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So far is modern theory from the point of view of Adam Smith and the Physiocrats that the epithet of productive labour is denied even to the production of material objects, if the material objects are not valuable. Indeed, it has gone further than this. ), p. 3lti. Theoriu of Production and l>i8tribution, pp. 18-31; Review oflCCMUJmic Theory, pp. 49-51. a It is even arguable that the reaction has gone too far. n classification had a significance for capital theory which in recent times has not alwaya been clearly recognised, See Taussig, Waou Gnd Capital, pp.

Professor Schumpeter, in his Wuen und Hauptinhalt der theoreti&chen NationalDkonomie, has attempted with neve,r to be forgotten subtlety to vindicate the latter definition by demonstrating that it is possible to conceive all the fundamental aspects of behaviour germane to Economic Science as having the form of exchange .. That this is correct and that it embodies a truth fundamental to the proper onderstanding of equilibrium theory may be readily admitted. But it is on,. thing to generalise the notion of exchange as a construction.

But let us suppose Crusoe is rescued and, coming home, goes on the stage and talks to the parrot fol' a living. Surely in such conditions these conversations have an economic aspect. Whether he spends his earnings on potatoes or philosophy, Crusoe's getting and spending are capable of being exhibited in terms of the fundamental economic categories. Professor Cannan does not pause to ask whether his distinction is very helpful in the analysis of an exchange economy-though, after all, it is here that economic generalisations have the greatest practical utility.

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