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    Statics and Dynamics: Kaleidoscopic Words

    Fritz Machlup

    Southern Economic Journal, Vol. 26, No. 2. (Oct., 1959), pp. 91-110.

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    SOUTHERN ECONOMIC JOURNALVOLUME October 1959 2XVI NUMBER

    STATICS AND DYNAMICS: KALEIDOSCOPIC WORDSFRITZ MACHLUP

    T he J ohns Hopk i ns Uni v e r si t yThis essay is one in a series of studies ineconomic semantics: inquiries into the meaningsof some of the most widely used terms in eco-nomics. Serious terminological ambiguities andconceptual obscurities have been found to exist,some of them curable, others beyond hope ofclarification. Previous essays have dealt with the

    "marginal product,"' with "forced saving,"%ithth e "balan ce of payme nts,"%th "equilibriumand d iseq~ il ibrium ,"~ i th "structure and struc-tu ra l change";' the present essay will deal with"statics and dynamics" and the truly kaleido-scopic variety of meanings that have been givento these learned term s.

    there can be no such thing as "Economic Dy-namics'-and all economics mu st needs be static.The fact is that economists in their reasoningmust always cause some variables to "stand"an d some variables to "move'-which leaves usnowhere in deciding this argument.I. STATEMENTS ON TH E DISTINCTION BETWEENSTATICS AND DYNAMICS

    Not all writers who have used the terms havebothered with defining them. But often, evenwhere there are no definitions, some statementscan be found in which a writer reveals what hemeans. I have examined a represen tative sampleStatics is derived from the Greek ~ T ~ T L K ~ S ,of th e literat ure for sta tem en ts defining or dis-which means "causing to stand," and Dynamicsfrom ~ U V ~ ~ L K ~ S ,hich means "causing to move."Thu s, an extremist ma y say, since all economicsis designed to explain change, there can be nosuch thing as "Economic Statics7'-and all eco-nomics must needs be dynamic. On the otherextreme, since all economics must use a methodof isolating some factors fro m oth ers, which in-volves assuming some variables to be unchang ed,

    Fritz Machlup, ..On th e Meaning of Mar-ginal product," ~ ~ in ~~~~~~i~~nHonor of F. W. Taussig (New Yo rk: McGraw Hill,1937), pp . 250-63. Reprinted in Re adi ngs i n t heTh eor y of Inc ome Dis t r ibut ion (Philadelphia:Blakiston, 1946), pp . 1 5 g 1 7 4 .'Frit z Mach lup, "Forced or Induced Saving:An Exploration into its Synonyms and Homo-nyms," Re v i e w o f Ec onom i c S t a ti s ti c s , Val. XXV(1943), pp . 26-39.Fritz Mach lup, "Three Concepts of the Balanceof Payments and the So-called Dollar Shortage,"Economic Journal , Val. L X (1950) , pp . 46-68,

    tinguishing Statics and Dynamics, and shall pre-sent a collection of th em . Bu t first I shouldexplain some conspicuous omissions in the col-lection.1. Some of the great system builders whoseworks have been widely discussed as significantcontributions to Economic Dynamics have notthemselves used this term. For this reason, Ri-cardo. Malthus. Sismondi. List, Marx , the writersof the ~ e n n a h i s t o r i i a lSchool, 'and finallyRobertson are not represented on the list. Butl ~ ~ ~ ~we shall retu rn to them-and also to Keynes-in Section 11 in order to find what in the eyesof their critics or admirers characterizes theirmethods as Statics or Dynamics.

    2 . Some of the great names in the history ofeconomic thought are absent from the list be-cause these authors said nothing at au or nothingworth quoting on the distinction between Staticsand Dynamics; this is true, for example, forJevons, Menger, BGhm-Bawerk>Wieser, Cassel.~ l ~ , Jevons made one, quite casual, remark in the4 ~ ~ ~ ~ i~ h ~ ~ a nd ~ i ~ ~ ~ ~ i l i b -~ ~ ~ i l i b ~ i ~ ~rium : Misplaced C oncreteness and Disguised Poli- preface of his Theory, which was interp reted intics," Ec onomi c J ournal , Vol. LXVIII (1958 ) , pp. con tradicto ry ways: Men ger said nothing abou t

    1-24.Fritz Machlup, "Structure and Structural 'Jevons referred to "a close analogy" of th eChange: Weaselwords and Jargon," Zei t schr i f t fur theory of w ealth and value "to the science of Stat i-Nat ionalokonomie , Vol. XV III (1958 ) , pp . 280-298. cal Mechanics" because the former is "explained by

    91

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    92 FRITZ MACHLUPStat ics and Dynamics , which is noteworthy inthe case of an author of two books on themethodology of economics. Bohm-Bawerk usedth e terms only in review articles when he referredt o t h e u s e s J. B . C la r k a n d S c h u m ~ e t e rhadma de of them , but he did no t propose alternativ edefinitions or suggest alternative me aning s7 I nWieser 's work only a sh ort an d misleading state-men t about Sta t ics , and nothing abo ut Dynamics ,can be detected.' Cassel used "static" as a syno-ny m for "stationary," and contrasted his modelth e consideratio n of indefinitely sm all am oun tsof pleasure a nd pain, just as th e The ory of S tatic sis ma de to rest upon the e qua lity of indefinitelysmall amo unts of energy." He added th at th e"dyna mical bra nches of th e Science of E conom ymay remain to be developed1'-but he failed tosay just what they should deal with. W . StanleyJevons, The Theory of Political Economy (Lon-do n: Macmillan, 1871), pp. viii-ix. Streller had nodoubts that Jevons meant Dynamics to be "Prac-tical Economics" while Statics was "TheoreticalEconomics." Rudolf Streller, Statik und Dynamikin der theoretischen Nationalokonomie (Leipzig:Streller, 1926), pp. 4 54 6. Icuznets, on the otherhand , inferred from "the analogy . . .with static anddynamic mechanics" that "statics would deal withth e relation of forces at the equilibriu m leve l, dy-namics with the same relations in the changes thatlead toward equilibrium." Simon Kuznets, "Staticand Dynamic Economics," American EconomicReview, Vol. XX (1930), p . 426; reprinted in Essaysin Economic Change (New York: Norton, 1953),p. 32.'Bohm-Bawerk did not reject the terms; hespoke of "this certainly important and fruitful dis-tinction, which in the m ost recent theoretical litera-ture, chiefly thanks to Clark's influence, has re-ceived great honors." Eugen von BGhm-Bawerk,"Eine 'dynamische' Theorie des Kapitalzinses,"Zeitschrift fur Volkswirtschaft, Sozialpolitik undVerwaltung, Vol. X X II (1913), p. 3 . I t is not under-standab le why Schumpeter-whose theory was criti-cized in tha t article-should later remark tha t"Ma ny, am ong them Bohm-Bawerk, would not hearof s tatics and dy namics a t all." Joseph A . Schum-peter, History of Economic Analysis (New York:Oxford University Press, 1954), pp. 9 666 7.Wieser, in this statement, rejected all S t a t i c swhich he confused with a mathematical system,"like math ema tical physics," tha t disregarded someof th e essentials of h um an action a nd economicchoice. Friedrich von Wieser, Theorie der gesell-schaftlichen fi'irtschaft. Grundriss der Sozialoko-nomik, 1. dbteilung, 2. Teil (Tiibingen: Mohr-Siebeck, 2nd ed., 1924), p. 40.

    of a sta tion ary economy with on e of t he "steadilyprogressing economy," without using the term"dyn amic ."Ve rhap s Mitchell should be men-tioned in this company; although sometimesnamed among the pioneers of "quantitative dy-namics," he can be quoted only as the a uth or ofsomewhat emotional pronouncements on t he tw oc o n c e p t ~ . ' ~3. Several well known names in contemporaryeconomics are not included, simply because thelist is designed t o be merely a "sample." Th er ewould hav e been no point in multiplying restate-ments of points of view already clearly statedby others. Needless to say, some more originaldefinitions or characterizations may have beenoverlooked. Their authors a re requested to par-don the overs ight , and to take comfort in thethought that this essay is, in a sense, a pilloryof terminological originality. Writers are im-plicitly castigated for their originality in themeanings given to accepted terms!The statements included in the list are, when-ever possible within the brief space, quotedliterally, thoug h some of t he sta teme nts ar e syn-thet ic in the sense that they have been puttogether from different pages or different chap-ters of a book, or even from different books ofan a utho r . In a few instances , for the sake ofbrevity, a concise paraph rase was sub stituted fora long statemen t ; th e absence of qu otation ma rksindicates where the authors ' own language wasreplaced by the compiler 's paraphrase.The order of the entries is roughly chrono-logical; only very roughly though, because thes t a t e m e n t s ~ u o t e d ave o ften been mad e in simi-lar form in earl ier works by th e same autho r , orbecause several s ta tements are p ut together f rompassages of different publications th at hav e ap-peared many years apar t . Thus, if a s ta tement isquote d fro m a book first published in 1955, itis quite possible that virtually the same ideaswere expressed in a book the same author hadpublished in 1939. As a result, the order of the

    Gustav Cassel, The Theory of Social Economy(N ew Yo rk: Harco urt Brace, 19241, pp. 29, 34.loMitchell wrote th at s tatic theory w as providingan "escape from stern reality into a romanticTT-orld,"whereas Dynamics furnished "scientific"theones of "the cumulative change of institutions."Wesley Clair Mitch ell, "T he Prospects of Eco nom -ics," in Rexford Guy Tugwell, ed., The Trend ofEconomics (Ne w York : Alfred A . Knop f, 1924), p.27.

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    STATICS AND DYNAMICS : KALEIDOSCOPIC WORDS 93entries should not be ta ken t o reflect "priority." and a want of linguistic inventiveness-for when(Let me repeat t ha t priority in t he use of a novel a writer creates or modifies a concept he oughtmeaning of a term is no cause for pride; in fact also to coin a new word to denote it, rather tha nit be trays a lack of "terminological discipline" corrupt th e language and spread confusion.)

