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from the Biographical Dictionary of American Economists, edited by Ross B. Emmett, London: Thoemmes, 2006, pp. 73-79.


BOULDING, Kenneth Ewart (1910-1993)

Boulding was born on 18 January 1910 in Liverpool, England. He died 19 March 1993 in Boulder, Colorado. Son of a gas fitter and lay preacher in the Wesleyan Methodist Church, Boulding attended New College, Oxford on a chemistry scholarship, but quickly transferred into the honor school of politics, philosophy, and economics. He graduated with a ‘first’ in economics in 1931. Following a year of postgraduate work at Oxford, he used a Commonwealth Fellowship to study at the University of Chicago and Harvard. After several unrewarding years (1934-7) as an assistant lecturer at the University of Edinburgh, he settled in the United States for good, becoming a U.S. citizen in 1948. He taught at Colgate University (1937-41), worked as an economist with the League of Nations Economics and Financial Section in Princeton (1941-42), returned to academia at Fisk University (1942-43), Iowa State College (1943-6 and 1947-9), McGill University (1946-7), and the University of Michigan (1949-67) before finally settling at the University of Colorado in 1967. After retirement in 1980, he continued as a research associate and project director at the university’s Institute of Behavioral Science.

Boulding received the John Bates Clark medal in 1949, awarded every other year by the American Economic Association to an economist under the age of forty who has made a significant contribution to economic thought and knowledge. Nominated at different times for the Nobel Peace and Economics prizes, he was awarded honorary doctorates by thirty-three universities; he was honored not only for economics but also for political science, peace research, and scholarship in the humanities. He was president of the Society for General Systems Research (1955-9), president of the American Economic Association (1968), president of the International Peace Research Society (1969-70), president of the Association for the Study of the Grants Economy (1970-89), president of the International Studies Association (1974-5), president of the American Association for the Advancement of Science (1979), and president of the section on economics of the British Association for the Advancement of Science (1982-3). He was a member of the National Academy of Sciences (elected in 1975), the Institute of Medicine, and the American Academy of Arts and Sciences.

Less prominent for a single contribution to economic theory than for his many intellectual and ethical insights, the narrow bounds of the economics discipline failed to contain his interests and talents. In addition to economics, Boulding made important contributions to the fields of political science, sociology, philosophy, and social psychology. His forays into subjects outside the usual concerns of economists were not an intellectual dilettantism; rather, they were a result of his conviction that an understanding of human behavior can only be accomplished by studying man in his totality. Much of Boulding's work was an attempt to move beyond the narrow economic view of humans as self-interested, rational utility maximizers to a general social science exploiting the full range of our rational, instinctual, and mystical knowledge.

Boulding’s career as an economist began with a short paper he had written on displacement costs that was accepted by John Maynard Keynes for publication in the Economic Journal in 1932. This first paper exhibits the freshness, clarity, and attention to reality which was to characterize his subsequent writings. Economists had become careless in applying the concept of displacement cost: a change in the quantity of resources used in any one employment necessitates a change in the opposite direction in the quantity of resources employed in all other possible employments. Boulding pointed out that this concept has meaning only when the total quantity of resources is fixed and homogeneous and only when definite quantities of two goods are produced by definite quantities of resources. In the real world, these conditions are not met.

Professional recognition came very early in his career through a debate with Frank H. Knight over the concept of capital and the ‘period of production’. The Austrian school viewed capital as a fund for supporting the other factors of production, labour and land, over a period of time. In a series of articles Boulding attempted to modernize this concept, conceiving of capital as heterogeneous physical inputs. Knight’s response in the Quarterly Journal of Economics (1935) was entitled ‘The Theory of Investment Once More: Mr. Boulding and the Austrians’. Knight argued that capital is a homogenous, perpetual fund of value. While continuing to insist that time intervals were important considerations for production and investment processes, Boulding (1934: 664) acknowledged that the ‘average period of production ... is difficult or virtually impossible to measure’ and conceded that the aggregation across time of heterogeneous physical inputs in value terms is a makeshift ‘device to express as a single figure what in fact has too many dimensions to be so expressed’ (Boulding 1936: 526-27). Referring to this debate with Knight, Boulding (1992: 10) later wrote, ‘I have often said that this put me in such good company that I never had to take a Ph.D.’

