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From:
[log in to unmask] (Ross B. Emmett)
Date:
Fri Mar 31 17:19:13 2006
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----------------- HES POSTING ----------------- 
 
My thanks to Avi for providing such a great survey of the Boulding - Knight  
relationship regarding capital theory. And to Pete for the personal story of  
asking Boulding about it. 
 
I don't have a great deal to add, but there are a few things. 
 
1) As Avi's contribution makes clear, Boulding was not quite correct in telling  
Pete that Knight published his response to Boulding's work before Boulding  
even published an article. Both of Boulding's articles appear before Knight's  
"The Theory of Investment Once More: Mr. Boulding and the Austrians." But  
he may have been right that Knight's criticism launched his career! 
 
2) But the story begins even earlier. The first correspondence in the Knight  
papers between the two is a letter from FHK to KB on 5 December 1933.  
Knight outlines what he would like to see done with Keynes' ideas on capital  
theory, and asks Boulding if he would like to tackle that as his research topic.  
Seven days later, on 12 December, Knight sent Boulding his newly-released  
essay "Capitalistic Production, Time and the Rate of Return" (In _Economic  
Essays in Honour of Gustav Cassel_. London: George Allen & Unwin, 1933,  
pp. 327-42), along with some additional notes regarding capital theory. This  
article launched Knight's attack on Austrian capital theory. Ten days later, in  
another letter (22 December), Knight asks Boulding if he would be interested  
in tackling a topic in capital theory. There is no additional correspondence  
between the two preserved in the Knight papers from this time period. I  
presume, then, that Boulding came to work with Knight already prepared to  
discuss capital theory. 
 
3) There is a preliminary draft of the "The Theory of Investment Once More"  
piece in the Knight papers (Box 1 Folder 8-9). It is not significantly different  
from the published version. Like some of the other capital controversy  
pieces, this one was written quickly and is not laboured over (many of  
Knight's later writings have as many as nine drafts, with several redirections  
and offshoots).    
 
4) Avi's reference list does not include "Versus Boulding" (February 1936,  
Knight Papers, Box 39 Folder 16, 3 pp.). This is an unpublished sketch of  
Knight's disagreement with Boulding, written as a rejoinder to Boulding's  
"Professor Knight's Capital Theory: A Note in Reply." 
 
I have found no other material related to the Knight-Boulding disagreement. It  
doesn't seem to have soured their relationship, although they do not  
correspond again until much later in life. And they disagreed again in the  
1950s -- this time on institutionalism (see "A New Look at Institutionalism,"  
by Kenneth E. Boulding, in AER 47 (May Supplement): 1-12. and Knight's  
discussion of it in "Institutional Economics," AER 47 (May Supplement): 18- 
21. Both of these are reprinted, I believe, in Institutional Economics, edited by  
Warren J. Samuels (Aldershot, U.K.: Edward Elgar, 1988). 
 
My own Boulding story: In January 1987 I attended the AEA meetings in  
NYC. I was standing at the registration booth, when I noticed Boulding  
standing talking to (of all people) Robert Lucas. Just then, the woman staffing  
the registration booth asked me: "Who's that distinguished-looking gentleman  
over there with the beautiful long hair?" I proudly told her it was Boulding, a  
renown economist. With that, she leaned over the counter, yelling and waving  
to attract Boulding's attention! Once she got it (and everyone else's!), she  
immediately proceeded to ask him: "Can you help me? I have to decide  
whether to lock in my mortgage or not, and wonder if interest rates are going  
to go up or down?" Everyone in the room started laughing, and Boulding  
looked a bit surprised. Bob Lucas, of course, volunteered to field the  
question! 
 
Ross 
 
 
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