Marshall's Principles of Economics in the Light of Contemporary Economic Though

Abstract

The first edition of Marshall's Principles came out in the year I890-more than 6o years ago. If it is true, as I believe, that everything that was important in his thought is to be found in that edition, and that when he did add new material he was merely drawing on the vast storehouse of knowledge and ideas which he had accumulated and worked out during the preceding 20 years, then it is a very remarkable fact (probably unique in the whole field of organised knowledge in all subjects) that this book should still be a standard textbook, and one that no Final Honours student in Economics could afford to neglect. One may ask, to what peculiar quality or combination of qualities does the Principles owe its survival today, when so much of the general background against which it was written, the economic structure of late Victorian England, has passed away ? One of Marshall's major preoccupations was to forge tools of economic analysis which could be used in the handling of actual problems. Hence his preference for the method of partial equilibrium and his distrust of the value of conclusions that could only be reached on the assumptions of a stationary state. Associated with this is the fact that the keynote of the Principles is that it relates always to a dynamic world of change and movement and that all his tools are chosen with a view to throwing light on the working of economic forces in such a world. Hence such typical concepts as the representative firm, his time analysis of value, etc. In all this he was greatly helped by the fact that, as Schumpeter has pointed out, he was an economic historian of the first rank, which means that he had a fundamental sense of process.