Robbins' "Remarks upon certain aspects of the theory of costs" (1934) (amv)

The last couple of days I have read quite a bit on cost theory. The most remarkable paper I have found is indeed quite old ... it is Lionel Robbins' "Remarks upon certain aspects of the theory of costs," first published 1934 in the Economic Journal. First of all, Robbins is the best British economist up to now. This is not easy, since the Kingdom is the power house of economic theory since 1776 (and actually even before). That is, from Adam Smith to Mark Blaug, I think Robbins ranks highest ... but I am a marginalist and thus others will have a different ranking. However, to Robbins we owe the final definition of economics, as the study of rational conduct driven by scarcity. And, of course, Robbins was influenced by the Austrians, especially by Wieser and his Law of Cost, which was also propagated by the British-"Austrian" Philip Wicksteed. Robbins 1934 paper on cost is important, because ...

1. ... the principle of opportunity cost is vividly stated and contrasted to its more modern version which is a product of Frank Knight's and Gottfried Haberler's attempt to simplify value theory by reducing the subjectivist - and thus unmeasurable - assumptions to a minimum. Not the marginal value product, but physical product became central and the opportunity cost-principle was reduced to a definition of equilibrium states. Robbins, in his 1934 paper, tries to rescue the value (i.e., subjectivist) components of price theory.
2. He shows how neoclassical theory can be used to explain dynamic phenomena without leaving the strictly deductivist approach which is common to Mises and Robbins.
3. Finally, Robbins shows how partial equilibrium analysis is deficient without a strictly general equilibrium framework which, for instance, forbids to draw flat supply curves under the ceteris paribus clause. He also has a good point in integrating external economies and productivity growth into the negative feedback rule provided by the price system.

Go and get it!