ABSTRACT
The problem From a purely physical point of view, produced goods and services are heterogeneous. It is the primary task of economics to make them homogeneous by determining a common unit of measure. It is therefore particularly surprising to read the following sentence in Hicks’s Capital and Time: ‘Physically, there could be many inputs and many outputs; by confining attention to their values we made them homogeneous, whatever their physical character. When we pass to the more strictly economic application, we lose that advantage’ (Hicks 1973: 37). The Oxonian economist seems not to be aware of the fact that any economic application requires the existence of an economic system, and that no economic system can ever exist if commodities remain heterogeneous. What Hicks is claiming here is that an economic theory might be constructed on mere technological grounds. His attempt at so doing is based on growth theory and relies on the assumptions that ‘all “original” inputs are taken to be homogeneous, and all final outputs homogeneous’ (ibid.: 37). This is a curious way of proceeding. Having claimed that when we pass to the more strictly economic application we lose the advantage of making inputs and outputs homogeneous, is it legitimate to enter the world of economic application on the assumption that homogeneity can be taken for granted among the elements of each category? Hicks’s approach is all the more unconvincing that he thinks of final output ‘as standing for “consumption goods in general” ’ (ibid.: 37).
