Marshall's Principles Research Articles

The Idea of ‘Character’ in Victorian Political Thought

When in the summer of 1902 Helen Bosanquet published a book called The Strength of the People she sent a copy to Alfred Marshall. On the face of it, this might seem a rather unpromising thing to have done. Mrs Bosanquet, an active exponent of the Charity Organisation Society's ‘casework’ approach to social problems, had frequently expressed her dissatisfaction with what she regarded as the misleading abstractions of orthodox economics, and in her book she had even ventured a direct criticism of a point in Marshall's Principles. Marshall, then Professor of Political Economy at Cambridge and at the peak of his reputation as the most authoritative exponent of neo-classical economics in Britain, was, to say the least, sensitive to criticism, and he had, moreover, publicly taken issue with the C.O.S. on several previous occasions. But perhaps Mrs Bosanquet knew what she was about after all. In her book she had taken her text from the early nineteenth-century Evangelical Thomas Chalmers on the way in which character determines circumstances rather than vice versa, and, as the historian of the C.O.S. justly remarks, her book ‘is a long sermon on the importance of character in making one family rich and another poor’. Although Marshall can hardly have welcomed the general strictures on economics, he was able to reassure Mrs Bosanquet that ‘in the main’ he agreed with her: ‘I have always held’, he wrote to her, ‘that poverty and pain, disease and death are evils of greatly less importance than they appear, except in so far as they lead to weakness of life and character’.

Gender and class in Marshall's Principles of Economics

Marshall held that economics is a positive and not a normative science1 and emphasised the scientificity imponed to the discipline's approach and object by the measurability of the phenomena observed,2 this measurability being afforded (and limited) by the use of money in economic transactions and decision-making.3 Marshall's marginalist model rests on the assumption of individualistic rational economic behaviour, a behaviour directed at 'the attainment and ... the use of the material requisites of well being' (p. 1) involving marginal calculations by the individual to reach a welfare optimum. In this model, income shares—and wages—are determined by the marginal product of the individual factors of production. Market mechanisms allow the maximisation of economic returns and the optimal state of economic welfare at the level of the nation and beyond. Yet Marshall departs from that model in at least two instances. In particular, the unit to be considered for consumption, welfare decisions, income levels, etc... in many cases is not the individual, but the family. Interestingly, individualistic (selfish) economic motivations break down within the family unit, especially in the case of inter-generational transfers (p. 24). Elsewhere, Marshall breaks with the market-orientated laissez-faire tradition when he approves of state intervention (Factory Acts) and advocates further state involvement in the economy (education, family wage...). As we shall see, these divergences from the model find a unity in the economist's treatment of the role of women in a capitalist economy. Marshall's argument about women rests on his development of a 'human capital' theory in Book IV of his Principles. His intent there is to provide advice on how to improve the productivity of the working class. Education is a major element in his proposal. But, to enhance the environment in which male workers and their children live, and to generate greater health, 'character and ability', working-class women are required to build a 'true home'. Marshall therefore opposes employment for married women and advocates a 'family

The economic civil war

A little over two years ago the passing of demand-side economics was happily celebrated by many of the more conservative members of our profession, and its death knell was of course held to be the election of President Reagan. A little over two months ago the demise of supply-side economics was joyfully hailed by many of the liberals among us. It was apparently signalled by the slide in business activity which just last year yielded a new postwar high in unemt~loyment, and tempered only modestly by the recovery which seemed to be underway a bit later. Both conclusions no doubt reflected some wishful thinking. I would venture that a little less impassioned cogitation will demonstrate that both celebrations were clearly premature. Taking a leaf from Alfred Marshall's famous Principles of Economics, it would be more reasonable to contend that, like Jevons and Ricardo, our contemporary demand-siders and supply-siders are both partly right, that their basic ideas are still very much alive, and that what is needed is to fit the two sides together. Just as Marshall successfully inferred that demand and supply determine price, so may we suppose today that demand and supply determine the national income, and with it our nation's growth and wellbeing. I feel confident that John Maynard Keynes unders tood that rather obvious truth, overlooked though it has undoubtedly been by many of his followers and opponents today. At the same time, it would be misleading if we failed to acknowledge the depth of the division between some of our more vocal colleagues on the relative Left and on the

