Eugen von Böhm-Bawerk on Patten’s The Theory of Dynamic Economics (1892)

Eugen von Böhm-Bawerk’s review examines Simon N. Patten’s proposed reconstruction of economic theory around development and consumption. Its movement from appreciative intellectual portrait to exposition and sustained criticism expresses a consistent judgment: Patten identifies important forces, but exaggerates their explanatory reach and revolutionary significance.

Wie überhaupt bei temperamentvollen, impulsiven Naturen, so liegt auch Patten's Stärke mehr im Anregen als im Ausbauen.

English translation: As is generally the case with spirited, impulsive natures, so too Patten's strength lies more in stimulating than in building out.

The opening praise thus establishes the review’s critical standard. Patten’s originality and intellectual generosity make his writings stimulating, but their compressed presentation leaves readers to test and develop his insights. For Böhm-Bawerk, an ingenious hypothesis must withstand the consistency checks that only a theory worked through in detail can provide.

The review identifies two organizing principles in Patten’s system. First, “dynamic” economics studies the reciprocal transformation of human beings and their natural environment: changes in circumstances reshape conduct and psychology, while changing people alter their surroundings. Second, consumption supplies the impulses governing production, value, prices, and distribution. It also mediates between external conditions and moral and intellectual life. Patten’s law of variety connects these principles: cultural development multiplies wants and forms of enjoyment, potentially moving consumers farther from satiation even as wealth increases. Patten consequently attributes to development a tendency to raise subjective value.

Böhm-Bawerk accepts the importance of these ideas while resisting Patten’s diagnosis of earlier economics. Smith and other predecessors did not wholly neglect development; more decisively, their errors cannot be explained simply by their failure to move beyond a stationary picture.

Sie blieben hinter ihrer Erklärungsaufgabe nicht bloss deshalb zurück, weil sie der „Statik“ eine „Dynamik“ hinzuzufügen unterliessen, sondern in ungleich höherem Maasse deshalb, weil ihre Statik eben schon als Statik falsch war.

English translation: They fell short of their explanatory task not merely because they omitted to add a "dynamics" to the "statics", but in an incomparably higher degree because their statics was already false precisely as statics.

This distinction between incompleteness and error grounds the review’s methodological argument. Böhm-Bawerk compares Patten’s claims for dynamics with historical economists’ claims that adopting their method would overcome classical failures. Neither induction nor deduction guarantees truth. An unsuitable method may yield no useful result; a positive error requires a further faulty inference, such as generalizing from inadequate evidence or treating a conditional proposition as universally valid.

Das sind aber nicht Fehler in der Wahl der Methode, sondern Fehler in der Handhabung der gewählten Methode.

English translation: These, however, are not errors in the choice of method, but errors in the handling of the chosen method.

Dynamic analysis therefore enriches economics without automatically correcting its existing explanations. The underlying account of value or wages must be repaired on its own terms before an account of change can safely build upon it.

Im Gegentheil wird wahrscheinlich eine Dynamik, die auf eine falsche Statik aufgebaut wird, selbst falsch gerathen.

English translation: On the contrary, a dynamics which is built upon a false statics will probably itself turn out false.

The final substantive section applies this demand for precise explanation to Patten’s consumption theory. Böhm-Bawerk agrees that multiplying wants exerts upward pressure on subjective value. He disputes the claim that this secondary effect ordinarily outweighs the direct reduction in marginal utility produced by larger supplies.

Mit zunehmendem Besitze sinkt der Grenznutzen und subjective Wert der Gütereinheit, und die der Erweiterung des Güterbesitzes „dynamisch“ sich zugesellende Vermehrung der Bedürfnisse hat in aller Regel nur die Kraft, dieses Sinken zu verlangsamen, keineswegs aber dasselbe aufzuheben oder gar in das Gegentheil zu verkehren.

English translation: With increasing possessions the marginal utility and subjective value of the unit of goods falls, and the multiplication of wants which "dynamically" attaches itself to the extension of the possession of goods has as a rule only the power to slow this fall, but by no means to abolish it or even to convert it into its opposite.

His objection concerns the relative strength of opposing causes, not the existence of Patten’s mechanism. He allows exceptional circumstances: settlers with abundant necessities but little variety might experience rising marginal utility as new goods and wants emerge. European poverty, and poverty in densely populated America, instead involves scarcity even of necessities. The greater hardship caused by losing the same monetary sum when poor than when rich supports his contrary account, despite the richer person’s more numerous wants.

The review closes by reaffirming the pleasure and instruction Patten’s book provides. Its lasting conceptual interest lies in this combination of receptiveness and restraint: development and consumption deserve central attention, but explanatory enlargement is not equivalent to correction, and identifying a causal tendency does not establish its predominance.