    AuthorA. Comte1lJ. S. Mi1112

    T. Veblen"

    1 Statist ics 1I Abstract theory of social orderStudy of "the economical laws ofa stationary and unchangingsociety," especially "of theeconomical phenomena consid-ered as existing simultaneously"and of "the principles of thei rinterdependence"

    Analysis of interdependence inwhich we "imagine an economyestablishing . . . equilibrium abovo over a given period of t imeduring which no changes takeplace in th e dat a of the prob-lem"

    St udy of "phenomena . . . asthey present themselves undergiven conditions"

    St udy "of some group of tenden-cies . . . isolated by the assumption other things being equal":"we fix our minds on somecentral point" and "treat vari-ables provisionally as con-stants"

    Methodological device of "iso-lating" by holding conditionsconst ant, yielding "real laws. . . working" both in a "sta-tionary state" and in a societyin "movement and disturb-ance"! (a) ~~Taxonomicl 'tatics-where

    DynamicsTheory of social progressStudy of "the tendencies" of "the econom-

    ical conditions undergoing progressivechanges"; "thereby adding a theory ofmotion to our theory of equi librium"

    Analysis of interdependence in which we"suppose the da ta of the problem . . . tovary as a function of time," with "thefixed equilibrium . . . transformed intoa variable or moving equilibrium," "con-stantly being disturbed by changes inthe data and . . . constantly being rees-tablished"

    Study of "manner in which (economic andsocial) conditions change over . . .time," especially "study of economicprogress," chiefly by "historicalmethod"

    St udy of economic "change and progress,"taking account of "complex mutual in-teractions" and gradually approximat-ing the world in which "all these mutua linfluences take time to work themselvesout, and, as a rule, no two influencesmove at equal pace"

    "Laws" accounting for "variations ofactual incomes from . . . natural stand-ards" and "for t he slow and steadychange" in these standards, especiallyunder the influence of "five genericchanges" in conditions-population,capital, technology, business organiza-tion, and tastes.

    "Evolutionary Economics"-"a close-knitl1 Auguste Comte, C o u ~ sde philosophie positive

    16Alfred Marshall, Principles o f Economics (Lon-(Paris, 183942).1" john stuart ill, principles poli t ical ,ycon- do n: Macmillan, 8th ed., 1920). PP. xv, 366, 368,o m y (London, 1848), Book I V , ch. 1. 369, 380, [First edition 1890.1laLeon MTalras, Elem ents o f Pure Economics, leJohn Bates Clark, Th e Distr ibut ion of W ea l th

    Translated by William Jaffk (Homewood, 111.: Ir- (New York: Macmillan, 1899), pp. 30,36, 56, 60.win, 1954), pp. 318, 319. [Published in French in Thorstein Veblen, T h e Place of Science inll John Neville Keynes, Sc ope an d M e t h o d o f

    Modern Civil isation and Other Essays (New York:Polit ical Economv .London: Macmillan. 1890. 2nd Viking Press, 1932), PP. 70,72, 77, 165,190,232,242,ed., 1897), pp. 144,145. 243. [First published in 1898, 1900, 1908, an d 1909.1

    1873.1

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    FRITZ MACHLUP

    Author I

    K. Wicksellls

    Statistics I"the activity ("not t o disturbthe equilibrium . . . betweenvariables") goes on in perfec-tion, without lag, leak, or fric-tion"

    (b) Clarkian "Dynamics"-aconception "of an imperfectlystatic state," involving"changes in the absolute orrelative magnitude of t he sev-eral factors comprised in theequation," but still an "equi-librium between variables"

    (a) "Aspect of the problem ofequilibrium" which concernsitself with "the conditionsnecessary for the maintenance,or the periodic renewal, of astat ionary st at e of economicrelations"

    (b) Analysis based on the as-sumption of "a society whichretains unchanged from year toyear the same population, thesame area of ter rito ry andthe same amount of capital,and remains on the same levelof technical achievement"

    Fir st par t of "pure economics,"study ing "equilibrium" underthe assumption of given andunchanged conditions

    "Study of equi librium positions"

    St udy of "properties" of "posi-tions of equilibrium" of theeconomic system

    Dynamicsbody of theory . . . of a n unfolding se-quence," giving "a genetic account ofthe life process" and of "the growth andmutations of the institutional fabric"; a"theory of genesis, growth, sequence,change, process, or the like, in economiclife," "of a process of cultu ral growth asdetermined by the economic interest, atheory of a cumulative sequence of eco-nomic institutions s tat ed in terms of t heprocess itselfH-not of th e "determina-tion . . . of the outcome of the process"-where "each new sit uat ion is a var ia-tion of what has gone before i t and em-bodies as causal factors all that has beeneffected by what went before"(a) "Complete analysis of economic phe-nomena" tak ing account of changes in"the t ota l supply of labor," capi tal, andland, and "in the efficiency of the avai l-able supply of labor ," etc.

    (b) "Can only be successfully presentedin combination with the practical partof our subject"

    (c) "Transition to dynamic point ofview": t rea tment of "the problem ofsaving or accumulation of capital-which is equivalent to production with-out corresponding consumption-as wellas its negative counterpa rt, capital con-consumption"

    (d) (Imputed by Myrdal) Theory of the"cumulative process" by which a devia-tion from monetary equilibrium evolvesand progresses

    (a) Second part of "pure economics,"studying "successive equilibria" underchanging conditions;

    (b) Third pa rt of "pure economics,"studying "the movements of economicphenomena""Study of movements taking place in posi-tions of disequilibrium and leading to areturn to equilibrium positions"

    Study of "the pa th of th e economic systemfrom any. . . random [position] to aposition of equilibrium"

    l8Knut Wicksell, Lectures o n Political Ec ono my nomic Dynamics," International Economic Papers,(London: Routledge and Kegan Paul, 19341, PP. Vol. V (London: Macmillan, 1956), p. 28. [Italian7, 105. [Published in Swedish in 1901.1 version in Giornale degli Econom isti , 1909.1

    loVilfredo Pareto, Manuel dJEconomie Pol it ique(Paris: Girard, 2nd ed. 1927), p. 147. [First Italian Francis Edgeworth, Papers t o Po-edition 1906.1 l i t ical Economy (London: Macmillan, 1925), Vol.

    Maffeo Pantaleoni, "Some Phenomena of Eco- 11,p. 311. [Written in 1889.1

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    ST AT ICS AND DYNAMICS : KALEIDOSCOPIC WORDS 95Author 1 Stat ist ics I D y n a m i c s

    J. A. Schumpeter22 Theory or "logic of the economy's Theory of "economic development . . .(early writings) circular flow," explaining changing the da ta of the s tati c system"

    "changes in the equilibrium through "innovations" by "dynamic position of t he economy as orig- entrepreneurs" inat ing in changes of the da ta ," th at is, as adjustments to "exog- enous disturbances"

    "A par t of dynamics," studying The enti re "social process," the subjec"not a sta te of rest , but a st at e matte r of sociology, "containing Stat icsof movement . . . that is not and Kinetics as its two parts"; "Kineticsexposed to disturbances . . . comprises all studies of movementsthrough changes in the data which change in magnitude or directionduring the interval of observa- or both" because of "changes in data''tion"; includes "comparativestatics"

    "Reasoning" about "economic Cannot exist as "economic scienceu-change" in the only possible though perhaps as "evolutionary ormethod: varying one thing historical economics"while holding others constant

    "Conception [which] considers "Conception [which] considers economiceconomic phenomena, essen- phenomena in the process of changes intially and as a matt er of prin- their elements and in the interrelationsciple, without taki ng int o ac- of the lat ter in the course of time, andcount their variations in time. seeks to discover regularities in theI t deals with real ity as if its progress of these variations," withelements were in a stat e of fixed special attention to "quantitative vari-equilibrium" ations" and to "reversible and non-

    reversible processes"R. Streller2= "A conception which abstracts "A conception of which time inte rva ls are

    from all time intervals that an integral part "; "coextensive with themay arise between individual subject mat te r of economic theory"economic acts"; "derived fromdynamics by way of abstr ac-tions made on methodologicalgrounds"J. M . Clark27 Theory of "equilibrium," based Study "which focuses attention o n proc-upon "the relative stability of esses of change," "restores realism byeconomic values" and upon the putt ing in everything that statics leavesassumption of an "unchanging out":pattern of action" (a) dealing with "quantitative departures

    from stat ic norms,""Joseph A. &humpeter, Theorie der wir t schaf t - 25 3.D. Kondratieff, "The Static and the Dy-l ichen Entwicklung (Leipzig: Duncker & Humblot, namic View of Economics," Q u a rt er ly ~ o u r n a l f

    1912), pp. 96,464,489,522. Economics , Vol. XXXIX (19251, pp. 576, 577, 579,"Franz Oppenheimer, System der Soz iologie , 1. 580.Halbband des 1.Bandes. 2, Halbband des 111,Ban- 28 Streller, und in der

    des. ( Jena : Fischer, 19221, pp. 68,71,74,76; Theorie theore t i schen Nat ional i ikonomie (Leipzig: Streller,19261, p. 135.der re inen oder poli t ischen O kono mie: Die Gese ll - John Maurice Clark, "The Relation betweensc ha f t sw i s se mc haf t , (Jena: Flscher, 19241, P. 618. statics and D ~ ~ ~ ~E~~~~~ in ~Honor~ , H~~~~~i~''Frank Hyneman Knight, Ris k , Uncer tainty and J ohn Bat e s C l ark , Jacob ~ ~ l l ~ ~ d ~ ~d. ( N ~ ~Profi t (Boston: HOughtOn~ lg 2l ), pp. 16- York: Macmillan, 19271, p. 46. Reprinted in Preface17; "Statik und Dynamik," Zei t schr i f t f i i r Nat io- to Soc ial Economics (New York: Farrar & Rine-

    nalokonomie , Val. 11 (19301, English translation in hart, 1936), pp. 196, 203; "Statics and Dynamics,"Et h i c s o f C omp e t i t i on and Ot he r Essay s (New Encyc lopedia of th e Soc ial Sc iences , Vol. 14. (New'York: Harper, 1935), pp. 167,169. ~ o r k~ acm i l l an , 934), p. 354.