Boulding's major work in economics was his introductory textbook, Economic Analysis, which first appeared in 1941. The book sought ‘to be a contribution to the development and systematization of the body of economic analysis itself’ (Boulding 1966: 1, xix). An enthusiasm for the usefulness of economic theory as a map of reality runs through the text. The book was organized by the method of analysis employed rather than by subject matter. The first half of the book used supply and demand to examine price determination, money and banking, international trade, and business cycles. The second half employed marginal analysis to explain the theory of the firm, demand, imperfect competition, and the formation of capital. The textbook also included two chapters stressing the importance of incorporating a time variable into theories of production and of the firm. Curiously, the first edition of the text makes no mention of the ongoing Keynesian macroeconomic revolution. The second edition of the book, published in 1948, is a full-blown Keynesian text. The Economics of Peace (1945), his next book, utilized the ‘Bathtub Theorem’ - the rate of accumulation is equal to the difference between the rate of production and the rate of consumption - to tackle the problem of postwar reconstruction.

In the early 1940's, Boulding had been hired by Iowa State College to become a labour economist, but he left there in 1949, by his own account, an ‘impure’ economist. He'd come to believe that in order to understand economic reality, one had to look beyond the traditional boundaries of economics. ‘I became convinced that in any applied field one had to use all the social sciences and indeed developed a general social science, as all the social sciences were essentially studying the same thing, which was the social system’ (Boulding 1971: xi).

A Reconstruction of Economics (1950) was his first book to reflect this new attitude. The basic analytic framework was the balance sheet; asset transfers as expressed in the balance sheet provide the best understanding of economic behavior. Since consumption is the destruction of assets, the maximization of welfare through the enjoyment of assets requires that consumption be minimized. Current levels of consumption are so high, however, that the stock of assets, particularly natural resources, is being depleted. The end result will be a no-growth, stationary state in which current consumption equals current production. A Reconstruction of Economics, with its emphasis on stocks rather than flows, assets rather than income, and shares of wages and profits in national income rather than the prices of labour and capital was out of step with the Keynesian mainstream thought of the times and had little impact on the economics profession.

In The Organizational Revolution (1953), commissioned by the Federal Council of Churches, Boulding turned his attention to the increasing importance of large organizations, especially those devoted to the economic improvement of their members. He argued that these organizations arose largely because of an increased ability to organize. The main economic impact of large economic organizations has been to make prices and wages stickier and less flexible than they would otherwise be. This has rendered the free market a far less effective device for reconciling individual interests with the social interest and, therefore, has increased the importance of political institutions.

Boulding was concerned with the ethical implications of large-scale organization. An organization consists of a system of communication, and organizations are developed to right wrongs. An organization may fail in its task because of some technical defect in its structure: faulty information, gaps in communication, or poor decision-making. Alternatively, an organization may fail to right wrongs for moral reasons: it may set out to do things that are not right or the values which govern its behavior are wrong. Boulding argues that a diffusion of power among many organizations is most likely to result in a righting of society's injustices.

The central question of The Image (1956), Boulding’s contribution to the philosophy of science, is what determines our subjective knowledge. Since human behavior depends on the image, knowledge that the individual believes to be true, an answer to this question is a prerequisite for an adequate theory of behavior. He answers that all knowledge is a series of images and that since the image is built up as a result of all past experiences of the possessor, knowledge is organic. It grows and accumulates. Images are revised as new information is received. In fact, the meaning of new information is the change it produces in the image. Knowledge for Boulding is the main hope for humanity. The growth of knowledge is anti- entropic; it brings order out of what was previously chaos. And, unlike other resources, knowledge is not used up.

