William Stanley Jevons (1835-1882)
English
economist and logician
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Jevons developed the theory explaining
the period of the trade cycle with variations in solar activity. In his
lifetime, the commercial crises had occurred at intervals of 10-11 years
(1825, 1836-39, 1847, 1857, and 1866), which broadly matched the average
solar cycle length. In his papers, Jevons carried back this history of
“commercial crises” at 10-11 year intervals almost to the beginning of the
XVIII century (Jevons, 1875, 1878, 1879). This "beautiful
coincidence," as he called it, produced in him a strong conviction of
causal nexus, going from cyclical solar activity through crop-harvest
fluctuations to commercial trade cycles. He linked the crises first to
harvests in Europe and subsequently to Indian harvests, which, he argued,
transmitted prosperity to Europe through the greater margin of purchasing
power available to the Indian peasants to buy imported goods (Keynes, 1936). However, there were several significant
flaws in Jevons’ theory and calculations. First, he assumed that the solar
cycles were highly regular, while in fact their length varied considerably.
When he later obtained the actual sunspot number series, he discovered that
the “commercial crises” identified by him landed in various phases of solar
cycles, thus breaking the perception of the "beautiful coincidence"
(Jevons, 1882). Second, he devoted insufficient attention to the exact dating
of deficient harvests in relation to the dating of commercial crises. As a
result, some of the bad harvests identified by Jevons appeared to have
happened after the “commercial crises” that they were supposed to explain.
These apparent flaws exposed Jevons’ theory to strong criticism. Also, they
diverted attention from his core proposition of the “commercial crises”
relationship to the solar cycle to the question of solar influence on crops
and agriculture (Garcia-Mata and Shaffner, 1934). |
Citing John Maynard Keynes:
“… It is often forgotten how comparatively
late in his career Jevons developed the theory of solar variation as the
explanation of the period of the Trade Cycle, which is immortally associated
with his name. It was published in two papers read before the British
Association in 1875 and 1878. The first of these papers is brief and goes
little further than to suggest a matter for enquiry. In 1801 Sir William
Herschel had "endeavoured to discover a
connection between the price of corn and the power of the sun's rays as marked
by the decennial variation of the sun's spots." In 1861 R. C. Carrington,
"in his standard work upon the sun, gave a diagram comparing the price of
corn with the sunspot curve during portions of the last and present
centuries." The results of both these enquiries were negative. But Arthur
Schuster, Jevons's colleague at Owens College, revived the matter by pointing
out "that the years of good vintage in Western Europe have occurred at
intervals somewhat approximating to eleven years, the average length of the principal
sunspot cycle." Thorold Rogers' History of Agriculture and Prices in
England, which began to appear in 1866, provided Jevons with material for analysing wheat prices over a long period. The commercial
crises in his own lifetime had occurred at intervals of
ten or eleven years: 1825, 1836-39, 1847, 1857, 1866. Might there not be a
connection between these things? "I am aware," Jevons concluded,
"that speculations of this kind may seem somewhat far-fetched and
finely-wrought; but financial collapses have recurred with such approach to
regularity in the last fifty years, that either this or some other explanation
is needed."? Nevertheless, he soon repented of publishing what was no
better than a bright idea. "Subsequent enquiry convinced me that my
figures would not support the conclusion I derived from them, and I withdrew
the paper from publication."
“The virus, however, had entered into
his system. No one who has once deeply engaged himself in coincidence-fitting
of this character will easily disembarrass himself of the enquiry. In 1878
Jevons returned to it in his second paper before the British Association, and
in an article contributed to Nature in which the argument was recapitulated.
Three new discoveries were his excuse. In the first place, he had succeeded in
carrying back the history of commercial crises at ten- or eleven-year intervals
almost to the beginning of the eighteenth century. In the second place, he was
now advised by his astronomical friends that the solar period was not 11 years,
as he had previously supposed, but 10.45 years, which fitted much better his
series of commercial crises. In the third place, he now abandoned European
harvests, the price statistics for which yielded negative results, as the
intermediary through which sun- spots affected business, in favour
of Indian harvests, which, he argued, transmitted prosperity to Europe through
the greater margin of purchasing power available to the Indian peasant to buy
imported goods.