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    FRITZ MACHLUP

    Author Statist ics

    Theory of "static equilibrium"showing "the interdependenceof all economic quantities" andthrough "simultaneous mathe-matical equations the condi-tions of their common deter-mination"

    Study of economic "relat ions andprocesses on the assumption ofa uniformity and persistenceof ei ther th e absolute or rela-tive economic quantities in-volved," based on "a singleprinciple of individual activ -ity"

    Stud y of "economic develop-ments taking place in time,"though "the variables studieddo not change their values withthe lapse of time"; thus, "aspecial application of generaldynamic theory for stationaryconditions"

    Theory of economic interdepend-ence in which "all the variablesbelong to the same point oftime"

    Study of "the changes of certaininterdependent factors," suchas "relative prices," by an"instantaneous analysis," as-

    %Henry Ludwell Moore, Synthet ic Economics

    Dynamics(b) "second level of dynamicsH-"perhaps

    to be called evolutionary"-dealing with"qual itat ive evolution of th e basic legalinstitutions . . . , of forms of businessorganization and of competi tion, or dy-namic changes or long run evolution inhuman nature itself"

    Theory of "moving equilibria, oscillations,and secular change" which "presents allof t he interrelated economic auantit iesin a synthesis of simultaneous . . . equa-tions" "where al l the variables in theconstituent problems are treated asfunctions of time"

    "Study of changes in the social phenomenaover historical time "--"~vithout des-cending to t he level of individual ac-tivity"-with "emphasis on stat isticalresearch"

    (a) "General dynamic theoryJ'-"to deter-mine certain variables as functions oftime . . .with th e help of equationsbased on . . . ini tia l values of these vari-ables and the conditions which deter-mine their fluctuations," with emphasison plan making and plan changing;

    (b) "Special dynamic theoryu-an "ap-plication of general dynamic theory to. . . changing and evolutionary" condi-tions

    Theory "that explains how one situationgrows ou t of th e foregoing," by consider-ing "the magnitudes of certain variablesin different points of time," and intro-ducing "certain equations which em-brace a t the same time several of thesemagnitudes belonging to different in-stances"; (a) "micro-dynamics," (b)"macro-dynamics"

    Study of "the changes of certain interde-pendent factors" and "the time se-quences" by a "period analysis" of "thedevelopment from one point of time to a

    (New York: Macmillan, 19291, pp. 2 , 4 , 6 . Ragnar Frisch, "Propagation Problems andSimon Kuznets, "Static and Dynamic Econom- Impulse Problems in Dynamic Economics," Eco-

    ics," Amer ican Economic Rev ie w, Val. XX (1930), nomic Essavs i n Honor o f Gus tav Cusse l (London:reprinted in Essays in Economic Change (New Allen & Uniin, 1933), pp:York: Norton, 19531, pp. 32 ,35 , 38 ,44 .80 ~ ~ i k tudies in the ~h~~~~ M~~~~ Gunnar Myrdal, Monetary Equi l ibrium (Lon-~ i ~ d ~ h l ,a n d C a ~ i t a lNew York: Farrar & Rinehart, 1939), don: Hedge, 1939), pp. 35, 36, 43,44. [Gem an ver-

    pp. 3 1 , 3 2 . [Swedish version 1930.1 sion in 1933.1

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    97TATICS AND DYNAMICS : KALEIDOSCOPIC WORDSAuthor Stat i s t ics DynamicsI I

    J . A . Schumpeter36(later writings)

    suming "that a deviation fromth e equilibrium position bringsabout reactive forces whichrestore equilibrium again"

    Study of "how certain variables. . . adapt themselves to givendat a until a st at e of equilibriumhas been reached,'I whereby"the adaptation process itselfdoes not influence the funda-mental conditions of equilib-rium" and "all variable factors. . . are simultaneously vari-able" and "simultaneously in-terdependent"

    "Method of all scientific work,designed to analyze the effectof t he change of a ny one factorceteris paribus . . . The assump-tion of perfect changelessnessof all other conditions . . . is afiction indispensable for scienceand for thinking in general."". . . its aim is the explanationof change"

    Analysis "expressed in terms ofth e values which our variablesassume a t an y single point oftime," i.e., connecting "eco-nomic quantities that refer tothe same point in time"

    Theory in which "we do nottrouble about dating" the eco-nomic quantities involved

    "Theory where all the variablesrelating to a certain . . . timeare explained by data relatingto t he same point or period oftime,"-hence without timelags "in t he causal nexus"

    second and a third and so on," assumingth at equilibrium may be "labile," th at"the mutual adjustments . . . take time"and that "the time order in which theyoccur is decisive for the outcome"

    "Sequence analysis" "explaining how eachstate is derived from a preceding oneand, in turn, induces the next," and thusexplaining "how the conditions of equi-librium themselves are changed," takingaccount of different "reaction times"and "reaction patterns"

    "Everything that can be said about thetheory of action is theory of change, andin th is sense would have a claim on beingcalled Dynamics." Beyond this, thesearch for "dynamic theory . . . s de-void of any sense"

    "Theorems" which "include in our func-tions values of variables which belong todifferent points of timen-this terminol-ogy adopted "in deference to ProfessorFrischH-"practically coextensive withsequence analysis" and "includes periodanalysis," bu t "not coextensive with thetheory of economic growth, or develop-ment, or progress"

    Theory in which "every quanti ty must bedated"

    Theory where "a magnitude is explainedby another relating to an earlier . . .time,"-hence with "lags in th e causalnexus"

    =Erik Lundberg, S tud ies i n t he Theory o f Eco- "Joseph A. Schumpeter, Business Cycles (Newnomic Expansion (London: King, 1937), pp. 2, 3, York: McGraw-Hill, 1939), p. 4 8 ; His tory o f Eco-9, 11, 17, 243. nomic Analysis (New York: Oxford University

    =Ludwig von Mises, Grundprobleme der Na- Press, 19541, pp. 1142,1160.t ionalokonomie (Jena: Fischer, 1933), pp. 104, 105. %John R. Hicks, Value and Capi ta l (London:Nat ionalokonomie: Theorie des Handelns und Oxford University Press, 19391, p. 115.Wir t scha f t ens (Geneva: Union, 1940), p. 244; H u - Gottfried Haberler, Prosperity and Depressionm a n A c t i on (New Haven: Yale University Press, (Geneva : League of Nations, Revised edition,1949), p. 353. 19391, pp. 249 ,250 .

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    FRITZ MACHLUP

    Author Stat i s t i cs D y n a m i c sR. F. Harrod3* Theory which, taking "certain Theory where "the fundamental conditions

    fundamental conditions to be will themselves be changing, and th e un-given and known," will "deter- knowns . . . to be solved will not be ra tesmine the values of certain un- of output per annum, bu t increases orknowns," such as annual rate s decreases in the rate s of o utp ut perof inputs and outputs and annum"prices of factors and products

    A. G. Hart39 "Timeless equilibrium theory" Theory which concentrates "on the timeelement" and, especially, "allows forantic ipat ions of change and for uncer-tainty"F. A. Hayek40 (a) "Timeless" "equilibrium (a) "Intertemporal equilibrium" theory,

    theory" analyzing the "fictitious st at e" of "com-(b) Theory of "stationary state" plete compatibility of e z an te plans" a t

    "successive moments of time'(b) "Explanation of th e economic process. . . n time," not through interdepend-

    ences, but "as chain of historical se-quences"F. S. C. Northrop41 A deductive system based on Impossible-would be "an empirically veri-

    "empirically verified postu- fied deductive system" enabling uslates" but without verification "through i ts postulates and theoremsof its "deduced consequences" . . . to deduce a future state" once the

    "quantitative values" "defining thepresent state" are empirically deter-minedJ. Tinbergen42 "Theory . . . based on the as- Theory "to explain . . . endogenous proc-

    sumption of a sta tionary posi- esses," "which will follow step by steption," confined to "exogenous th e process of adapta tion and the suc-movements," i.e., those "tha t ceeding movements," with time "as onemay be considered as the im- of t he variables"mediate, or the almost immedi-ate, adaptation to changes indata"P. Samuelson43 "Simultaneous and instantane- Stud y of "functional relationships" amongous or timeless determination "economic variables a t different pointsof economic variables by mu- of time" or, th at is, "between economictually interdependent rela- variables and their rates of change, theirtions" 'velocities,' 'accelerations,' or higher

    'derivatives of derivatives' " (a) "dis-crete processes, trea ted in 'period analy-sis' " [with "difference equations"], (b)"continuous processes involving flows,

    =Roy F. Harrod, "An Essay in Dynamic t er ly Journal of Economics, Vol. LVI (1941), pp. 1,Theory," Ec onomi c J ournal , Vol. XLIX (March 12.1939); Tow ards a Dy nami c Ec onomi c s (London: Jan Tinbergen and Jacques J . Polak, T h e D y -Macmillan, 1948), p. 4. namics o f Business Cyc les (Chicago: University of

    "Albert Gailord Hart, Ant ic ipat ions , Uncer- Chicago Press, 1950), pp. 102, 103. [Dutch versiont a i n t y , and D y nam i c P l anni ng . Studies in Business 1942.1Administration, Vol. XI, No. 1 (Chicago: Univer- 4 3 P a ~ l. Samuelson, "Dynamic Process Analy-sity of Chicago Press, 1940), pp. vii, I . sis," Surv ey of Co ntemporary Economics , Vol. I,

    'O Friedrich A. Hayek, T h e Pu r e T h e o r y o f C ap i- 'Howard S. Ellis, ed. (Philadelphia: Blakiston,ta l (London: Macmillan, 19411, pp. 17, 18,22,23. 1948), p. 354. See also Foundat i ons o f Ec onomi cU F . S. C. Northrop, "The Impossibility of a Analysis (Cambridge: Harvard University Press,Theoretical Science of Economic Dynamics," Quar- 1947), pp. 311-317.

