Friedrich August von Hayek, The Framework of the Pricing System (1937)

Hayek’s book review assesses E. H. Phelps Brown’s introductory account of price theory as an accomplished exposition whose teaching methods nevertheless invite criticism. His central distinction is between the soundness of the economic argument and the usefulness of presenting an essentially mathematical system to students with little mathematics.

The review opens with strong praise for the book’s organisation, elegance, and explanatory completeness within its deliberately restricted scope:

And although the exposition is rigorously abstract, it never becomes dull.

Hayek credits Phelps Brown with explaining both the simplified model and the limits of its conclusions. He traces the central sequence from separate treatments of consumers’ and producers’ markets to their integration into a single economic system. The concluding survey of capital and interest, dynamics, money, and the firm is less satisfactory because it remains sketchy, though Hayek allows that this may be unavoidable. His broad agreement with the substantive theory makes exposition, rather than doctrinal dispute, the review’s principal concern.

The first pedagogical objection concerns the attempt to explain simultaneous equations without requiring mathematical preparation:

Mr. Phelps Brown has probably made the best of the difficult task of explaining a system of functional dependencies without making use of functional notation.

This concession sharpens rather than resolves Hayek’s doubt. Students with mathematical aptitude would, he suggests, learn more readily by acquiring the necessary calculus first; students without it may gain little from mathematical reasoning disguised in verbal form. The issue is therefore not simply whether the exposition succeeds on its own terms, but whether those terms suit its intended readers.

Hayek’s second objection concerns the scarcity of diagrams:

To discuss at length varying rates of substitution without using either indifference curves or equi-product curves makes matters probably more difficult than otherwise.

Graphs would do conceptual as well as explanatory work. Hayek worries that the book’s substitution function, explained with one commodity’s quantity held constant, could be confused with an older absolute utility function. Avoiding technical devices may thus make the underlying distinctions harder to grasp.

The closing criticism extends this concern with accessibility to independent study:

It is a pity that the author has not made it equally useful for the reader who is not guided by a tutor.

The absence of further-reading guidance limits a book Hayek otherwise regards as valuable within a planned course. The review’s significance lies in this qualified endorsement: agreement about elementary price theory does not settle how to teach it, and verbal simplicity cannot substitute automatically for mathematical preparation, visual explanation, or guidance beyond the text.