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Harvard. Graduate Core Economic Theory, Readings and Exams. Schumpeter, 1936-37


The reading lists and exams for Schumpeter’s graduate economic theory course in 1935-36 have been posted earlier (the year Paul Samuelson took the course). It is worth noting that Keynes and the General Theory (at least Chapters 11, 13-16) were added to the readings for the second term of 1936-37.


Course Announcement, 1936-37

Economics 101 (formerly 11). Economic Theory

Mon., Wed., Fri., at 2. Professor Schumpeter.

Source:  Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences during 1936-37 (first edition). Official Register of Harvard University, Vol. XXXIII, No. 5 (March 2, 1936), p. 142.


Course Enrollment, 1936-37

Primarily for Graduates:

[Economics] 101. (formerly 11). Professor Schumpeter.–Economic Theory.

Total 36:  30 Graduates, 3 Seniors, 3 Radcliffe.

Source: Harvard University. Report of the President of Harvard College for 1936-1937, p. 93.


Economics 101

Following is a list of some of the most important works in English dealing with problems outside the range of perfect competition. They are not all assigned, but assigned reading is taken altogether from this list.

Pigou, A. C., Economics of Welfare, 3rd Edition.
Chamberlin, E. H., The Theory of Monopolistic Competition.
Chamberlin, E. H., On Imperfect Competition, in the March, 1934 Supplement of The American Economic Review, pp. 23-27.
Robinson, Joan, Economics of Imperfect Competition.
Robinson, Joan, What is Perfect Competition, Q. J. E., Nov. 1934.
Zeuthen, F., Problems of Monopoly and Economic Warfare.
Cournot, A. A., Mathematical Principles of the Theory of Wealth.
Edgeworth, F. Y., The Pure Theory of Monopoly (Papers, Vol. I)
Hotelling, Harold, Stability in Competition, E. J., March 1929.
Shove, G. F., The Imperfection of the Market, E. J., March 1933.
Harrod, R. F., Doctrines of Imperfect Competition, Q. J. E., May 1934.
Hicks, J. R., The Theory of Monopoly, Econometrica, Jan. 1935.

The subjects, in the order in which they will be taken up, together with the assigned reading, are given below.

I.  The Technique and the Background.

Pigou, Part II, Ch. XIV.
Robinson, Chs. 1, 2.
Chamberlin, Chs. 1, 2.


V. Monopolistic Competition

Chamberlin, Chs. 4, 5, 6, 7.
Robinson, Ch. 7. Q.J.E., Nov. ‘34
Shove, E.J., March ’33.
Harrod, Q.J.E., May ’34.

II.  Simple Monopoly.

Pigou, Part II, Ch. XVI.
Robinson, Chs. 3, 4, 5.

VI. Discrimination.

Pigou, Chs. XVII, XVIII (Part II).
Robinson, Chs. 15, 16.

III.  Duopoly and Oligopoly

Pigou, Part II, Ch. XV.
Chamberlin, Ch. 3.

IV. Bilateral Monopoly.

Hicks, Sect. 3.


Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes. Box 9, Folder “Ec 11, Fall 1936”.


[Hand-written notes, neat, presumably to be typed]

  1. On Substitution

Marshall, V., Chs. 4, 8; VI, Ch.1.
Hicks, Theory of Wages, Ch. 6.
Robinson, Imperfect Competition, Ch. 22.
Machlup, “Commonsense of the Elast. of Subst.”, Rev. Econ. Stud., Vol II, No. 3. (on Econ. 1 shelf)

More Advanced

Hicks, Appendix.
Various notes on elast. of subs. In Vols I and II, Rev. Econ. Stud., by Hicks, Lerner, Kahn, Tarshis etc.
Hicks, Rev. Econ. Stud. Oct., 1936.
Pigou, Econ. Journal, June, 1934.

  1. On Period of Production

Böhm-Bawerk, E., Positive Theory of Capital, Bk II, Ch. 2, 3.
Knight, F. H., “Capital, Time + the Interest Rate,” Economica, August 1934 (on Econ. 151 shelf)
Hayek, F. A., Q. J. E., Feb., ‘36
Machlup, F. “Professor Knight + the Period of Production,” J. P. E., Oct. 1935.

More Advanced

Gifford, C.H.P., Econometrica, April 1935 (in Econ. 102 shelf).

Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes. Box 9, Folder “Ec 11, Fall 1936”.



(Answer any FIVE questions)

  1. What meaning can be attributed to
    1. Positively inclined demand curves?
    2. Negatively inclined long-run average cost curves?
  2. Define arc elasticity of demand and explain the usefulness or otherwise of the concept.
  3. From given demand curves for consumers’ goods we derive demand curves for the producers’ goods or factors of production. From these in turn we derive the prices of factors and hence incomes. And these incomes determine the demand curves for consumers’ goods. Does this involve circular reasoning?
  4. Why is the explanation of market price by means of the theory of marginal utility superior to the explanation of market price by means of the Ricardian theory of quantity of labor?
  5. Consider a commodity A which is the product of two factors of production B and C. Then “an increase in the supply of A raises the demand for B in terms of money if the elasticity of the demand for A is greater than the elasticity of substitution.” Prove.
  6. Show why and in what sense price is determinate in the case of bilateral monopoly.
  7. “Perfect competition exists to such a negligible extent in the modern economy that all theorizing based on this assumption must be regarded as sheer waste of time.” What have you to say to this?
  8. “The key to problems of imperfect competition lies in the conditions of demand. But it is precisely when we come to problems of imperfect competition that the ordinary demand curve apparatus ceases to have any clear meaning.” Comment.