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    STATICS AND DYNAMICS : KALEIDOSCOPIC WORDS 99Author I Statistics I Dynamics

    Theory "which explains th e equi-librium position in t he particu -lar problem on the assumptionth at the data of tha t problemdo not change"

    Theory of "economic change,"explaining change as "adjust-ment to change," where "timeis eliminated as a variable andtime sequences do not affect th eresul ts of a process'?

    Analysis of "a t ime-s lice, a crosssection . . . , thereby eliminat-ing the passage of time fromthe problem, though . . . no tnecessarily eliminating the in-fluence of time altogether"

    "Economics of perfect adjust-ment," an analysis in which"time has no significant place,and uncertainty no place"

    "Approach" which "does not in -clude anything about the con-nection between conditions atvarious points of time (aboutmovements in time, increases,lags, uncertain expectations,etc.)"

    treated in 'rate analysis' " [with "dif-ferential equations"]

    St udy "of the pa th by which a set of eco-nomic quantities . . . reach equilibriumwithin a static framework"

    Theory of "step-by-step adjus tment s . . .as sequences in time," showing "thesemovements from period to period" andth e effects of different "time sequences"depending on "in what order [certain]steps are taken" and on the "time int er-vals between th e steps"

    "Study of economic phenomena in relationto preceding or succeeding events," (a)"Magnificent dynamics1'-"broad gen-eralizations, often in th e natu re of al-leged . . . laws," concerning secularchanges and "the development of thewhole economy over long periods"; (b)"Statics involving timeH-"concernedwith features of th e system other thanth e process of change itself "; (c) "Proc-ess (or sequence) analysis"-"step-by-step analysis of economic changes" overrela tively short "spans of time"

    (a) "Calculable dynamics"-introducing"dynamic time" "in th e form of laggedreac tions or of st eady growth"

    (b) Expectational dynamics-introducing"expectational time and uncertainty,"i.e., uncertain expectations of t he futu re

    "Approach" where "differences in t imeare taken into consideration . . . , forinstance, . . . he velocities with whichchanges take place," or "growth, th eprocess of adjustmen t, subsequent ef-fect s or time-consuming processes on th ewhole," also "uncertain or mistaken ex-pectations"; divided int o (a) "momen-ta ry dynamic analysis," analyzing "theconditions of a single moment wheremovement is going on"; (b) "the courseof economic phenomena through a periodof time" (sequence analysis) ; (c) "com-parative dynamics" analyzing "alterna-

    HGeorge J . Stigler, Th e T heory o f Price (New "William J. Baumol, Economic Dynamics (NewYork: Macmillan, 1951), pp. 2,4,6,123.York: Macmillan, 19471, pp. 25,26. "George L. S. Shackle, Uncertainty i n Economics"Fritz Machlup, International Trade and the and oth er ~ ~ f (Cambridge~ : ~ t i ~niversityNational Income Mult ipl ier (Philadelphia :Blakis- press, 1955),p. 218, ton, 19431, p. vii; T h e Economics of Sellers' Corn- ssFrederik Zeuthen, Economic The ory and petit ion (Baltimore : Johns Hopkins, 19521, PP. 34, Method (Cambridge, Mass.: Harvard University 187,188,189. Press, 1955), pp. 27,78,79,139,140.

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    100 FRITZ MACHLUPAuthor

    D. Patinkin49

    Stat ist ics I Dynamicst ive movements . . . under a l t e rna t ivecondit ions"(a) "Analysis of . . . he na ture "Analysis of . . . the nature of th e mar ketof the equilibrium position" forces which bring the economy t o equi-(b) Comparat ive Stat ics: "com- librium from a n init ial posit ion of dis-parison of equilib rium posi- equil ibrium" t ions before an d a fter a speci- fied chang e in one or more of th e independ ent variables"

    11. PUTATIVE S T A T I C S AND D Y N A M I C SF or m ore t h an t w en t y yea r s I have been tel l ingmy students that one of the widespread uses of

    "Statics" a nd "Dynamics" was to dist inguish awri ter ' s own work fro m tha t of his opponentsagainst whom he t r ied to argue. Typical ly,"Statics" was what those benighted opponentshave been writ ing; "Dynamics" was one's own,vastly supe rior theory.*Besides this at trib utio n of a "stat ic" cha rac terto the wri t ings of others, who might not haveso regarded their work, we also find "dynamic"theor i z ing a t t r i bu ted to wr i t e rs who had notthemselves used this term, ei ther because i t hadno t yet been int roduced into economic l i teratureor because they avoided i t . I t m ay be ins t ruc tiveto ascertain just what features of thei r s tudieshave ear ned for the m the label "Dynamics," andwhether these putat ive contributors to dynamicswere conscious of the ir doing some thing th a t was"different" from whatever m ay be regarded as"non-dynamic."

    What is now widely called "Classical Dy-namics" a re th e theories-associated chiefly withMal thus , R icardo , James h i l l , McCul loch , Se-nior-

    48D on Pat inkin, Money , Interes t , and Prices:A n In te gra ti on o f M one t ary and Val ue The oryEvanston, Ill.: Row, Peterson, 1956, p. 32 .My quip was quoted in a recent book review:"In this reviewer's opinion, the best definition-and the one that will command the widest agree-me nt among economists--is still an unpublishedone due to Professor Machlup: 'Dynamics is mytheory; statics is the other fellow's theory.' " JohnS. Chipm an, review of "La p kriode da ns l'analysekconomique, une approche 8. l'ktude due temps,"by Raymond Barre, Econometr ica, Vol. 22 (Jan .1954), p. 126. Virtually the same remark was madeby Samuelson: "We damn another man's theory byterming it static, and advertise our own by callingit dynamic." Paul A. Samuelson, Fozrndations ofEconomic Analysis, p. 311.

    ambitiously attempting to analyze the growthan d develo pme nt of en tire economies over rela-tively long periods of time-decades or even cen-turies . . .The basic theme .. .was the develop-men t of th e econom y from a progressive state in toa stat ionary state . . .with no net investment, sub-sistence wages, and low or even zero profits. . .=Bau mol calls this theor y "Magnificent Dynam ics"becau se of th e "sweeping gen eralizations," "in-spired oversimplifications," an d th e "daring andimaginative" thought on which these theorieswere bas ed. Th e chief building stone s of "Clas-sical Dynamics" were (a) the Mal thusian lawof po pula tion, ( b) th e law of (historically) di-minishing returns, (c) th e propensi ty to accumu-late ( invest profi t s) , and (d) th e law of wages(which are raised through increased investmentdemand and depressed through increased laborsupply .=Because of th e eve ntu al disapp earan ce of prof-i t s and the resul t ing end of accumulat ion andgrowth which these theories predict , historiansof thou ght referred to thei r authors as "The Pes-simists."" If th ey ar e now regard ed as builders

    "Will iam J . Baumol, op. cit. , pp. 11-12. Al-though John Stuart Mill is customarily notcounted among the "classical" economists, heshared the views characterized as their "Dynam-ics." H e was convinced of the "impossibility ofultimately avoiding the stationary state-this ir-resistible necessity th at the stre am of h um an in-dustry should finally spread itself out into an ap-parently stagnant sea." John Stuart Mill, op. cit. ,(Lon don: Longmans Green, 1926), p. 746.6?Baumol ,op. cit., p. 19 . Most other writers em-phasize only the first two of th e four funda me ntallaws. Cf. Paul Sweezy, The Theory of Capi tal i s tDev e lop men t : Pr inc iples of Marx ian Pol it i calE c o n o m y (New York: Oxford University Press,1942), pp . 92-93.

    63 Charles Gide and Charles Rist, Histoire desdoctrines e'conomiques (Paris: Recueil Sirey, 5thed., 19261, p. 137. For the same reason Carlylecalled economics the "dismal science."

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    101T AT ICS AND DYNAMICS : KALEIDOSCOPIC WORDSof a "dynamic" model it is chiefly because theirsis a theory of historical development and eco-nomic growth. But also others, who do not seegrowth and development as the essence of dy-namics but prefer to use this term to denotecertain methods and techniques of analysis, havebeen able to attribute a "dynamic" approachto classical economists. For example, Pantaleonistates that the "famous essay by D. Ricardo onthe depreciation of English paper money. . .i salso a study of economic dynamics."* AndSchumpeter regards Ricardo as a contributor todynamics because of his conscious use of "periodanalys i~ ."~If thus the label "Dynamics" was so con-spicuously bestowed on the classical economists,we must not overlook the label "Statics" whichhangs there too. Indeed, for a long time it washighly fashionable to identify "classical" eco-nomics with "static" economics; members of theGerman and English historical schools nevertired of criticizing and rejecting classical eco-nomics for its "statical" approach. (What manyof these critics meant by "statical" approach,hen-ever, was the method of abstraction and iso-lation which they rejected in favor of a "totalis-tic" or "holistic" approach, comprehending the" i n n e r l i c h z u s a m m e n h a n g e n d e , e i n h e i t l i c h e L e -b e n s t o t a l i t a t c l e s V o l k e ~ . ' ' ~ )

    Of course there is no reason why classicaleconomics should not have been both "stat,icnand "dynamicn-whatever this may mean-,static in some parts and dynamic in others.But the classical writers themselves did no6 indi-cate that they mere conscious of employing twodifferent approaches (as to subject matter ortechniques of analysis)--except perhaps whenthey were speculating about future developments.This is akogether different with regard to one oftheir most famous critics, who was quite em-phatic in differentiating his own approach fromthat of the clnseic on grounds of what has beencalled 3 thoroitghly "dynamic" program. The

    51 Maffeo Pantaleoni, loc. cit., p. 31 .a Joseph A . Schumpeter, Hi s t ory o f Ec onomi c

    Analysis, pp. 563-64.56 Julius J. Kautz, Die Natzonal ij konomie a k

    Tf i ssenschaf t (TVien: Gerold, 18581, p. 320.67Sismondi is treated as the first of the "adver-

    saires" of the classical school. See Gide and Rist,op . cit. , pp. 199, 201.

