I just re-read the famous Lionel Robbins Essay on the Nature and Significance of Economic Science. Every time one reads a book, it’s with new preoccupations and interests. So this time, here’s what jumped out at me:
“Value is a relationship, not a measurment. … It follows that the addition of prices or incomes to form social aggregates is an operation with a very limited meaning.”
“The idea of precise ‘correction’ of price changes over time is illusory.”
For Robbins, economics is essentially price theory. He wrote the essay of course in 1932, just before the development and subsequent rise to prominence of aggregate economic measures and price indices. But I think he was right to underline the pervasiveness of relative price changes and the consequences for aggregation.
[amazon_link asins=’1610160398′ template=’ProductAd’ store=’enlighteconom-21′ marketplace=’UK’ link_id=’3ffe353f-d470-11e8-a948-63e4f4c96221′]
Back in the 1950’s I went from working for General Sir John Hackett one week to LSE the following week and being at lectures by Robbins. Mind boggling to think of it now. My family joke is that Hackett was the better economist but Robbins had a clearer perspective of strategies.