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• Foreword
• Preface
• Acknowlegments
• Cost and Choice
• 1.: Cost In Economic Theory
• Classical Economics
• Marginal-utility Economics
• The Marshallian Synthesis
• Frank Knight and American Neoclassical Paradigms
• 2.: The Origins and Development of a London Tradition
• Wicksteed and the Calculus of Choice
• H. J. Davenport
• Knight On Cost As Valuation
• Robbins, 1934
• Mises, Robbins, and Hayek On Calculation In a Socialist Economy
• Hayek, Mises, and Subjectivist Economics
• The Practical Relevance of Opportunity Cost: Coase, 1938
• G. F. Thirlby and “the Ruler”
• Mises’ Human Action
• The Death of a Tradition?
• Appendix to Chapter 2: Shackle On Decision
• 3.: Cost and Choice
• The Predictive Science of Economics
• Cost In the Predictive Theory
• Cost In a Theory of Choice
• Choice-influencing and Choice-influenced Cost
• Opportunity Cost and Real Cost
• The Subjectivity of Sunk Costs
• Cost and Equilibrium
• 4.: The Cost of Public Goods
• The Theory of Tax Incidence
• Costs and Fiscal Decision-making: the Democratic Model
• Costs and Decision-making: the Authoritarian Model
• Costs and Decision-making: Mixed Models
• The Choice Among Projects
• The Costs of Debt-financed Public Goods
• Ricardo’s Equivalence Theorem
• Tax Capitalization
• 5.: Private and Social Cost
• Summary Analysis
• A Closer Look
• Internal Costs, Equilibrium, and Quasi-rents
• An Illustrative Example
• Pigovian Economics and Christian Ethics
• Narrow Self-interest and Alternative-opportunity Quasi-rents
• Conclusion
• 6.: Cost Without Markets
• Prices, Costs, and Market Equilibrium
• Resource-service Prices As Final-product Costs
• Market Equilibrium, Costs, and Quasi-rents
• The Cost of Military Manpower: an Example
• The Cost of Crime: Another Example
• Artificial Choice-making
• Socialist Calculation and Socialist Choice
• Costs In Bureaucratic Choice

H. J. Davenport

Herbert J. Davenport was an American economist and, roughly, a contemporary of Wicksteed. His influence was limited to a relatively small group of followers, none of whom were major figures in the history of doctrine. Davenport’s insights on opportunity cost, however, if read from the perspective developed in this book, suggest that it is appropriate to place his name between that of Wicksteed and Knight in this summary review.

Davenport’s emphasis was on what he called “entrepreneur’s cost,” and he clearly defined this in a utility dimension. “That is to say, cost as a margin determinant is purely a matter within the personal aspects of entrepreneurship, a managerial fact, a subjective phenomenon, in which all the influences bearing on the psychology of choice between different occupations and leisure have their place.”6 Furthermore, Davenport explicitly recognized that cost is related to the particulars of the choice situation, and, indeed, his emphasis on entrepreneur’s cost stemmed from his criticism of other writers, notably Marshall, who confused this with what Davenport called “collectivist cost.”7

Embedded in Davenport’s treatise, Value and Distribution, is a conception of opportunity cost that is almost as sophisticated as that developed by Wicksteed. The failure of Davenport’s ideas to have more influence than they did have was due, apparently, to his failure to articulate these ideas and also perhaps to his petulance toward the idols of the profession in his time. Davenport would have surely come into his own had he been able to criticize the more flagrant confusions in cost theory that emerged only after the 1920’s.8

[6. ]Herbert J. Davenport, Value and Distribution (Chicago: University of Chicago Press, 1908), p. 273.

[7. ]See esp. ibid., p. 404.

[8. ]For a summary of the history of cost theory in which Davenport’s ideas are prominently featured, see Bob M. Keeney, “The Evolution of Cost Doctrine” (Mimeographed, Midwestern Economics Association, November 1967).