“Jevons's argument is by no means so clear as is usual with him. He produced considerable
evidence for the view that commercial crises had occurred at intervals of about
10½ years. The astronomers told him that the solar period was about
10½ years. This" beautiful coincidence," as he called it,
produced in him an unduly strong conviction of causal nexus. "I beg leave
to affirm," he wrote in his article for Nature," that I never was
more in earnest, and that after some further careful enquiry, I am perfectly
convinced that these decennial crises do depend upon meteorological variations
of like period." But he devoted far too little attention to the exact
dating of deficient harvests in relation to the dating of commercial crises,
which was a necessary first step to tracing the intermediate links. In his paper
of 1875, when he believed his evidence to depend on European harvests, he
discovered the link in the spirit of optimism produced by good crops:
“Mr. John Mills in his very excellent
papers upon Credit Cycles in the Transactions of the Manchester Statistical
Society (1867-68) has shown that these periodic collapses are really mental in
their nature, depending upon variations of despondency, hopefulness,
excitement, disappointment and panic. … Assuming that variations of commercial
credit and' enterprise are essentially mental in their nature, must there not
be external events to excite hopefulness at one time or disappointment and
despondency at another? It may be that the commercial classes of the English
nation, as at present constituted, form a body suited by mental and other
conditions to go through a complete oscillation in a period nearly
corresponding to that of the sunspots. In such conditions a comparatively
slight variation of the prices of food, repeated in a similar manner, at
corresponding points of the oscillation, would suffice to produce violent
effects.
“But in 1878 he described this theory
as a "rather fanciful hypo thesis," and made everything to depend on
the decennial fluctuations in foreign trade consequent on cyclical crop changes
in India and elsewhere. Unfortunately this involved a difficulty in dating
which he passes over with surprising levity:
“One difficulty which presents itself
is that the commercial crises in England occur simultaneously with the high
prices in Delhi, or even in anticipation of the latter; now the effect cannot
precede its cause, and in commercial matters we should expect an interval of a
year or two to elapse before bad seasons in India made their effects felt here.
The fact, however, is that the famines in Bengal appear to follow similar
events in Madras.
“Thus the details of the inductive
argument are decidedly flimsy. If, however, it could be established that,
generally speaking and on the average of different crops and countries, years
when the world draws for current consumption on the stocks carried forward from
one harvest to another alternate, in accordance with the solar period, with
years when bountiful harvests serve to increase the stocks carried forward,
Jevons could have linked his thesis, on the broadest possible grounds, with his
forgotten theory of 1863 that the trade cycle depended on fluctuations of
investment. For alternating investment and disinvestment in the aggregate
stocks of the produce of the soil held in excess of current consumption might
be capable of consequences closely analogous to those he had previously
ascribed to fluctuations in the rate of new investment in durable goods.
“…Since his time, unfortunately for
his conclusions, the astronomers have reverted to 11.125 as the average of the
solar period, whilst the trade cycles have recurred at intervals of 7 or 8,
rather than of 10 or 11i years. In 1909 the problem was reconsidered in an
ingenious manner by his son Prof. H. S. Jevons, who argued that the harvest
statistics could be interpreted in terms of a 32-year cycle, which was combined
in twos or threes to produce either 7- or 10½-year periods. This was followed
up after the War by Sir William Beveridge's much more
elaborate studies of harvest statistics, which led him to the conclusion of a
complex 15.2-years period which he further analysed
into sub-periods. It is now generally agreed that, even if a harvest period can
be found associated with the solar period or with more complex meteorological
phenomena, this cannot afford a complete explanation of the trade cycle. The
theory was prejudiced by being stated in too precise and categorical a form.
Nevertheless, Jevons's notion, that meteorological phenomena play a part in
harvest fluctuations and that harvest fluctuations play a part (though more
important formerly than to-day) in the trade cycle, is not to be lightly
dismissed.”
Cited from:
Keynes, John Maynard, 1936: “William Stanley Jevons 1835-1882: A Centenary Allocution
on his Life and Work as Economist and Statistician,” — Journal of the Royal Statistical Society, Vol.
99, No. 3 (1936), pp. 528-531.
Literature references:
Garcia-Mata, Carlos and
Felix I. Shaffner,
1934: “Solar and Economic Relationships: A Preliminary Report,” — The Quarterly Journal of
Economics, Vol. 49, No. 1, Nov., 1934.
Jevons, William Stanley,
1875: “Influence of the Sun-Spot Period on the Price of Corn,” — A paper read at the meeting of the British
Association, Bristol, 1875.
Jevons, William Stanley,
1878: “Commercial crises and sun-spots,” — “Nature,” Volume xix, November 14, 1878, pp. 33-37.
Jevons, William Stanley,
1879: “Sun-Spots and Commercial Crises,” — “Nature,” Volume xix, April 24, 1879, pp. 588-590.
Jevons, William Stanley,
1882: “The Solar-Commercial Cycle,” — “Nature,” Volume xxvi, July 6, 1882, pp. 226-228.