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Kenneth E. Boulding

Kenneth E. Boulding was a most extraordinary economist. The narrow bounds of the economics discipline could not contain his interests and talents. In addition to economics, Professor Boulding made important contributions to the fields of political science, sociology, philosophy, and social psychology. His forays into subjects outside the usual concerns of economists were not an intellectual dilettantism; rather, they were a result of his conviction that an understanding of human behavior can only be accomplished by studying man in his totality. Much of Boulding's work was an attempt to move beyond the narrow economic view of humans as self-interested, rational utility maximizers to a general social science exploiting the full range of our rational, instinctual, and mystical knowledge.

Kenneth Boulding was born on January 18, 1910 in Liverpool, England. He attended New College, Oxford on a chemistry scholarship, but quickly transferred into the honor school of politics, philosophy, and economics. Boulding graduated with a "first" in economics in 1931. That same year, a short paper he had written on displacement costs was accepted by John Maynard Keynes for publication in the Economic Journal. This first paper exhibits the freshness, clarity, and attention to reality which was to characterize his subsequent writings. Economists had become careless in applying the concept of displacement cost - a change in the quantity of resources used in any one employment necessitates a change in the opposite direction in the quantity of resources employed in all other possible employments.

Boulding pointed out that this concept has meaning only when the total quantity of resources is fixed and homogeneous and only when definite quantities of two goods are produced by definite quantities of resources. In the real world, the conditions are not met.

Following a year of postgraduate work at Oxford, Boulding used a Commonwealth Fellowship to study at the University of Chicago and Harvard. After several unrewarding years as an assistant at the University of Edinburgh, he settled in the United States for good. He taught at several schools around the country before settling at the University of Colorado.

Professor Boulding's major work in economics was his introductory textbook, Economic Analysis, which first appeared in 1941. The book sought "to be a contribution to the development and systematization of the body of economic analysis itself." 1 An enthusiasm for the usefulness of economic theory as a map of reality runs through the text. The Economics of Peace, his next book, utilized the "Bathtub Theorem" - the rate of accumulation is equal to the difference between the rate of production and the rate of consumption - to tackle the problem of postwar reconstruction. The culmination of this period of Boulding's career was his receipt of the John Bates Clark medal in 1949, awarded every other year by the American Economic Association to an economist under the age of forty who has made a significant contribution to economic thought and knowledge.

In the early 1940's, Boulding had been hired by Iowa State College to become a labor economist, but he left there in 1949, by his own account, an "impure" economist. He'd come to believe that in order to understand economic reality, one had to look beyond the traditional boundaries of economics, "I became convinced that in any applied field one had to use all the social sciences and indeed developed a general social science, as all the social sciences were essentially studying the same thing, which was the social system."2

A Reconstruction of Economics was his first book to reflect this new attitude. The basic analytic framework was the balance sheet; asset transfers as expressed in the balance sheet provide the best understanding of economic behavior. Since consumption is the destruction of assets, the maximization of welfare through the enjoyment of assets requires that consumption be minimized. Current levels of consumption are so high, however, that the stock of assets, particularly natural resources, is being depleted. The end result will be a no-growth, stationary state in which current consumption equals current production.

In The Organizational Revolution, Boulding turned his attention to the increasing importance of large organizations, especially those devoted to the economic improvement of their members. He argued that these organizations arose largely because of an increased ability to organize. The main economic impact of large economic organizations has been to make prices and wages stickier and less flexible than they would otherwise be. This has rendered the free market a far less effective device for reconciling individual interests with the social interest and, therefore, has increased the importance of political institutions.

Boulding was concerned with the ethical implications of large-scale organization. An organization consists of a system of communication and organizations are developed to right wrongs. An organization may fail in its task because of some technical defect in its structure: faulty information, gaps in communication, or poor decision-making. Or, an organization may fail to right wrongs for moral reasons: it may set out to do things that are not right or the values which govern its behavior are wrong. Boulding argues that a diffusion of power among many organizations is most likely to result in a righting of society's injustices.

