Introduction to the 1978 Edition



THE THEORY OF Economic Progress has become a major classic of Institutional Economics and progressive social science and its author one of the most admired and respected scholars in the country. Most importantly, both have become so in the face of enormous institutional and intellectual barriers. Through the years, since its first publication in 1944, this book has quietly continued to thrive as a creative and thoughtful guideline for the achievement of a responsive and humane economy against the dogmas of the dominating neoclassical ideology. Along with the works of Marx and Veblen, it has contributed immensely to the scope and power of the heterodox critique of the Holy Order of Economic Orthodoxy and its zealous campaign to maintain and extend its catechism of the faithful not only in our universities­by both subtle and explicit exclusion of heterodox­radical economic analysis from the bill of fare­but also in all the corners of our lives and especially so in the institutions of our livelihood. It has survived both mainstream neglect as well as fearful and sometimes arrogant and unjust attacks by some of the most "sophisticated" theorists of the orthodox hierarchy. It has also managed to maintain its stature and to sustain its critical power in spite of some implausible arguments put forward on its behalf by friends who may have misunderstood its essential meanings. Overall, it might appropriately be said that not only is the intellectual strength of this book progressively being recognized but that the course of science is moving in Ayres' direction. Orthodoxy is now more on the defensive than ever before.

In more specific terms, however, it would appear that the largest area of miscomprehension of most critics as well as some friends involves the central theme of this book: the development and clarification of the instrumental theory of social value and the comparison of its achievements with those of the orthodox utility theory of value. For that reason alone it is crucial for this Introduction, once again, to focus special attention on the vital role played by the instrumental theory of value in the whole of Ayres' economic analysis. Without a deep appreciation of the theoretical intricacies of the instrumental theory of value at the heart of the Ayresian system, it is virtually impossible to understand Ayres' approach to social analysis and the reasons why he neglected some criticisms of the technical details of standard analysis and drove so hard and persistently against the core concept of orthodox economic theory.

A pertinent example of Ayres' attempt to reach the minds of his colleagues in the profession on this matter began with the review of this book by Professor Abba Lerner. In December of 1945 Ayres answered Lerner's criticisms by publishing the "Addendum to the Theory of Economic Progress" in the American Economic Review, which we are including in this new edition. This Addendum was not simply a reply to Professor Lerner's review published in the March, 1945 AER. Although it did have some effect in this direction, it also provided Ayres another opportunity to clarify his position on the value problem-so implausibly interpreted by Lerner and so badly misconceived by economists in general-and to reiterate his arguments against orthodox value theory subtly, on the single greatest theoretical shortcoming of the economics profession: its militant, missionary and dogmatic devotion to the utility theory of value and the intellectual obliviousness of its true believers to the conceptual achievements and operational ramifications of the instrumental tradition in philosophy and economics.

The plain fact is that Ayres was handled badly because his arguments decimated the utility theory of value and that was the unkindest cut of all to the profession. Using the radical and penetrating Ceremonial­ Instrumental dichotomy as his baseline, he exposed and attacked its hidden as well as its explicit meanings; he critically explored its implications and made all of us more aware of its dire intellectual and institutional consequences. He riveted our attention on the limitations of the orthodox theory of value for a pointed and special reason. He understood all too clearly that traditional price theory without the utility theory at its philosophical base would leave little of value for orthodox economic theorists except perhaps the still persistent need to explain price movements and price data as a portion of the larger cultural­institutional framework rather than as a set of mechanical rules for professors to teach and for students to memorize and mimic.

So, the central questions still remain for the economics profession to ponder and resolve. What is left of the logical and conceptual structure of orthodox economic theory, especially in the microeconomic range and more subtly in the macroeconomic, when all these criticisms of the utility theory of value are brought home to roost? Will price theory as now explained be able to maintain its place at the center of the economic universe or will it, like the earth at a previous time in the history of science, take its place as an altered and minor entity within the larger confluence of forces working discretely in the background?

The author of this book thus poses a critical issue for all economists. Can the utility theory of value and the price theory built upon its foundations serve and guide us in our continuous quest for a more productive, just, and humanserving economy, or is it simply a complex ideology in defense of elitism and of the hierarchical power system which gives it point and meaning? Are these concepts of such intellectual merit that we are required to stand by them whatever the consequences, or are they more correctly to be understood as the harbingers of greed and power, rationalizers of the status quo and the "tools" for covering both with the aura of science?

Clarence Ayres gave his answers to these crucial conceptual questions not only in this book but in all his life's work. The utility theory of value is palsied at its joints. Its merit as a scientific theory are fictitious. It suffers the terminal ills of tautology, teleology, dualism, malignant individualism, and non­processual reasoning. It is reductionist in character and its principles are fundamentally divisive of human experience. It acts as a cover for economic power and as an intellectual­ideological blockage to the dissemination of genuine information and constructive institutional adjustment. Most fundamentally, perhaps, it cannot deal with nor incorporate human learning and differentiation into its theoretical structure. Its definition and application of the utility principle emphasizes "satisfaction" without scientific assessment of choices rather than learning and adaptive behavior based on that learning. It has a zero learning curve because it has no conception of warranted knowledge without which it cannot possibly have an adequate conception of social waste. It wallows in an individualistic value fog and, so doing, tends to reflect the operational rule that might makes right.

These are some of Clarence Ayres' critical answers to his colleagues, and therein lies his continuing challenge not only to the economics profession but to all human beings interested in the betterment of the human situation. He insisted that we have the positive means at hand for the reconstruction of our organizational­institutional system away from a master­servant elitist orientation and towards a mutually beneficial community of relationships on the widest human scale. But power, magic, superstition and institutional intransigence stand in the way and need to be dealt with from the vantage point of genuine science. Thus, the imperative that emerges may be stated in various ways: adapt and reconstruct in the light of newly emergent knowledge or lament the social consequences for failing to do so; learn and apply your learning to the whole living process with the broadest human access or go down with the imbecile institutions we cannot shed; construct a more inclusive, demanding and instrumental value framework and criteria of judgment or suffer the pestilence of zombie institutions whose performance cannot match human needs and demands for more productive and creative living conditions.

How will we respond? Only time will tell. This book is one view of the necessary reconstruction, and while it cannot be the last word it is, most assuredly, a major step in the right direction. For this it deserves our renewed and continuous attention.

Louis Junker

Western Michigan University

June, 1978


Acknowledgments for the 1978 Edition


The publication of this new edition of The Theory of Economic Progress is of vital importance to a large number of concerned scholars. Many of them have offered their full support of our efforts to again make it available for themselves and their classes and for successive generations of students. Since it is impossible to name them all, we simply extend our thanks and appreciation to them as a body.

Our greatest debt is to Gwendolyn Ayres for helping to make the rights available to us for publication and for her unfailing support of the project from its inception.

A number of people deserve special thanks for their assistance: to James Adler for his strong urging that we include the Addendum to the Theory of Economic Progress" in this volume; to Professor David DeShon of Western Michigan University for granting us permission to use a photograph he took of Clarence Ayres at the University of Missouri at Kansas City; to Mrs. Anne L. Tice of the University of North Carolina Press, who assisted us in the transfer of rights to the New Issues Press; to Lawrence J. Brink, Manager of Western Michigan University's Printing Services, for his craftsmanship and assistance in printing this volume; and last but not least to Professor Jack Plano, Editor of the New Issues Press, for his foresight and wisdom not only in editorial matters but also for his willingness to give his support to a good cause­the production of this volume.

Louis Junker


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