    "dissenter"" was Simonde de Sismondi." His pro-gram is best described in SchumpeterJs words:The distinctive feature of Sismondi's analysis isthat it is geared to an e x p l i c i t dy nami c mode l in

    the m od ern sense o f thi s phrase .He realized that the most important of thereasons why trnnsitional phenomena are of theessence of the economic processand hence notonly relevant to its practical problems but also toits fundamental theory-is that the economic proc-ess is chained to certain sequences that will excludecertain forms of adaptation and enforce others.Sismondi's great merit is that he used, syste-matically and explicitly, a schema of periods, thatis, that he was the first to practice the particularmethod of dynamics that is called period analysis.

    Moreover, he saw clearly the difference this makesand in particular the disturbances, discrepancies,and hitches that result from the fact that economiclife is bound to sequences of which every unit isdetermined by the past and in turn determines thefuture!'The features of Sismondi's work that promptedSchumpeter to call it "dynamic" are, of course,the methodological principles stressed in Schum-peter's definition of dynamics adopted "in def-erence to Professor Frisch." But also if dy-namics is understood in some of the alternative

    senses can one find reasons for characterizingSi~mondi'work as "dynamic." For example, itmay be regarded as a study of historical eco-nomic development and of the evolution of eco-nomic institutions.Friedrich List's work earned the label of "Dy-namics" on similar grounds. It was essentially ananalysis of the development of the "productiveforces of the nation," a severe critique of thestatic foundation of classical free-trade theory,and an elaborate infant-industry argument forprotective tariffs." The putative dynamics of hiswork is pointed up in the following statement byGide and Rist :

    List has enlarged the political horizon of theclassical writers by substituting for their purelystatic conception a d y n a m i c conception of the wel-fare of the nations. He introduced into the theory58 Jean Charles Leonard Simonde de Sismondi,Xouveaux principes d'e 'conomie poli t ique (Paris:1819),Joseph A. Schumpeter, H i s t o r y o f E c o n o m i cAnalys&, pp. 491, 495, 496. (I talics in the original,)B0 Friedrich List, Das na t i ona l e Sy s t e m de r t i schen Okonomie (Stuttgart : Cotta, 1841 .

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    102 FRITZ MACHLUPof international trade what Sismondi had intro-duced into domestic economics: the preoccupationwith the cond itions of economic progress. On lythat while Sismondi wanted progress to be sloweddown List wanted it p r ~ m o t e d . ~ '

    The sys t em tha t qua l i f i es for t he a t t r i bu t ionof "dynamicsJJ on more scores than an y other, orund er th e gr eat ,est variet ,y of meanings given t 'ot he t e rm , is " M a r i an D ynam ics. " I t does soas a t 'heor y of develo pme nt, a s a t 'heo ry of acum ulative sequence, a s a theo ry of historicalevolution, as a general sociology interpreting thewhole of social life, as a study of the evolutionof insti tutions, as a model where al l variablesar e funct 'ions of t ime, as p eriod analysis, an dprobably on several other counts. One maywonder how Marx and Engel s were ab le to doal l this wi thou t using the word "dynamics." Th eyused a substi tute, tho ugh : "dialectics." T o thist e rm they gave just abou t a l l t he meanings tha tother wri ters ascribed to "dynamics." I n EngelJswords, th e "dialecticalJ1 me thod "grasps thingsand their images, ideas, essential ly in their in-terconnect ion, in thei r sequence, thei r movem ent ,thei r bi r th and death."" Mu ch has been wri t tenabo ut t he extr aor dina ry comprehensiveness-de-f ea ti ng a ll a tt e m p t s a t d efin in g i t o f t h e M a r x -ian concept of dialectics. The re can be l i t t le do ub ttha t i t emb races "dynamicsJJ as one of i t s es-sential components-if no t as i ts ver y essence.Among the "dynamicJJe le me nts i n t h e M a r i a nsystem a re th e theories of ac cumulat ion, repro-duct ion on a n enlarged scale, mechanizat ion, con-sta nt re-creat ion of th e industrial reserve army,progressively increasing misery of the masses,concentration of industry, fal l ing rate of profi t ,recurring crises, and the inevitable downfall ofcapi tal ism. Because of this termina l s ta te in theevolut ionary sequence, i t has been characterizedas an "eschatological dyn am i~." '~ Schumpeter

    B'Gide and Rist, op. cit., p. 339. (Italics in theoriginal.)" Friedrich Engels, Herrn Eugen Diihring'sUmwiilzung der Wissenschaft (Leipzig: Genossen-schaftsbuchdruckerei, 1878); English translationHe rr Eug en Diihring's Rev olution in Science: Anti-Diihring (New York : Interna tional Publishers,19351, p. 29.= C f . K enne th E. Boulding, "A New Look atInstitutionalism," American Economic Review,Proceedings, Vol. XL VI I (M ay 1957), p. 9. Mises

    had called it a "chiliastic" theory, predicting thearriv al of a millenium. Ludwig von Mises, Die

    st resses in Marxian Dynamics the analysis ofth e sequence of evo lutionary (endogenous)change, thefundamental idea . . .of a theory, not merely ofan indefinite num ber of disjointed in divid ual pat-terns or of th e logic of economic quan titie s ingeneral, but of the ac tua l sequence of those pa t-terns or of the economic process as it goes on,under its own steam, in historic time, producingat every in stan t th at s tate which will of itself de-term ine the next one."'

    And Paul Sweezy affi rms that Marx, chieflythrough his theories of the industrial reservearm y an d of th e progressive mechanizat ion of theprocess of prod uction,

    laid the foundation for a new and amazinglypowerful attack on the problems of economic evo-lution . . . [and] . . .discovered one of the most im-portant of the 'laws of motion' of capitalism whichit was the announced intention of C apital to ex-plore!'Th e G erma n Historical School has occasional ly

    been characterized as dyna mic economics, par t lybecause of i ts objective to discover "the laws ofthe development of the economy of a nation,""par t ly because of i t s at tem pts to for mulate "stagetheories" of economic development: pa rt ly be-cause of i ts "em phasis. . .on th e concept of socialGemeinwirtschaft: Untersuchungen iiber den So-zialismus ( Je na : Fischer, 2nd ed. 1932), pp. 250 ff .

    84 Joseph A. Schumpeter, Capitalism, Socialism,and Democracy (New York: Harper, 1942), p. 43.B 5P au lM . Sweezy, op. cit., pp. 93-94. Sweezy ex-plained tha t the dynamics of the classics had beenbased primarily on the Malthusian law of popula-tion; that, when '(facts" forced economists to"abandon" this law, they gave up exploring eco-nomic evolution and "proceeded to exclude ques-tions of e volu tiona ry processes from t he field ofsystem atic theorizing"; th at M arx, who had re-jected "all truck with Malthusianism," was an ex-ception an d by discovering "the principle of t he[industrial] reserve arm y in place of t he law ofpopulation" established a firm base for his dy-namics.Wilhelm Roscher, System der Volkswirthschaft(Stuttgart : Co tta, 2nd. e d. 18571, p. 25.

    B7 Karl Biicher, Die Entstehung der Volkswirt-schajt (Tiibingen: H. Laupp, 1893).

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    STATICS AND DYNAMICS : KALEIDOSCOPIC WORDS 103ev olu t i~n , "~ut chiefly because of i ts opposi-tion to the "static" theory of classical economists.

    In our survey John Maynard Keynes de-serves a special place because of the intentional"dynamics" but putat ive "statics" which he pro-duced. This divergence between intention andrealization happened twice: first with his Treat i s eand again with his G en er a l T h eo r y . In theTreatise he had declared that greater concernwith "dynamical problems . . .will enormouslyincrease the applicability of theory to practice,"and that "This Treatise. in contrast to mostolder work on monetary theory, is intended tobe a contribution to this new phase of economicscience."" However, the critics of the Treat isewere unanimous in the conclusion that Kevnes'argument, especially his supposedly "dynamicalequations" were "purely statical in type.""

    "Edmund Whittaker, A His tory o f EconomicIdeas (New York: Longmans, 19401, p. 737. In amost informative description of Gustav Schmoller'swork, J. F. Bell writes: "Economic life, he believed,was a part of an active culture pattern which wasboth dynamic in an evolutionary sense and self-revealing. He believed that it was the task of eco-nomic science to determine the means or laws ofthis cultural exfoliation in its economic aspects,thus providing a sequence of cultural changes ofgrowth and decline. Since history shows a repeti-tive sequence of events, a comprehensive record ofpast cultural developments would therefore pro-vide a historical cultural prospective for the fu-ture. Short-run, environmental elements would notdo more than briefly interrupt the cultural trend;they would not alter the final outcome of the dy-namic march of cultural progress or of the cul-tural process. This reasoning provided Schmollerwith a logical method of making historical inquirythe most important means of determining the lawsof economic and other cultural development."John Fred Bell, A His tory o f Economic Th ought(New York : Ronald Press, 1953), pp. 341-342.

    John Maynard Keynes, A Treat i se on M one y(London: Macmillan, 1930), Vol. 11, pp. 406-407.

    "Evan F. M. Durbin, The Problem o f Credi tPolicy (New York: Wiley, 1935), p. 248. With thisverdict Durbin confirmed earlier opinions by F.A. Hayek, "Reflections on the Pure Theory ofMoney of Mr. J. M. Keynes," Economica, August1931 and February 1932, Vol. XI ; James E. Meade,Th e Rate o f Interes t i n a Progressive S ta te (Lon-don: Macmillan, 1933), and several others. For agood discussion see Arthur W. Marget, T h e T h e o r yof Prices, Vol. I (New York: Prentice-Hall, 1938),pp. 101-140.

