheless possible to discern clear lines of development in the literature. First, there has been a steady tendency toward the removal of moral, utilitarian, welfare connotations from the concept. Secondly, there has been a progressive movement toward the rejection of hedonistic, introspective, psychological elements. These tendencies are evidenced by the names suggested to replace utility and satisfaction-ophelimit6, desirability, wantability, etc. The question arises as to what is left when all these elements are removed. Does not the whole utility analysis become meaningless in the operational sense of modern science? A meaningless theory according to this criterion is one which has no empirical implications by which it could conceivably be refuted under ideal empirical conditions. Thus, it is meaningless to ask whether the earth really moves around the sun rather than the sun around the earth, since no hypothesis with respect to the facts of celestial behavior is implied by either of these conventions. Is the same true of utility analysis? Has it no empirical implications for price-quantity behavior? It is clear that in its early formulations it was thought to have very definite, even revolutionary, consequences for the analysis of price and value. Moreover, even today the instinct of the textbook writer is methodologically sound in his attempt to deduce the negatively sloping demand curve from the Weber-Fechner law and diminishing marginal utility; this does not alter the fact that the whole demonstration is hopelessly fallacious and illogical. That some modern formulations of the utility concept are empty, circular, and meaningless in the above sense, is hardly open to doubt.' Consider, for example, a typical view as follows. (1) People act according to a plan; (2) a plan is how people act; (3) hence, people act as