ABSTRACT OF PAPER
Title: Heckscher's incidental refutation of Jevons and Menger
Author: Fregert Klas
Eli F. Heckscher (1879-1952) published in 1930 the article “Natural and money economy. As illustrated from Swedish history in the sixteenth century.” It is a pioneering study of a partially monetized economy, representing a stage between pure barter and pure monetary exchange. He reported a striking finding, namely, the prevalence of indirect triangular barter, known in the modern theoretical literature as a Wicksell triangle. The article was included in the AEA anthology on economic history by Lane and Riemersma (1953), but has received few citations. The article’s fate is not surprising, but it is surprising that the topic of the evolution of the “mechanism of exchange”, as Jevons (1875) put it, has hardly been studied empirically. There is, however, a lively theoretical literature on the emergence of money since the 1970s, breaking a long hiatus after Jevons and Menger (1892), with homage routinely paid to both. The curious situation thus has arisen in which theory continues to be developed, but without any references to empirical facts. This has created a vicious circle where theory appears barren to empiricists and theorists lack an empirical testing ground, resulting in an impasse between theory and empirics. I believe Heckscher (1930) is a good place to return to the topic and break the impasse. There are several reasons for this: the article was published in English; it was part of an effort by Heckscher to establish economic history as a sister discipline to economics; the unusual character of the Swedish empirical material; and that the exchange system is a key feature of any economy, as Heckscher believed. I present Heckscher’s contribution: first his own view of the role of theory for the topic of barter and monetary exchange, and then his empirical findings. I relate how he used his findings in his own later work. I touch on how his findings relate to current theories on the emergence of money. Finally I discuss possible reasons why empirical work on the emergence of money never took off and thus the scientific feedback back and forth between theory and empirics was never established.
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