ABSTRACT

This chapter discusses the American reaction to the marginalist revolution in Europe and the contributions made by U. S. economists in advancing scientific economics, especially in the areas of wage, rent, and capital theory. The American economists, especially John Bates Clark and Frank A. Fetter, extended the marginalist revolution to the factors of production and the issue of income distribution. Nevertheless, using the marginality principle developed in Europe, Americans were able to solve a mystery that had remained unsolved for years—the so-called distribution problem in economics. The principal critic of Henry George was John Bates Clark, the first American economist to gain an international reputation. The so-called conspiracy against George is labeled "one of the most heinous episodes in the history of the development of scientific knowledge". George called his simple solution a uniting of Adam Smith's laissez-faire economics and the noble dreams of the socialists.