LSE Essay - On Cost

Remarks upon certain aspects of the theory of costs
A lecture delivered before the Nationalökonomischen Gesellschaft, Vienna, 7 April 1933. First published in the Economic Journal (March 1934).

The theory of costs is not one of those parts of economic analysis which can properly be said to have been unduly neglected. It has always occupied a more or less central position, and in recent years it has been the subject of a quite formidable body of new work. There is, indeed, no part of his subject about which the contemporary economist may legitimately feel more gratified, either as regards the quality of the work which has been done or as regards the temper in which it has been undertaken. Yet, in spite of this, the present state of affairs in this field is not altogether satisfactory. The various problems involved have been tackled by different sets of people; and the conclusions which have been reached in one part of the field have sometimes a rather disquieting appearance of incompatibility with conclusions which have been reached elsewhere. No doubt some of this apparent incompatibility is real. It is not to be expected that here—any more than elsewhere—economists should have reached finality. But some of it is probably illusory; and if in discussing these matters we were to state more decisively the problems which we are attempting to solve, and the assumptions on which we proceed, it seems likely that not only should we be able to clear up our outstanding real points of difference more quickly, but that, in the course of doing so, we should also discover that many of them depended essentially upon subtle differences of object and assumption, hitherto insufficiently stated. At any rate, it is in the belief that this would be so that these very tentative remarks are put forward.