A Comment on “Marshall and the Classical Tradition”

In the article Marshall and the Classical Tradition, published by Professor Levine in the Journal of Post Keynesian Economics (Summer 1982), he states that Marshall's Principles was influenced by the classical economists, notably David Ricardo. Levine shows these influences in Marshall's theory of factor-pricing and income distribution and the theory of the firm, but omits another classical theme in the Principles-Marshall's theory of economic growth. Several passages of Marshall's Principles (8th edition) deal, at least implicitly, with growth theory.

Rewriting the Principles of Economics

By the Principles of Economics I mean a core of economic theory such as that contained in John Stuart Mill's Principles of Political Economy and, a generation later, in Alfred Marshall's Principles of Economics.' In our time no single treatise dominates as Mill and Marshall did in their days, but there is nevertheless a corpus of economic theory that constitutes mainstream Principles of Economics. These Principles are essentially the same whether expressed at the elementary, intermediate, or advanced (graduate) level. A textbook by a master craftsman such as Paul A. Samuelson may, perhaps, be taken as an approximation of a contemporary counterpart of the works of Mill and Marshall.2 The theme of this article is that contemporary Principles need to be rewritten, much as those of Mill and Marshall needed to be rewritten after a lapse of time. What is involved here is a judgment concerning a very large topic of great importance to professional economists and to the nonprofessional public. Even among our colleagues who, with a straight face, teach mainstream neoclassical economics, dissatisfaction is widespread. Perhaps more important, the general public is disenchanted with professional economists and with economics generally. Our professional responsibility to the public to provide intellectual guidance about economic affairs is not being fulfilled. Incredible as it may seem in 1981, our nation is

Textbook public choice: A review essay

Textbooks are of obvious importance to authors and publishers fantasizing about substantial royalties, students expected to purchase and read them, and instructors who choose texts and teach from their pages. While academic custom dictates a certain derision of texts and text-writers, most of the 'greats' in most disciplines have authored at least one text and have often taken considerable pride in their efforts. Regardless, textbooks are invaluable indicators of the state of a discipline and, in a few instances, have been shapers if not innovators of major trends. One thinks of Marshall's Principles; Musgrave's The Theory of Public Finance; Samuelson's Economics; and, now, Alchian and Allen's University Economics. These classics are at once textbooks read by a generation of undergraduates, yet cited by scholars as authoritative sources. Each has produced a host of imitators and imitations; each has served to integrate the known; each has provided a distinct point of view; each has defined problems, provided new tools and, thus, equipped another generation of teachers. Those who teach must have something to teach and what they teach is to a large degree decided by those who write our texts. Uncertainty of substantive content or, perhaps, more accurately, uncertainty as to the integration of disparate elements creates both unsettling problems and an opportunity for those who would impose order. To write a textbook is to impose intellectual order, i.e., decide what is important, why, and how it should be transmitted to colleagues and students, alike. Writing a text in an ordered or settled field of science must surely be one of the more boring uses of one's time, but to write a first-rate text in a new and rapidly evolving 'discipline' demands imagination, substantive knowledge, and literary skills of the highest order. Those who have or are now attempting to provide suitable texts in public choice surely deserve our appreciation and, possibly, admiration, for they chart unknown waters. In market terms most will 'fail,' but one of these days someone will set the pattern and, thereby, provide the first definitive 'Principles of Public Choice.' Most teachers of public choice have taught and continue to teach directly from the classic writings of Arrow, Buchanan and Tullock, Downs, and Olson.

The Megacorp and Oligopoly. Micro Foundations of Macro Dynamics.