The central question of The Image is what determines our subjective knowledge. Since human behavior depends on the image, knowledge that the individual believes to be true, an answer to this question is a prerequisite for an adequate theory of behavior. Boulding answers that all knowledge is a series of images and that since the image is built up as a result of all past experiences of the possessor, knowledge is organic. It grows and accumulates. Images are revised as new information is received. In fact, the meaning of new information is the change it produces in the image. Knowledge for Boulding is the main hope for humanity. The growth of knowledge is anti-entropic; it brings order out of what was previously chaos. And, unlike other res ources, knowledge is not used up.

The Image also contains the ultimate Bouldingism: commenting on the failure of the sociology of knowledge to take hold in the United States, he wrote, "Unfortunately, the English language is not so well adapted as the German for saying nothing in particular about things in general."3

Raised a Methodist, Boulding became an active Quaker and a committed pacifist. In 1942, he composed a circular opposing World War II, and in 1965 he helped to organize the first anti-Vietnam War teach-in. However, merely witnessing against war was insufficient. Boulding believed that war could only be eliminated by understanding why it occurs. Conflict and Defense, his major contribution to peace research, uses the theory of oligopoly to analyze several different forms of conflict. He also was instrumental in the founding of the Journal of Conflict Resolution.

Boulding's belief in "the immediate experience of the Holy Spirit, or Inward Light, available to every man to teach, guide, reprove, and draw him up toward goodness"4 found expression in the concept of integrative systems. He identified three types of social systems: (1) exchange systems, in which activity is organized through the market mechanism, (2) threat systems, in which desired behavior is brought about by the threat of losses in welfare, and (3) integrative systems, or love systems, in which an interdependence of utility functions produces a situation where "what you want, I want". These three systems are driven by different motives. Self-interest is the motive behind exchange systems while fear and love are most important in threat and integrative systems. It is in the integrative systems that our heroic nature - passionate, selfless behavior - is exhibited.

All three organizers are necessary for society to flourish. Our economy is dominated by exchange. A threat system supports the legal order necessary for social stability. Our economy also depends on integrative relationships. For example, trust and honesty are needed for the development of the financial system. One of the insights to which Boulding's emphasis on love systems leads is that the failure of the integrative system of a country to develop concepts of mutuality, trust, honesty, and community beyond the family is one of the major obstacles to economic development.

Boulding's stressing of motives and his preference for love systems show up in his emphasis on the grants economy. The grants economy consists of the network of one-way transfers. He includes in the grants economy private philanthropy plus the redistributive transfers of the government and its expenditures on education and research. So measured, the grants economy is not insignificant - Boulding estimated it to be 10 to 20 percent of national income.

One of his most interesting later works, Three Faces of Power, employs the trinity of social organizers as the three categories of power. Contrary to the presumption of deterrence theory, threat power is not effective unless it is reinforced by economic and integrative power. And whereas he had earlier expressed a mistrust of the coercive power a world government would enjoy, Boulding now sounded optimistic about the possibility of a world government based largely on integrative power.

It is appropriate in a biographical essay to discuss the major theme of the subject's life work. However, the writings of Kenneth Boulding are so rich and varied that they defy generalization. Yet, the same purpose eventually came to drive all his research: to understand society in its totality. He contributed as much as anyone to our image of society.

Kenneth E. Boulding died on March 19, 1993.


FOOTNOTES

1. Boulding, Kenneth E. (1966) Economic Analysis. New York: Harper and Row. 2 Volumes. vol. 1, p. xix.

2. Boulding, Kenneth E. (1971) Collected Papers, Volume 1. Boulder: Colorado Associated University Press. p. xi.

3. Boulding, Kenneth E. (1956) The Image. Ann Arbor: University of Michigan Press. p. 150-151.

4. Boulding, Kenneth E. (1953) The Organizational Revolution: A Study in the Ethics of Economic Organization. New York: Harper and Brothers. p. 253.


David A. Latzko
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