Sep 22, 2026 · 44 min · 13 segments
This week, Bob talks with professor Matt McCaffrey about a soon-to-be-published, never-before-seen manuscript by Frank A. Fetter, surveying the history of economic thought from Adam Smith to John…
Matt McCaffreyGuest
Bob MurphyHost
Like classical economics, what we mean is, you know, Adam Smith, uh, David Ricardo.
Um, and then the, the marginalist revolution is also sometimes referred to as the subjectivist revolution, but that occurs in the early 1870s.
You know, a big one from an Austrian point of view is 1871 with Menger's, uh, treatise, um, where the, the transition was like, how do you explain value and the interaction with subjective value with objective market price? And the idea was in the marginalist revolution, that's where the name comes from.
It's, oh, it's not that, to use a colloquial example, wh- why does d- do diamonds have a higher market price than water, like a unit of diamonds versus a unit of water or, you know, a pound of diamonds versus a pound of water or a gallon of diamonds versus a gallon of water? And it's, you know, it's not because of their o- objective usefulness as a class, but on the margin.
Like, you know, for most people, one additional pound of diamonds is gonna be worth a lot more than an additional pound of water, you know, that kind of thing.
So that's what we mean by we, we frame these broad periods of classical versus marginal.
Um, and s- and, and the classical economists tended to have, like, an objective cost or labor theory of value and to explain market prices when you just went and looked at their actual explanations, like what explains this regularity in the market.
... their explanations tended to go towards things, "Well, it takes this many labor hours to make a stagecoach, and that's why blah, blah, blah, blah," as opposed to starting out with, "Well, people like the taste of oranges," and that's where we start to understand how come, you know, the farmers plant more oranges.
Um, before we get too deep into it though, Matt, can you explain, so why, w- why are you here talking about this? Like, how did, did...
Was Fetter's manuscript just sitting around and then you discovered it, or what happened there?
I've always found him just to be a particularly interesting economist, not least because he is very neglected, even by contemporary Austrians, who I think have a lot to, to learn from him.
So I've been working, uh, on various projects relating to Fetter for a few years, and that included looking at some of his unpublished papers and lots of his correspondence and things like that.
So I've published a few papers about Fetter and his relationship to the Austrians and some of his contributions to economics.
But as a part of this larger project, uh, amongst his unpublished papers, uh, one of the things I discovered was this, uh, largely drafted volume on The History of Economic Thought, and it's something that he had been working on in his later years.
He sort of officially retired in the late 1920s, but he, he, uh, lived until 1949.
He died when he was 86, so he lived to a ripe old age, and he was very productive right up until the end.
And one of the last things he was working on was this much larger project, as to say, a kind of a retrospective project, looking back at the history of economic thought in light of all of the progress that had been made by him and by the Austrians and others, uh, closely related to them.
Like classical economics, what we mean is, you know, Adam Smith, uh, David Ricardo.
Um, and then the, the marginalist revolution is also sometimes referred to as the subjectivist revolution, but that occurs in the early 1870s.
You know, a big one from an Austrian point of view is 1871 with Menger's, uh, treatise, um, where the, the transition was like, how do you explain value and the interaction with subjective value with objective market price? And the idea was in the marginalist revolution, that's where the name comes from.
It's, oh, it's not that, to use a colloquial example, wh- why does d- do diamonds have a higher market price than water, like a unit of diamonds versus a unit of water or, you know, a pound of diamonds versus a pound of water or a gallon of diamonds versus a gallon of water? And it's, you know, it's not because of their o- objective usefulness as a class, but on the margin.
Like, you know, for most people, one additional pound of diamonds is gonna be worth a lot more than an additional pound of water, you know, that kind of thing.
So that's what we mean by we, we frame these broad periods of classical versus marginal.
Um, and s- and, and the classical economists tended to have, like, an objective cost or labor theory of value and to explain market prices when you just went and looked at their actual explanations, like what explains this regularity in the market.
... their explanations tended to go towards things, "Well, it takes this many labor hours to make a stagecoach, and that's why blah, blah, blah, blah," as opposed to starting out with, "Well, people like the taste of oranges," and that's where we start to understand how come, you know, the farmers plant more oranges.
Um, before we get too deep into it though, Matt, can you explain, so why, w- why are you here talking about this? Like, how did, did...
Was Fetter's manuscript just sitting around and then you discovered it, or what happened there?
I've always found him just to be a particularly interesting economist, not least because he is very neglected, even by contemporary Austrians, who I think have a lot to, to learn from him.
So I've been working, uh, on various projects relating to Fetter for a few years, and that included looking at some of his unpublished papers and lots of his correspondence and things like that.
So I've published a few papers about Fetter and his relationship to the Austrians and some of his contributions to economics.
But as a part of this larger project, uh, amongst his unpublished papers, uh, one of the things I discovered was this, uh, largely drafted volume on The History of Economic Thought, and it's something that he had been working on in his later years.
He sort of officially retired in the late 1920s, but he, he, uh, lived until 1949.
He died when he was 86, so he lived to a ripe old age, and he was very productive right up until the end.
And one of the last things he was working on was this much larger project, as to say, a kind of a retrospective project, looking back at the history of economic thought in light of all of the progress that had been made by him and by the Austrians and others, uh, closely related to them.
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