Raised a Methodist, Boulding became an active Quaker and a committed pacifist. In 1942, he composed a circular opposing World War II, and in 1965 he helped to organize the first anti- Vietnam War teach-in. However, merely witnessing against war was insufficient. Boulding believed that war could only be eliminated by understanding why it occurs. Conflict and Defense (1963), his major contribution to peace research, combined the theory of oligopoly with game theory and models of international conflict to analyze several different forms of conflict. Boulding’s object was to demonstrate that conflict processes are not random or arbitrary or incomprehensible. An understanding of conflict is necessary for its control. He also was instrumental in the founding of the Journal of Conflict Resolution.

Boulding's (1953: 253) belief in ‘the immediate experience of the Holy Spirit, or Inward Light, available to every man to teach, guide, reprove, and draw him up toward goodness’ found expression in the concept of integrative systems. He identified three types of social systems: (1) exchange systems, in which activity is organized through the market mechanism, (2) threat systems, in which desired behavior is brought about by the threat of losses in welfare, and (3) integrative systems, or love systems, in which an interdependence of utility functions produces a situation where ‘what you want, I want’. These three systems are driven by different motives. Self-interest is the motive behind exchange systems while fear and love are most important in threat and integrative systems. It is in the integrative systems that our heroic nature - passionate, selfless behavior - is exhibited.

All three organizers are necessary for society to flourish. The modern economy is dominated by exchange. A threat system supports the legal order necessary for social stability. The economy also depends on integrative relationships. For example, trust and honesty are needed for the development of the financial system. One of the insights to which Boulding's emphasis on love systems leads is that the failure of the integrative system of a country to develop concepts of mutuality, trust, honesty, and community beyond the family is one of the major obstacles to economic development.

Boulding's stressing of motives and his preference for love systems show up in his emphasis on the grants economy. The grants economy consists of the network of one-way transfers. He includes in the grants economy private philanthropy as well as the redistributive transfers of the government and its expenditures on education and research. So measured, the grants economy is not insignificant - Boulding estimated it to be 10 to 20 percent of national income. A Preface to Grants Economics: The Economy of Love and Fear (1973) is his contribution to the study of grants economics.

The Meaning of the Twentieth Century (1964) set out Boulding’s evolutionary view of human history. He postulated three stages of mankind. The first is ‘precivilization’, a subsistence society of hunters and gatherers. Between five and ten thousand years ago, the invention of agriculture freed some of the population from the burden of producing food, leading to the development of cities and the transition to ‘civilization’. Most of the populace remained farmers who provided food to the remainder of the population through physical or spiritual coercion. During the Middle Ages farming advances gradually reduced the fraction of the population working in agriculture, and an exchange economy began to replace the exploitative economy based on coercion. The transition to a ‘post-civilized’ world, a state of very high technological development, began during the twentieth century. In short, the development of human society was an evolutionary process resulting from the growth of knowledge: the discovery of agriculture, the invention of new forms of social organization, and the development of technology.

The theme of history as an evolutionary process is continued in Ecodynamics (1978), which presents a general theory of human social evolution. Against a background of physical and biological evolution, human social evolution consists of the transmission of the know-how to produce social organizations and other physical artifacts. An understanding of human social evolution consists of an examination of the three patterns of social organization: the threat system, the exchange system, and the integrative system. These organizational systems are as much human creations as are physical artifacts such as buildings and machinery. The use of language, the ability to learn, and the ability to envision different futures are the factors which drive evolutionary change in these organizations, and so in human society more generally.

Boulding saw his evolutionary view of history as diametrically opposed to the Marxist theory of historical materialism and denied that dialectical conflict was a positive force in human history. His Primer on Social Dynamics (1970) argued that the dialectical elements of society are contained in the threat system but there are important non-dialectical processes: the exchange and integrative systems. All three systems are part of the learning process that drives human history. The dialectical process does not advance the growth of knowledge. In fact, dialectical conflict has been a hindrance to the growth of knowledge since it prevents the validation of knowledge by scientific methods.

One of his most interesting later works, Three Faces of Power (1989), employs the trinity of social organizers as the three categories of power. Contrary to the presumption of deterrence theory, threat power is not effective unless it is reinforced by economic and integrative power. And whereas he had earlier expressed a mistrust of the coercive power a world government would enjoy, Boulding now sounded optimistic about the possibility of a world government based largely on integrative power.

