John Maurice Clark

From New World Encyclopedia


John Maurice Clark (November 30, 1884 – June 27, 1963) was an American economist, the son of John Bates Clark. He was one of the most famous American economists of the first half of the twentieth century. After beginning his career as a follower of his father, co-authoring the revised version of The Control of Trusts, he later became associated with the Institutional school of economics. Clark developed several important economic concepts, including the "acceleration principle" and the concept of "workable competition," based on his belief that perfect competition is unattainable. This formed the basis of antitrust laws, established to prevent monopolistic behavior, although they have been met with questionable success.

Clark recognized that there were aspects of human nature that influenced how people make economic decisions, and such factors needed to be addressed by economists in developing useful theories. Ultimately, however, study of these factors by social scientists is only one step—for harmonious economic development, people need to add more to the economy than they seek to take from it. Clark's acceptance that perfect competition is unattainable reflected the time in which he lived.

Life

John Maurice Clark was born on November 30, 1884, in Northampton, Massachusetts, the son of famous neoclassical economist John Bates Clark. He graduated from Amherst College in 1905 and received his Ph.D. from Columbia University in 1910. His father, who was a professor at Columbia at the time, significantly influenced his son’s life and his early views. He served as mentor on his son’s doctoral dissertation, which was entitled Standards of Reasonableness in Local Freight Discriminations (1910).

After graduating, John Maurice Clark worked as an instructor at Colorado College from 1908 to 1910, and at Amherst College from 1910 to 1915.

In 1915, Clark received appointment as associate professor of political economy at the University of Chicago, and in 1922, he became a full-time professor. His colleagues at the university included famous economists Jacob Viner and Frank Hyneman Knight. In 1826, Clark left Chicago and accepted a position at Columbia University, where he stayed for the rest of his career.

In 1923, Clark published his highly praised Studies in the Economics of Overhead Costs, which he dedicated to his father. From 1934 to 1935, he worked as the consultant for the National Recovery Administration, where he tried to mend the effects of the Great Depression. In 1935, he received an honorary doctorate from Amherst College, and in the same year served as the thirty-seventh president of the American Economics Association (AEA).

From 1939 to 1940, he was a consultant at the National Resources Planning Board, and from 1940 to 1943, a consultant at the Office of Price Administration. In 1951, he was appointed to the John Bates Clark chair at Columbia University, a position established in his father's honor. In 1952, he was awarded the Francis A. Walker Medal by the AEA for his service in economics, the highest honor in the field at that time (prior to the establishment of the Nobel Memorial Prize in Economics).

Clark retired from teaching in 1957, and died in Westport, Connecticut, on June 27, 1963.

Work

In his early career, Clark was greatly influenced by the economic theories of his father. He coauthored a revised edition of The Control of Trusts (1914) with him. He also dedicated his famous Studies in the Economics of Overhead Costs (1923) to his father, and in his last major work Competition as a Dynamic Process (1961), he connected his interest in dynamic economics with his father’s belief that static equilibrium analysis should be only the first step in an analysis of the dynamic economical processes.

Throughout most of his life, Clark focused on the clarification of theories already postulated by other economists. He was able to analyze and explain the complex economical models that others developed, building upon them and forming his own views and theorems. He first analyzed the work of the marginalists, and later the work of Edward Chamberlin and Joan Robinson. Clark tried to create real life, dynamic models of economic activity based on their static models.

Clark spent lot of time in analyzing the cost of production. He held that cost was not a simple category, and that the allocation of total cost into the categories of fixed and variable was a complex question, especially on the level of large enterprises. On a small company level it is rather simple to separate fixed and variable costs, however on the larger level it becomes mostly a legal and institutional problem. In his Studies in the Economics of Overhead Costs (1923), Clark applied his knowledge of costs to a whole variety of theories. Clark gradually shifted toward the Institutional school of economics.

In 1940, he published his famous Towards a Concept of Workable Competition in which he developed the concept of workable competition, regarding perfect competition as unattainable both theoretically and practically. Workable competition is an economic model of a market in which competition is less than perfect, but sufficient to give buyers genuine alternatives. Clark concluded that monopolistic arrangements and trust formation, as well as price discrimination and cutthroat competition, were an essential part of modern capitalism.

He also regarded business cycles, including times of depression and prosperity, which are often caused by monopolistic behavior, as normal economic phenomena. In Studies in the Economics of Overhead Costs, Clark developed his theory of the "acceleration effect," which stated that investment demand can fluctuate widely when consumer demand fluctuates. In this, he anticipated key Keynesian theories of investment and business cycles.

In his later career, Clark completely diverged from the neoclassical economics of his father. He believed that neoclassicism was not sufficient to explain human economic behavior, and thus unable to be the leading paradigm of modern economics. He was keenly interested in psychology and social sciences, and thought that they would create the basis for new economic theories that would expound more on human behavior in economics.

With his study on the role of institutions and the turn away from neoclassical theory, Clark became one of the leading Institutionalists in the United States. He published his The Costs of the World War to the American People (1931) and Economics of Planning Public Works (1935), in which he developed his multiplier and accelerator concepts, and through which he supported Keynesian "income-flow analysis." He later criticized Keynes’ models of economical stabilization and suggested numerous changes.

Legacy

Clark lived and worked in a period of American economics that is rather poorly understood and little appreciated by most modern economists. He witnessed World War I and the Great Depression, and saw the inability of the economy to recover on its own. His theory of the acceleration principle was a sort of overture into Keynesian theories of investment and business cycles.

Clark developed the theory of workable competition, which described the functioning of an economy in neither pure competition nor pure monopoly. His work in this area formed the basis of antitrust laws restricting monopolistic behavior.

Publications

  • Clark, John M. [1910] 1968. Standards and Reasonableness in Local Freight Discriminations. AMS Press. ISBN 0404510973
  • Clark, John M. [1923] 1981. Studies in the Economics of Overhead Costs. University of Chicago Press. ISBN 0226108511
  • Clark, John M. [1926] 1939. Social Control of Business. Augustus M Kelley Pubs. ISBN 0678005265
  • Clark, John M. 1931. The Costs of the World War to the American People. Augustus M. Kelley Pubs. ISBN 0678006628
  • Clark, John M. 1934. Strategic Factors in Business Cycles. Augustus M. Kelley Pubs. ISBN 0678000166
  • Clark, John M. 1935. The Economics of Planning Public Works. U.S. Government Printing Office.
  • Clark, John M. 1936. Preface to Social Economics: Essays on Economic Theory and Social Problems. Farrar and Rinehart.
  • Clark, John M. 1944. Demobilization of Wartime Economic Controls. McGraw-Hill Book Company.
  • Clark, John M. 1948. An Alternative to Serfdom. A.A. Knopf.
  • Clark, John M. 1955. The Ethical Basis of Economic Freedom. C.K. Kazanjian Economics Foundation.
  • Clark, John M. [1957] 1978. Economic Institutions and Human Welfare. Greenwood Press Reprint. ISBN 0313201846
  • Clark, John M. [1961] 1980. Competition as a Dynamic Process. Greenwood Press Reprint. ISBN 0313223009

References

External links

All links retrieved May 21, 2018.

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