Fritz Machlup’s text is a short methodological introduction on economic language, organized as a historical defense of semantic clarification in economics. Its thesis is simple but carefully delimited: economists cannot avoid semantic work if they want intelligible disagreement, but the clarification of words is only a precondition of inquiry, not inquiry itself.
Some people regard exercises in semantics as a waste of time. I consider them useful, if not indispensable, if we care to understand one another.
Machlup’s first conceptual move is to make semantics respectable by placing it in a lineage. He turns to Malthus’s Definitions in Political Economy as an early “terminological cleaning-up job,” emphasizing Malthus’s practical rules: begin from ordinary educated usage when possible, defer to major scientific authorities when ordinary usage is unavailable, alter terms only for strong reasons, and preserve consistency. Malthus’s first rule shows the anti-arbitrary character of this semantics:
When we employ terms which are of daily occurrence in the common conversation of educated persons, we should define and apply them so as to agree with the sense in which they are understood in this ordinary use of them.
For Machlup, this is not antiquarianism. The point is that economics inherits words from common life and from earlier theorists; if economists silently shift meanings, disagreement becomes partly verbal. His account of Malthus therefore presents definition as a discipline of intellectual responsibility rather than a merely verbal nicety.
The second stage of the essay turns to Whateley and Nassau Senior, who sharpen the analogy between economics and mathematics. Machlup quotes their claim that economists’ controversies would be reduced if their vocabulary were as precise as that of mathematics:
In this appendix, Senior (or Whately) stated that “there would be as little difference of opinion among Political-Economists as among Mathematicians” if only “they had possessed a vocabulary of general terms as precisely defined as the mathematical.”
Machlup accepts the plea for precision while refusing Senior’s rationalist excess. He does not require the reader to believe that economics is chiefly deductive, or that terminology is the whole source of slow progress. His methodological moderation is explicit:
One does not, however, have to share Senior’s extreme anti-empiricism in order to agree with him on the importance of clear language.
The third example, Henry Moore, is important because Moore was a pioneer of quantitative economics. Machlup uses him to show that semantic care is not opposed to empirical or statistical inquiry; it is required by it. Moore’s discussion of “competition” illustrates how technical terms pass through stages of assumed obviousness, attempted definition, proliferating exceptions, confusion, and finally classification.
One of the pioneers of quantitative economics in the modern sense, Henry Moore, who was convinced of the “imperative necessity” of better “statistical knowledge” of economic conditions, was no less concerned about the need of greater care in the use of terms.
Machlup’s relevance lies in this bridge: the more refined economics becomes, the more it needs controlled vocabularies. Ambiguous words such as “competition” can generate logomachy, where disputes about terms displace constructive investigation. Yet Machlup does not treat semantic drift as wholly natural or harmless.
He shows how much can be done, and must be done, by way of semantic analysis.
The essay closes by guarding against a contrary error: mistaking the study of words for the study of economic reality. Machlup distinguishes the necessary from the sufficient. Semantic work enables communication, comparison, classification, and criticism; it does not by itself yield substantive economic knowledge.
Semantic clarification is necessary but, as should hardly be necessary to state, it cannot be sufficient in the search for improved knowledge.
That final qualification gives the piece its balance. Machlup cultivates economic semantics as a methodological hygiene: indispensable against confusion, historically grounded in major economists’ practice, useful for both theoretical and empirical work, but always subordinate to the larger task of explanation.
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