Introduction to 1996 Edition
OVER FIFTY YEARS have passed since The Theory of Economic Progress was first published; nearly twenty since the last edition. It is a classic work in the literature of Institutional Economics and continues to be read and to instruct those whose minds are turned in its direction. The rich and penetrating nature of the analysis in the book is reason enough to warrant its reissue, but beyond this, the book provides a general framework within which to understand the passing of economic events and to grasp the actions necessary to economic progress. The smothering grasp of ideology has again taken the upper hand in the intellectual climate of economic and social analysis and policy. And, thus the liberating and progressive analysis in this book is especially vital. In difficult times people are more often prone to search for security. Relief from their anxiety, even if not their welfare, is sometimes found in the old comfortable ideas and ways. Stale, decrepit, even palsied, the old ideas seem to afford comfort and relief; unfortunate, since genuine relief from the difficulties of the economic life process is more likely found in new ideas; ideas that challenge the imagination as well as the status quo.
The ideas in this book, even after fifty years, are remarkably fresh. Certainly they challenge the imagination and the status quo. Ayres' concept of the idea of progress, genuine progress, in the economic affairs of man remains enduringly vibrant, fairly teeming with insight into strategies for a new approach to improving our the weal and welfare. What accounts for the enduring freshness of this book? It may be the extraordinary reach of Ayres' scholarship; Or the captivating style used to expose the readers to the subject. It may even be the boldness of his claims regarding the deficiencies of Standard Economics. Yet, these are features of many books that have not enjoyed similar fates. It is more likely that the success is to accounted for by the fact that it contains an exposition of the core of a genuine analytical alternative to the mostly irrelevant, but dominate, view of economic activities. The analytical core is the Veblenian Dichotomy, or the ceremonial/instrumental dichotomy, to use Junker's term. Not that many have grasped this tool. But, as with any tool, it remains behind for others--sooner or later to use even after the originators are gone. Sooner or later the combination principle will work itself out and the dichotomy will be found to be a fundamental part of economic analysis.
Veblen's work, of course, was the catalyst in analyzing the economy in an evolutionary framework. Veblen's insight into the cumulative and adaptive nature of economic activities was one of the genuinely secular accounts of the economic process. But Ayres' work, especially in The Theory of Economic Progress, is a superior statement of the elemental framework for analyzing the economy as a cumulative process. And, now with this new edition we once more have valuable assistance in carrying this approach to another generation of interested scholars.
This edition varies from the last by inclusion of additional material; a second Addendum. Specifically, included are materials pertaining to the review of the first edition of the book. In Louis Junker's edition the Addendum to the Theory of Economic Progress was included. This Addendum was Ayres' response to his critics. One critic was Abba Lerner. Lerner published a review of The Theory of Economic Progress in the American Economic Review, March 1945. Shortly after that John Hodges prepared a response to Lerner's review. The editor, Fritz Machlup, did not accept it for publication. Hodges' review is printed in Addendum II. Also printed there are three letters from Ayres to Hodges regarding the review.
James I. Sturgeon
University of Missouri-Kansas City
December, 1996
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on to the 1978 Introduction to the Theory of Economic Progress