    Keynes himself, prefacing his next work, pleadedguilty for his earlier "lack of emancipation frompreconceived ideas" and for the fact that "thedynamic development, as distinct from the in-stantaneous picture, was left incomplete andextremely conf~sed."~ut the renewed effort,though unequalled in all economic literature forits revolutionary impact upon contemporarythought, did not succeed in building a "dynamic"system. Indeed, "Mr. Keynes' system is still com-pletely static," as Haberler summed up the re-sults of several years of debate." Many featuresof the system presented in the General Theoryhave been pronounced "essentially static"" innature, but none more so than the interpretationof "the multiplier as an instantaneous relation-ship." Keynes apparently had an aversion toperiod analysis; "forget about periods!" he oncetold a student, according to a very credible re-port.?'

    I n contrast t o Keynes, Dennis H . Robertson ismost widely acclaimed as an architect of eco-nomic dynamics, though he has never claimed tobe one. "Robertsonian Dynamics" has becomethe accepted designation for period analysis basedon the income-expenditure lag. Robertson him-self, it seems, went out of his way to avoid usingthe word "dynamics." He can, however, be foundto speak of "a more explicitly temporal methodof analysis" and of an "analysis of processes ofchange,. . .following a step-by-step method, andstart ing again at each point in the light of alltha t has gone before""-which describes perfectlywhat many mean by "dynamics."

    "John Maynard Keynes, The General Theoryo f Employm ent , In teres t and M one y (London:Macmillan, 1936), pp. vi-vii.

    72 Gottfried von Haberler, Prosperity and De-pression: A Theoretical Analysis of Cyclical Mo ve -m en t s . (Geneva: League of Nations, 3rd enlargeded., 1941), p. 473.

    73 Joseph A. Schumpeter, op . cit., p. 1174." I b i d .'6Dennis H. Robertson, "Some Notes on Mr.

    Keynes' General Theory of Employment," Quar-terly Journal o f Economics, Vol. LI (1936), pp.172, 186. In an earlier article, Robertson speaks ofa "treatment" that stresses "the successive exist-ence of a short number of slices of time duringeach of which the money which appears as incomefor A cannot also appear as outlay by A (andtherefore income for B)." D. H. Robertson, "Sav-ing and Hoarding," Econom ic Journal, Vol. XLIII(1933), p. 413.

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    104 FRITZ MACHLUP111. TYPOLOGY A N D CLASSIFICATION

    After listing the statem ents in which 39 autho rsat tempted to say what they meant by Stat ics andDynamics, and after discussing another group ofeconomists whose work was characterized byother writers as either Statics or Dynamics, oneshould think th at we now have a pr ett y good ideaof these concepts. Unfortunately, we have gainedonly two stron g impressions: one, th at m any ofthe authors in the first list were quite clumsy inexpressing themselves, and som e of t he m un -successful in saying clearly what they had inmind (assuming they had a clear conception) ;and secondly, that there is a great variety ofmeanings attached to the terms in question.

    It might be an interesting undertaking to at-tempt interpretations of some of the obscurestateme nts. Wh en Mill spoke of a "stationarysociety," J. B. Clark of a "stationary state,"Wicksell of a "s tation ary st at e of economic re-lations," L ind ahl of "statio nar y conditions,"Hayek of the "stationary state," Tinbergen ofa "stationa ry positionv-did they mean the samething? Or were, as it seems more likely, five orsix different ideas involved here? When J. B.Clark stressed for his Dynamics "the influenceof five generic changes"-pop ulation, capit al,technology, business organization, and tastes-did he mean merely a one-way direction of"influence" or did he mean a two-way street, ashuttle connection between variables in mutualinterdependence? When Veblen formulated hisincredibly ambitious p rogram of searching for abody of theory th at w ould account for practicallyeverything-where "each new situa tion . . em -bodies as causal facto rs all tha t ha s been effectedby what went before'-did he mean wh at hesaid or was he merely exuberantly eloqu ent? DidJ. M. Clark really want to put into Dynamics"everything that statics leaves out"?Th is is only a small sample of the m any ques-tions raised by some of the statements collectedin ou r list. W e shall not tak e the time which suchan interpretation would require. A different taskseems more fruitful: an attempt to develop atypolog y an d a classification of the distinctionsmade between Statics and D ynamics. If success-ful, a modicum of o rder may be brough t into th esemantic chaos. An earlier attempt, made overthirty years ago, was not successful. RudolphStreller, in a monograph on the subject, pro-

    posed to sort the distinctions into the followingfive classes :7BI. The two concepts are equivalent to the two

    fields of "Theoretical Economics" and "Prac-tical [Applied] Economics"-the custom arydivision of economics in German universities.11. The two concepts signify two branches oftheoretical economics.111. All economics is Dynamics; Statics does notexist.IV. The two concepts refer to different subjectmatters, namely the study of "static countries"and the study of "d ynam ic countries."V. Statics is the study of equilibrium conditions,Dynamics the stud y of th e forces leadingtoward equilibrium positions.I t is perfectly correct th at all of these meaningsof Statics and D ynamics ha ve been expressed inthe li terature and that authors can be cited foreach of th e five classes. B u t a good many auth orscould not be classed as representatives of any ofthese views. Moreo ver, some of the classes ar e sobroad th at very different types of distinctions be-tween Statics and Dynamics would have to beleft undifferentiated. Fo r a bett er gras p, not onlythe obvious and conspicuous differences but alsothe finer nuances in the conceptions developed by

    different authors should be taken into account.Hence, we shall attempt to build a typology thataccommodates most or all of the variants foundin the li terature.I t seemed expedient a t first blush to separatethe views according to which Statics and Dy-namics meant two different me tho ds of analysisfrom the views according to which they referredto two different subject matters. This has provedunworkable. One may say, for example, that astationary economy and a growing economy, orthe phenomenon of stationariness and the phe-nomenon of growth, are different subject m atter s.Yet, in order to understand why an economy isstationary, or fails to grow, one will need atheory of grow th; and likewise, ma ny aspects ofgrow th will be bett er com prehen ded if recoursecan be had to the theory of the stationary state.It just is not so that a certain model is usefulonly to the interpretation of situations which itdepicts or schematizes. As a rule we need "con-trasting models" in order to study the signifi-cance of wh atev er facto rs seem to be relevant ina given situation. Fo r this reason, subject mat ter78R~do1phtreller, op. cit., pp. 38, 58, 77, 82, 89.

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    105TATICS AND DYNAMICS : KALEIDOSCOPIC WORDS

    cannot be ma de a ma jor independent c r i te r ion inth e classi ficat ion. Wh ere au tho rs ins ist on des-ignat ing subject mat ter as the al l - impor tant di f -ference between Stat ics and Dynamics , we shal lhave to regard this as an "extreme posi t ion."I n o ther ins tances we shal l have t o lum p "sub-ject m at te rJJ n d "basic approac h" into one class.

    The typology offered here wi l l be ar rangedin the following six classes, the first containingabsolute contradictor ies , the other f ive descr ib-ing spe ctra o r differences of de gree:

    A. Extreme posi t ionsB. Regarding bas ic approach and subjec tm a t t e rC. Regarding assumptions of invar iance, in-dependence, dependence and interdependence ofpar t icular var iablesD. Regarding the use of the equi l ibr ium con-

    ceptE. Regarding individual behavior and social

    f ac t sF. Regarding formal proper t ies of var iables .

    A . Extreme Positions Statics I Dynamics

    1. The theory of my opponent2. Desc ription of st at e of re st; hence, worthlessas explanation of change3 . Method of holding other things constant ;hence, th e only possible tec hniqu e of reason-ing ("There is no meaningful dynamics")4. Naive speculat ion about imaginary wor ld,based on unreal is t ic assumptions5. Method of explaining certain things by taking

    other th ings as da ta6. The ory applicable only to ' ( s tat ic " (s tagnant)economies

    M y ow n t heo r yExp lanatio n of cha nge ; hence, the only usefultheory ("There is no meaningful statics")Me thod of looking at th e complex to ta li ty of phe-nomena, wi th everyth ing changing a t once;hence, worthless for explaining anythingRea listic stu dy of th e real world, based on ob-served factsMethod of t ak ing noth ing as da tum, a t t empt ing t oexplain e verythingThe ory applicable only to ( 'dynam ic" (developing)economies

    B. Regarding Basic Approach and Subject MatterStatics 1

    1. Pure theory: model bui lding, us ing abs t rac.t ions , const ruct ions , i solat ion, ideal izat ion2. Theoret ical const ruct ion abs t ract ing f romhistorical t ime3 . Theory of exogenous changes: adjus tm ents toassumed (given) events or changes4. Theory of th e s t a t ionary s t a t e5. Theory of relative pr ices and ou tp ut : analyz-ing decision making, adjustments of costs,prices, out pu ts, allocation of resources, anddistribution of income6. Th eory of value and dis t r ibut ion: t he same asSta t i cs B 57 . Th eo ry of variation yielding conditional pre-dic tion s of effects of partic ula r ch ange s

    ceteris paribu s8. Taxonomic an d tau tological economics

    D ynamicsApplied economics: dealing with empirical "re-al i ty" in al l i t s complexi tyHistorica l description of o bserved sequences inhistorical t imeTheory of endogenous changes: explanation ofchanges evolving witho ut "disturbances" fromouts ideTheory of g rowth and f luctuat ionsTheory of accumulat ion and progress : analyzingsaving, inves tment , and technical change, andeffects on product ivi ty, employ ment , and income

    The ory of evo lution of insti t utio ns, including stag etheories of economic systemsTheory of development yielding unconditionalpredictions of tendencies in a distant futureEmpirical economics

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    106 FRITZ MACHLUPB . Regarding Bas ic Approach and Subject Mat ter (cont'd)

    Sta t ics I D y n a m i c s9. Abstract economic theory isolating idealized Holistic social theory dealing with the "whole"

    pat terns of action under given social ins ti- social process and the change of insti tutionstutions

    10. Analytic method (in Marxian sense) Dialectic method (in Marxian sense)

    C. Regarding Assumptions o f Invar iance , Independence, Dependence and Interdependence of Particu lar V ariabl es

    S ta t ics1. Assuming population, capital stock, technol-

    ogy, business organization, and tastes-andsocial institutions-to change only one a t atime, and analyzing the effects (adjustments)