His essay ‘The Economics of the Coming Spaceship Earth’ (1966), with its vivid metaphors of the cowboy and spaceman economies, can be credited with energizing the field of environmental economics in the late 1960s. Boulding described the open economy of the past with its seemingly unlimited resources and contrasted it with the closed economy of the future. He wrote, ‘I am tempted to call the open economy the "cowboy economy," the cowboy being symbolic of the illimitable plains and also associated with reckless, exploitative, romantic, and violent behavior, which is characteristic of open societies. The closed economy of the future might similarly be called the "spaceman" economy, in which the earth has become a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution, and in which, therefore, man must find his place in a cyclical ecological system which is capable of continuous reproduction of material form even though it cannot escape having inputs of energy’ (Boulding 1966: 9).

Published posthumously, The Structure of a Modern Economy (1993), a product of twenty years’ work, employed topographical techniques to translate the numbers of the economy into maps, especially what Boulding refers to as ‘time scatters’, graphs tracing the comovement of two or more economic aggregates over the period 1929-89, in order to reveal the patterns and relationships characterizing the American economy. The aggregates include gross national product by sector, unemployment, prices indices, interest rates, income distribution, debt, government finance, and world trade. Each of the seventy diagrams is accompanied by Boulding’s insights and analyses of what happened and why. Noteworthy findings include the extraordinary nature of the disturbances to the economy produced by the Great Depression, World War II, and the post-war disarmament, the relative economic insignificance of the federal government, and the relationship between the ‘profit-interest gap’ and the level of unemployment. Boulding argues that when an employer hires someone, the employer sacrifices the interest that could have been earned on the wage in the hope of gaining a profit on the output of the worker. He finds that aggregate interest payments rise relative to profits in economic downturns and fall during the expansion phase of the business cycle. During the early years of the Great Depression, for example, profits were negative and interest had almost doubled as a share of national income. Interest payments as a share of national income rose from less than two per cent to nearly nine per cent since the end of the Second World War, suggesting to Boulding (1993: 125) that ‘something in the system is not sustainable’.

It is appropriate in a biographical essay to discuss the major theme of the subject's life work. However, the writings of Kenneth Boulding, more than thirty books including books of poetry and over 1000 articles, pamphlets, and chapters, are so rich and varied that they defy generalization. Yet, the same purpose eventually came to drive all his research: to understand society in its totality. To do so, he strove to integrate the social sciences, pursued the development of general systems theory, explored the role of religion and ethics in social development, examined the nature of organizations and conflict, and stressed the ecological limits to economic development. He was viewed by the economics profession as a deep thinker and someone who tried to ennoble the profession but few of his ideas have been incorporated into mainstream economic thought. ‘To the extent that his work began to go “beyond economics” ... it seemingly became easy for economists simultaneously to admire it and ignore it’ (Mott 2000: F440).



Bibliography

Boulding, K. E., Collected Papers, Volume 1, Boulder: Colorado Associated University Press, 1971.

Boulding, K. E., Economic Analysis, New York: Harper and Row, 1966, 2 Volumes.

Boulding, K.E., ‘Professor Knight’s Capital Theory: A Reply’, Quarterly Journal of Economics, 1936, 50: 524-31.

Boulding, K. E., ‘The Application of the Pure Theory of Population Change to the Theory of Capital’, Quarterly Journal of Economics, 1934, 48: 645-66.

Boulding, K. E., ‘The Economics of the Coming Spaceship Earth’, In H. Jarrett (ed.), Environmental Quality in a Growing Economy, Baltimore: Johns Hopkins University Press, 1966: 3-14.

Boulding, K. E., The Organizational Revolution: A Study in the Ethics of Economic Organization, New York: Harper and Brothers, 1953.

Boulding, K. E., The Structure of a Modern Economy: The United States, 1929-89, New York: New York University Press, 1993.

Boulding, K. E., Towards a New Economics: Critical Essays on Ecology, Distribution and Other Themes, Hans, England: Edward Elgar, 1992.

Mott, T., ‘Kenneth Boulding, 1910-1993’, Economic Journal, 2000, 110: F430- 44.


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