ABSTRACT
It has been suggested that paradoxes, which economists regard as puzzling outcomes, can be understood as ‘a normal aspect of ongoing inquiry’ in that they act as a ‘stimulus to further research’. An illustration of this process is provided by the water and diamonds paradox,1 which Adam Smith presented in the Wealth of Nations as a rhetorical paradox, a device where ‘terminological fuzziness…[is used] to excite puzzlement and interest in the reader’ (De Marchi 1987:796 – 7). This characterisation of the significance of Smith’s paragraph is consistent with the approach taken by those historians of economics who depict the paradox as providing ‘the starting-point for the theorising of economists of the later nineteenth century which finally led to the marginal utility doctrine’ (Roll 1966: 156).