    2. Assuming the same as St atics C-1 or as Dynam-ics C-1

    3. Assuming capital s tock , technology, and busi-ness organization t o be unchanged, allowingpopulation and tastes (and some institu-tions?) to change, and analyzing the effects(adjustments)

    4. Assuming the fundamental social institutionsto be unchanged, allowing everything else t ochange, and analyzing the effects (adjust-ments)

    1 D y n a m i c sAssuming population, capital stock, technology,

    business organization, and tastes to changesimultaneou~ly-as independent variables or asfunctions of time-and analyzing the processand the effects

    Assuming population, capital stock, technology,business organization and tastes to change in th ecourse of an y sort of process-as dependent vari-ables-and analyzing the causes and interactionsas well as the process and the effects

    Assuming capital stock, technology and businessorgan izat ion to change in consequence of entre-preneurial innovation (and of bank credit crea-tion) and analyzing the causes and interactionsas well as the process and the effects

    Assuming all conditions including fundamentalsocial insti tutions to change in the course of anysort of process, and analyzing the causes and in -teractions as well as t he process and the effects

    D . Regarding the Use of the Eq ui l ibr ium Concept S ta t ics I D y n a m i c s

    1. Analyzing the formal properties of equilib-rium, disregarding transitions or the processof equilibration

    2. Analyzing the conditions of equilibr ium, bu tnot th e forces a t work t o att ain, maintain,or restore equilibrium

    3. Assuming all da ta , after the initial disturbingchange, to remain unchanged during theprocess of equilibration

    4. Assuming all responses to lead toward posi-tions of equilibrium

    5. Assuming equal reaction speeds of dependentvariables in the process of equilibration

    Analyzing the forces effecting the changes in eco-nomic quantities that are required for equilib-rium to be approached, attained, maintained,restored

    Analyzing the paths toward equilibrium and theeffects on th e outcome of different sequences inthe equilibrating process

    Assuming data to change further before equilibra-tion is completed; hence, hypothesizing a movingequilibrium that can never be attained ("i\.Iov-ing equilibrium")

    Assuming some responses to engender cumulativeprocesses leading to progressive deviations fromequilibrium ("Cumulative process")

    Assuming unequal reaction speeds of dependentvariables, resulting in sequences th at may or maynot tend to eventual equilibrium ("Sequenceanalysis ")

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    107TATICS AND DYNAMICS : KALEIDOSCOPIC WORDSD . Regarding the Us e of the Equi l ibr ium Concept (cont'd)

    S ta t i c s6. Comparing consecutive or alte rnat ive equilib-

    ria ("Comparative statics")7 . Assuming indifference of outcome t o the order

    of steps in the process of equilibration ifshown as a sequence8. Analyzing the simultaneous consistency of in-terrelated variables, disregarding the pos-sible realizations of t he expec tations of de-cision makers in the future

    9. Assuming absence of anticipat ions of changesin prices or other conditions, and absence ofallowances for subjective uncertainty

    D y n a m i c sTraci ng consecutive disequilibria as a sequence in

    time ("Sequence analysis")Assuming dependence of outcome on th e order of

    steps in a sequence which may or may not ap-proach equilibrium ("Period analysis")

    Analyzing the compatib ility of plans, decisions,and expectations with regard to their possiblerealizations over time ("Intertemporal equilib-

    rium")Analyzing the effects of uncertain expectations and

    anticipations of changes in prices or other condi-tions

    E . Regarding Indiv idual Behavior and Socia l FactsS ta t ics I

    1. Explanation of certain changes as adjustmen tst o exogenous causes by individuals and firmsresponding to altered opportunities andgiven preferences

    2. Focus on the ideal type of economic man, con-structed with unchanging postulates aboutindividual motivation and action

    3 . Deductions from assumption of universal pa t-tern of individual action4. Qualitative reasoning star ting from th e indi-vidual

    D y n a m i c sExplanation of certain changes as emanations from

    within the economic system (endogenouschanges) in the form of innovating actions ofentrepreneurs (financed by new money)

    Focus on the "whole man" and on the tota lit y ofchanging social fact s, especially "social wholes"

    Empirical observation of social facts and aggre-gative quantitative informationQuantitative research starting from statisticaldat a, especially time series over long periods

    F. Regarding Formal Propertie s of V ariab les S ta t i c s I D y n a m i c s

    1. Using only undated variables2 . Connecting quantities referring to the same

    point or period of time3 . Assuming no time lags4. Omitting time as a n independent variable5. Emphasizing as variables prices and quantit ies

    It must be acimitted tha t, in an attempt to keepth e number of classes down, their characteristicshave been formulated somewhat loosely andbroadly but, nevertheless, some of the types ofdistinction will be fitted only with considerablestr ain into one of th e boxes so provided. It mustfur the r be admit ted t ha t some of t he differencesbetween separat e types of distinction ar e sosmall, or merely verbal, that two or three ofth e types could just as well have been telescoped

    Using only dated variablesConnecting quantitie s referring to different points

    or periods of timeAssuming time lags, using lagged variablesMaking some or all quan titie s functions of timeEmphasizing as variables differences, rates of

    change, derivatives w ith respect t o time

    into one; on th e other hand, f urthe r subdivisionscould have been made if minor nuances of de-tails were considered sufficiently important. Allthis is natural in th e description of spectra. Itis a matt er of t aste how fa r one wants t o go individing a spectrum of ideas.

    Duplication, or even multiple entry, has beenunavoidable because certain meanings of dy-namics combine several criteria and thus rep-resent a t th e same time several different types.

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    108 FRITZ MACHLUPTake, for example, Schumpeter's theory of eco-nomic development, which he once regarded asthe pro tot yp e of "dynamics" (before he gener-ously accepted Frisch's definition). This Schum-peterian Dynamics would fit types B-3 (endog-enous change), B-4 (growth and cycle theories),B-5 (accumulation theo ry ), C-3 (giving to tech-nology, business organization, and capital stockthe status of dependent variables), D-3 (movingequilibrium), D-4 (cumulative processes), D-5(sequence analys is), E-1 (innovating activity of((dynamicf1 ntrepre neurs), as well as F-1, F-2,and F-3 (da ted , inter-period, lagged variables) .M an y of the theories t'ha t ar e widely recognizedas dynamic will qualify as more th an one type ofdynamic.Some of th e separ ate and a ppa ren tly differentcriteria are in fact closely linked with oneano ther , if th ey a re not logical correlative s. Athe ory of grow th will be closely associated w itha theory of capital accum ulation; this, in turn ,will be a theor y of endogenous change, and t heresulting processes and sequences will be analyz edunder any of the assumptions concerning re-actions, responses, etc. The "endogenous" changesthemselves, on the other hand, can readily be in-te rpr ete d in term s of the "equilibrations" on thepart of consumers-savers and entrepreneurs-in-vestors responding to alternative opportunitiesand given preferences. Thus, a good many "cate-gorical" distinctions are merely different ways oflooking at t he sa me things.Several of the distinctions proposed in theliterature and included in our list suggest con-trasts and contradictions which disappear oncloser inspection. llIany writers, for example,have believed that "ecluilibrium economics" and"evolutionary economics" were diametrical op-posites; in fact, however, the equilibrium con-cept can often be used in explaining an evolu-tionary sequence and, indeed, it may beimpossible to explain certain processes that arepart of an evolutionary sequence without theuse of t he equ ilibrium conce pt. Th us, a n evolu-tionary sequence may (a) employ "temporary"equilibria as ex planato ry devices, and (b ) assumethe eventual atta inm ent of (or close approa chto) an "ultimate" equilibrium. Cases in point,to name only a few, are Classical Dynamics,Marxian Dynamics, and the converging-cobwebtheorem. To illustrate by Marxian Dynamics:the very essence of t he "dialectic" scheme is asequence of "syntheses," which are equilibria in

    the short run as well as disequilibria from alonger-term point of view; and the eventualemergence of socialism is the u ltim ate equilib-rium, the terminal synthesis in the chain ofcontradictions. Undoubtedly, if "dynamics" weredefined by th e non-use of th e equilibrium conceptit would become a rather empty category; atleast, ma ny ty pes of economic analysis, nowsafely regarded as "dynamic," would no longerso qualify.

    IV. COMPLAINTS ABOUT CONFUSIONOver the years, there has been a long processionof economists lamenting the semantic confusionabout the pair of term s under review. Some ofthe complainants tried to repair the situation by

    prescribing what economists ought to mean whenthe y speak of S tatics and D ynam ics; each pre-scription added one more to the many conflict-ing and confusing distinctions already in stock.Other complainants confined themselves to sur-veying and analyzing the conceptual and ter-minological muddle.Th e number of articles an d books devoted ex-clusively to discussions of Stat ics an d Dyna micsis remarkable. Some of them we have citedabove-Pantaleoni, Kon dratieff, Streller, J. 31.Clark, F. H. Knight, Kuznets, Frisch, Harrod,Hart, Samuelson, Baumol. But this is by nomeans a n exhaustive list. Mo st probably it omitsmore than it includes. To name some omissionsof which I am fully aware, there is an essay bySimon P a t t e ~ ~ , ~ ~econd by Streller,"bookarti cl es by B ar ~ ne ,~ 'monn; Honegger: Roos,82

    77Simon N. Patten, Th e The o ry of Dy n ami cEconomics , Publications of the University of P enn-sylvania, Political Economy and Law Series, Vol.111, No. 2. (Philadelphia: Univ. of Pennsylvania,1892).78Ru dolph Streller, Die Dynamik der theore-t i schen ivat ionalokonomie (Tiibingen: Mohr-Sie-beck, 1928)."Enrico Barone, "Sul trattamento di quistionidinamiche," Giornale degli Economist i , Serie 11,Vol. IX (1894), pp. 407435."Alfred Amonn, "Die Probleme der wirtschaft-lichen Dynamik," Archiv fur Sozialwissenschaftenund So zialpol i t i k, 38. Bd. (1914)."H ans Honegger, "Zur Krisis der statischen Na-tionalokonomie," Schmollers Jahrbuch fur Gesetz-ge bung , Ve rw al t ung und Vol k sw i r t sc ha f t i mDeutschen Reiche , 48. Jahrg. (1924), pp. 473490.=Charles F. Roos, "A Dynamical Theory ofEconomics," Journal of Pol it i cal Eco no my , Vol.XX XV (1927), pp. 632-656.

