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‘The backward art of spending money’ by Wesley C. Mitchell.

Summary:
In 1912 Wesley C. Mitchell, Veblen’s best student and one of the three or four most important economists of the first half of the twentieth century, published ‘The backward art of spending money’ (the link will directly download the article) in the American Economic Review. The article is about the (monetary) problems housewives encounter when they have to manage a household and a family and having scant time and money to do so. It is related to the present day Levy institute ‘time poverty’ project (very much so, even).  It’s a feminist text. Maybe not all young modern readers will agree. But remember that in 1912 the 48 hour workweek was not yet introduced (in most countries this happened between 1915 and 1921) while quite some people in western countries were still illiterate. If

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In 1912 Wesley C. Mitchell, Veblen’s best student and one of the three or four most important economists of the first half of the twentieth century, published ‘The backward art of spending money’ (the link will directly download the article) in the American Economic Review. The article is about the (monetary) problems housewives encounter when they have to manage a household and a family and having scant time and money to do so. It is related to the present day Levy institute ‘time poverty’ project (very much so, even).  It’s a feminist text. Maybe not all young modern readers will agree. But remember that in 1912 the 48 hour workweek was not yet introduced (in most countries this happened between 1915 and 1921) while quite some people in western countries were still illiterate. If you’re still in doubt, discuss it with your grandmother. An excerpt:

But even after many of the housewife’s present cares have been reduced by the extension of business enterprise and municipal housekeeping, and after the housewife has received better training herself and can command the expert advice of a professional class, her task in spending money will still remain perplexing to one who takes it seriously. For the ultimate problem of what is worth while to strive for is not to be solved by sounder organization, by better training, or by the advance of science. Doubtless most women, like most men, will ever continue to accept uncritically the scale of conventional values which their day and generation provides ready-made. To such souls the only non-technical problems will be problems of reconciling minor inconsistencies, or striving to attain the more decorous standards of a higher social class. But to women of conscience and insight the ends of living will always be a part of the problem of spending money — the part which is most inspiring and most baffling. In this aspect the art of spending money differs from the technical pursuits of business and science, and is allied to philosophy and ethics. There is a scheme of values embodied in every housewife’s work, whether she knows it or not, and this scheme affects for good or ill the health, the tastes, the character of those for whom she cares and those with whom she associates.

The coming months I will post and introduce more of such classic texts by Wesley Mitchell, Fred Lee and Morris Copeland (which will be stored on the AFEE website) , three hugely influential economists. Why them? Because these institutional economists stressed the importance of money. Macro-economic statistics are often chided for being too monetary. I do not agree. As monetary relations are important: wages, profits, capital… (and yes, ‘capital’ is a money-thing, too). But it is of course not just about making money and the monetary relations this involves. It is also about spending money. As Mitchell and, nowadays, the Levy institute are stressing.

Merijn T. Knibbe
Economic historian, statistician, outdoor guide (coastal mudflats), father, teacher, blogger. Likes De Kift and El Greco. Favorite epoch 1890-1930.

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