Mid-Year. 1937.


Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes. Box 9, Folder “Ec 11, Fall 1936”.


ECONOMICS 101 [“37” is handwritten here]

The first month of the second term will be devoted to a study of the principles underlying the theory of distribution, with special emphasis on wages.

  1. Substitution and Relative Shares
    1. Hicks, J. R., The Theory of Wages, Ch. VI.
    2. Machlup, Fritz, “The Common Sense of the Elasticity of Substitution”, Review of Economic Studies, June, 1935.
    3. Hicks, J. R., “Distribution and Economic Progress: A Revised Version”, Review of Economic Studies, October, 1936.
    4. Also notes and articles on substitution and relative shares in Review of Economic Studies, Vol. I, Nos. 1 and 2, though not required reading, may be consulted.
  2. Theory of Wages and Marginal Productivity
    1. Marshall, Bk. VI, especially Ch. I.
    2. Hicks, J. R., Theory of Wages, Ch. I.
    3. ——-, Marginal Productivity and the Principle of Variation,” Economica, February, 1932.
    4. Schultz, Henry and Hicks, J. R., “Marginal Productivity and the Lausanne School: “A Reply” and “A Rejoinder”, Economica, August, 1932.
    5. Robertson, D. H., “Wage Grumbles” in the volume of essays entitled Economic Fragments.
    6. Chamberlin, E. H., On distribution under Imperfect Competition, pp. 23-27 of the Supplement to the American Economic Review, March, 1934.

Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes. Box 10, Folder “Ec 11, Spring 1937”.



            The next two or three weeks will be devoted to the discussion of capital and interest. A select bibliography and the assigned reading are listed below.


  1. Böhm-Bawerk, E., Capital and Interest (a history of interest theories) [: and] The Positive Theory of Capital (the third edition, available only in German, containing the polemical Excursi, is to be preferred to the English translation)
  2. Marx, Karl, Capital (especially Vol. I, Parts III and VII; Vol. II, Part III; Vol. III, Parts II and III)
  3. Wicksell, Knut, Über Wert, Kapital und Rente [, and] Lectures on Political Economy, Vol. I
  4. Fisher, Irving, The Rate of Interest (1907) [; and] The Theory of Interest (1930) (a rewriting of the earlier work)
  5. Taussig, F.W., Wages and Capital
  6. Knight, F.H., “Interest”, article in The Encyc. of Soc. Science
  7. For a rather complete list of the numerous recent articles on capital, interest and the structure of production, Cf. Machlup, Fritz, “Professor Knight and the Period of Production”, Journal of Political Economy, 1935, first footnote.
  8. For an exposition of Böhm-Bawerk, Wicksell and the later work along the same lines done in Sweden, particularly by Gustav Akerman, Cf. Kirchmann, Hans, Studien zur Grenzproduktivitätstheorie des Kapitalzinses.
  9. Keynes, J. M., General Theory of Employment, Interest, and Money.


  1. Fisher, The Rate of Interest, Part I, Chs. 1,2,3; Part III, Ch. 10
  2. Böhm-Bawerk, Positive Theory, Book I, Ch. 2; Book II, Chs. 2,4,5; Book V, Chs. 1,2,3,4,5; Book VI, Chs. 5,6,7; Book VII, Chs. 1,2,3.
  3. Wicksell, Lectures, Vol. I, pp. 144-171; 185-195.
  4. Keynes, J. M., General Theory of Employment, Interest, and Money, 11, 13, 14, 15, 16.

Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes. Box 10, Folder “Ec 11, Spring 1937”.



Answer FIVE questions. Arrange your answers in the order of the questions.

  1. Saving, by increasing the quantity of capital, will tend to increase its absolute and relative share. At the same time saving will tend to reduce the rate of interest and thereby to decrease capital’s absolute and relative share. State the conditions on which the net effect of saving on the absolute and relative share will depend. What do you think the actual effect is in practice?
  2. Classical economists spoke of a net benefit accruing from free trade. Have we any means to measure that benefit and to determine how it is divided between the trading nations?
  3. Which of the theories of interest which you have studied seems to you most acceptable and why?
  4. What warrant is there for the statement that in perfect competition and perfect equilibrium every firm will produce that quantity which corresponds to the point of minimum average cost?
  5. Discuss the problem of inequality of incomes from the following points of view: (a) measurement, (b) economic effects, (c) relation to welfare.
  6. Could unemployment exist with perfect competition?
  7. What do you regard as the most desirable railroad rate policy? State clearly and justify your criteria of desirability, and show how the policy selected meets these criteria.

Final. 1937.


Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes. Box 10, Folder “Ec 11, Spring 1937”.

Image Source: Harvard University Archives. HUGBS 276.90p(43) Irving Fisher and J. A. Schumpeter (May 12, 1934).

Irwin Collier

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