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    109TATICS AND DYNAMICS : KALEIDOSCOPIC WORDSMoretti," Demaria," Goetz-Girey? Samuelson,s" traditionalism, and speak of dynamics but meanan d a freque ntly cited book by Roos." Bu t in ad- p r o g r e s s i ~ i s m . ~ ' ~ ~dition there are many articles on the subject th at Schum peter likewise decries the incessant con-have appeared over the last fifty years in Italian, fusions between static and stationary, and be-German , French, D utch, Scandinavian journals, tween dynamic and evol~t ionary.8~ost writers,which I have not consulted, plus a number of he says, confuse "static theory" with th e "theorybooks in these languages. Finally there are now of the sta tion ary state,"innumerable p ublications on the "dynamics" ofparticular subject matters , such as the "dynamics witness the growing populari ty of the phraseof competition,') "dynam ic distrib utio n theory ," 'static s tate, ' which is the hallmark of this confu-sion. Nevertheless, though more clearly visualized"dynamic programming theory." Does this mean than rigorously defined, the system of economictha t agreement has been reached ab out the m ean- statics did emerge during the period and in facting of th e terms in que stion? constitutes its great achievement. But the natureAgreement with a particular set of formal defi- of economic dynamics was not even clearly visu-nitions of Statics and Dy namics would not be alized-some identified it with a historical theoryenough to remove the confusion, as Kuznets has of change or else with a theory that allows forrightly observed, for "there is confusion as to the trends; others with a theory of general interde-actual scope and relat ion of these two b ~ d i e s . " ~pendence as against partial analysis of sectionalBut we are far from an agreement on definitions phenomena; still others with a theory of a modernas against the tradition-bound economy of theeither. Kn igh t alludes to "the lack of effort a t Middle Ages; and a few simply with the theory ofclear definition" and "the paucity of discussion small var iations of economic quantities . . .Andof the ir [the terms'] meaning."" Rose nstein- there R-ere hose in whose hands the whole discus-Rodan calls them "terms of such ambiguity that sion degenerated into a quarrel about words. Allthe ir use is often positively Som- this goes to show the importance, even for purelybart calls the distinction "zweifellos das diirf- practical purposes, of logically rigorous defini-tigste Schema" for dividing economic analysis; tions. . . .83he remonstrates against the continuous "con-fusions of the working constructs of static and The sternest strictures came from Ewalddynamic states with the empirical concepts of Schams, who scoffed at th e use of "this pr ett ychangelessness and change"; an d he denounces pair of names" with unknown or unclear mean-"the autho rs who speak of statics bu t mean ings. The "peculiarity of a perfect agreementabou t the terminology" combined with a "perfect

    S3 Vincenzo Morett i, "Sopra alcuni problemi di disagreement" about its meaning is attributed t odinamica econornica," Giornale degli Economist i , the fact that the terms were rashly taken overSerie IV, Vol. LX IX (19291, pp. 449-488. from a different field. And "now one struggles84 Giovanni Demaria, "Saggio sugli studi di di- manfully to find for the two nam es some sensiblenamica econornica," Rivi sta Internationale di Sci-enze Sociali, Anno XXXVIII, Serie 111, Vol. I contents that would tolerably well fit the sub-

    (1930) , pp. 107-130,222-257. ject"; and und er the strange influence of the"Robert Goetz-Girey, "Statique et dynamique pair of names one feels under a compulsion to6conomiclues dans la science allemande contem- divide the subject into two parts, no matterporaine," Re v ue d 'Ec onomi e Pol i t i que , Vol. L whe ther it m akes sense or no t. Schams believes it(19361, pp. 1308-1330. makes no sense."

    sePaul A . Samuelson, "Dynamics, Statics, and This conclusion is too severe. The trouble, asthe Stationary State," Re v i e w o f Ec onomi c S t a ti s - I see it, is no t th at the division of econom ictics, Vol. XXV (1943) , pp . 58-61. analysis into Statics and Dynamics makes nos'Charles F . Roos, Dy nami c Ec onomi c s : The o- sense, but that i t makes too many senses. Pe r-~e t i c a l nd S t at is ti ca l S t ud ie s o f De m and , Produc-t ion and Prices (Bloomington: Principia Press, O1 Werner Sombart, Die dre i Nat ionalokonornien1934). (Miinchen: Duncker 8: Humblot, 1930), p. 187.

    83 Simon Kuznets, loc. cit., p. 32 . Joseph A. Schumpeter, Hi s t ory o f Ec onomi cZ"Frank H. Knight, "Statik und Dynamik," loc. Analysis, p. 964.cit., p. 1 ;Et h i c s o f Comp e t i t ion , p. 161. O3 Ibid., pp. 9 6 6 6 7 .

    Paul N. Rosenstein-Rodan, "The Role of Time Ewald Schams, "Komparative Statik," Ze i t -4in Economic Theory," Economica, New Series, schri f t fur Wationalokonomie, Vol. I1 (1930) , pp.Vol. I (19341, p. 77. 33 ,61 .

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    110 FRITZ

    haps this is even worse; non-sense can beshrugged off with a laugh, but multiple sensem ay be a real nuisance. I t involves, in thisinstance, less the danger of snags and snares ineconomic theorizing t ha n th e waste of time intrying to understand one another.Th e danger of a failure to und erstand one'spartner in discussion is serious. Remember thatfor Schumpeter "Dynamics" once was the theo ryof development, but later he warned againstconfusing growth and development theories with"Dynamics." And just when he and others haddeclared that by Dynamics they would meanperiod analysis and lagged variables, Harrod an-nounced tha t Dynam ics was growth theory a fterall. Pric e theory , based o n assump tions of givencost and demand, was definitely Statics for Har-rod and many others; yet, when analyzed withdifferent reaction speeds and sequences, withtime lags and alternative paths towards equi-librium, price theory became Dyn amics for man yeconom ists. T h e notion of equilibrium, a s wehave seen, is widely held to be a characteristicof Statics, and Dynamics to be completely di-vorced from equilibrium theory; but to many,perhaps most, writers Dynamics is equilibriumanalysis of a particular kind, namely, with em-phasis upon th e time aspe cts of th e process ofequilibration.Although all this recalls to our atte ntio n only asmall part of the wide choice of meanings, itis enough to establish the point that the wordsStatics and Dynamics do not convey a definitemeaning unless the speaker or writer has givenprior notice of his semantic intentions. Thereare some who do so in a rather authoritarianfashion by declaring, not what they propose tomean, but what Statics "is," and what Dynamics"is." Th is, considering the existence of d ozensof conflicting views sta ted by econ omists ingood standing, be tray s a lack of hu mility on thepa rt of th e defining au tho r, who evidently thinksof himself as the authori ty on the subject.One may discover a convergence in recent

    MACHLUP

    years, especially among writers using mathe-matical fo rms of expression, towa rd th e "laggedvariables" view of Dynamics. This convergencemay be enough to permit the reader's pre-sumption that the inclusion of lagged variablesin a model is what these writers mean whenthey refer to Dyna mics. Bu t, of course, therear e hundre ds of writers whose models have nocurves and no figures, nor any alphabetic sym-bols; and there are even writers who do notknow that their models are models, but whoseprose teems and buzzes with "Dynamics" an d"dynamic."

    The need for a declaration of semantic inten-tions reduces the usefulness of the words inquestion in oral discussions among people withunknown commitment to word meanings. Theycan be useful in an economic monologue, in acourse of lectures, or a treatise, for there it ispossible to announce in the beginning what willbe understood by the terms. For general use indiscussion, howev er, words the m eanin g of w hichcannot be understood without explanation evenin the context in which they are used cannot berecommended.Thus, whenever another, more readily under-stood word or phrase is available in lieu ofeither Statics or Dynamics, it should be pre-ferred. For example, when Dynamics is to meanGrowth Theory, we are certainly better off say-ing Growth Theory in the first place. WhenStatics is to mean Theory of the StationarySta te, we can use this (adm ittedly longer) phraseand avoid the ambiguous "Statics." When D y-namics is to refer to the history o r to the theoryof th e evo lution of e conom ic inst itutio ns, we

    should use these longer but self-explanatoryphrases. When it refers to Time-Series Analysis,to Trend Analysis, to Sequence Analysis, toPeriod Analysis,-all these ar e mo re or less de-scriptive terms, far superior to "Dynamics."Probably more often than not we should beable to do without the terms Statics and Dy-namics.

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    Statics and Dynamics: Kaleidoscopic Words

    Fritz Machlup

    Southern Economic Journal, Vol. 26, No. 2. (Oct., 1959), pp. 91-110.

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    [Footnotes]

    2 Forced or Induced Saving: An Exploration into Its Synonyms and Homonyms

    Fritz Machlup

    The Review of Economic Statistics, Vol. 25, No. 1. (Feb., 1943), pp. 26-39.

    Stable URL:http://links.jstor.org/sici?sici=0034-6535%28194302%2925%3A1%3C26%3AFOISAE%3E2.0.CO%3B2-6

    3 Three Concepts of the Balance of Payments and the So-called Dollar Shortage

    F. Machlup

    The Economic Journal, Vol. 60, No. 237. (Mar., 1950), pp. 46-68.

    Stable URL:

    http://links.jstor.org/sici?sici=0013-0133%28195003%2960%3A237%3C46%3ATCOTBO%3E2.0.CO%3B2-X

    4 Equilibrium and Disequilibrium: Misplaced Concreteness and Disguised Politics

    F. Machlup

    The Economic Journal, Vol. 68, No. 269. (Mar., 1958), pp. 1-24.

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    25 The Static and the Dynamic View of Economics

    N. D. Kondratieff

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    70 Reflections on the Pure Theory of Money of Mr. J. M. Keynes

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