This title was first published in 1976. This book provides both an explanation of the inflation which has bedeviled economic policy in the West since the end of World War II and a micro-economic theory to purge Keynesian models of the Walrasian strain derived from Marshall's Principles. By focusing on what is taken to be the representative business firm of the twentieth century - the large corporation or megacorp - the microeconomic model presented in the book reverses the usual assumptions of economic analysis. Instead of assuming the existence of firms with no control over prices, the book examines how the megacorp uses its pricing power to finance its own internal rate of growth. The result is a determinant model of how prices are set under the sort of oligopolistic conditions which prevail in most modern industries throughout the world.

Joint Supply, the Taussig-Pigou Controversy, and the Competitive Provision of Public Goods

AN impressive coterie of contemporary writers who have sought to explain and analyze supply and demand of public goods have done so in terms of a model very much like classic Marshallian joint supply theory.1 Buchanan has noted, for example, that the theory of joint supply that is found in Marshall's Principles is, in its fundamental respects, equivalent to theory of public goods.2 The purpose of this paper is to explore in detail implications of this assertion. We seek to demonstrate that theories of joint supply and public goods are not logically equivalent, and that in some instances attempted application of joint supply model to analysis of public goods has caused analytical mischief. Further, we find that certain of fundamental points which emerged in railway rate theory debates originating eighty years ago between F. W. Taussig and A. C. Pigou are directly applicable to current problem of distinguishing between theories of joint supply and public goods.3 That is, much of present confusion

The Economic Approach to Social Questions

Once upon a time-long ago now-it was possible to refer anyone who thought that economic theory had something to say about society and its problems, and wanted to find out what was, to Marshall's classic Principles of Economics, wherein he could find structure of economic theory spelled out in literary terms intended to be comprehensible to businessman of average intelligence. (Even when I went up to Cambridge in 1945 myth still prevailed that it is all [mercifully] in Marshall.) That situation has been revolutionized as a result of introduction of geometrical and mathematical methods of theoretical investigation in 1930s, and post-war emphasis on empirical testing of hypotheses and measurement of economic relationships. Economic theory is now written in set theory, mathematical models and regression results, with consequence that seems to be too abstruse and remote from reality, as well as too technical, to be of any interest or use to non-specialist concerned with understanding and improving world in which he lives. This impression, unfortunately, is all too often shared by professional economists themselves, who frequently confine use of their scientific tools to technical and academic problems, while relying on intuition, emotion, or political ideology to form their attitudes on social questions. Yet economics is essentially a social science, concerned to further understanding of society by application of scientific methods of analysis and research to economic aspects of society's activities, and great advance of science that has occurred in past thirty-odd years has made more and not less capable of illuminating social questions. This, at least, is what I hope to demonstrate-necessarily in very broad and sketchy terms-in this lecture. Economists have, of course, always expressed themselves freely on social questions, though their views have rarely been popular among rest of educated elite. It was, indeed, insistence of classical economists and their followers on inevitability of consequences of Malthus' (fallacious), theory of population growth that earned discipline in nineteenth century description of the dismal science: while their general endorsement of laissez-faire. though

The Representative Firm and Imperfect Competition

In a recent paper, J. N. Wolfe has interpreted P. Sraffa as having exposed a logical inconsistency in Marshall's Principles of Economics. According to Wolfe, Sraffa interpreted Marshall as being concerned with perfect competition and yet as allowing his representative firm to possess unexhausted internal economies; he therefore believed that Marshall was inconsistent, for the two phenomena are incompatible. Wolfe himself interprets the Marshallian representative firm as an oligopoly model.This note discusses the following points. First it will be shown that Marshall's model when discussing increasing returns and the representative firm involved neither perfect competition nor oligopoly but imperfect competition. Second, I shall argue that the representative firm was largely designed to describe the problems which exist when product differentiation is recognized but when the industry is retained as a meaningful concept. That is, Marshall faces the same difficulties as those faced by J. Robinson and E. Chamberlin, but his solution involves a different approach. This is not to suggest that there was no need for the Robinson and Chamberlin volumes; indeed their appearance, together with Sraffa's article, reflected the unsatisfactory state in which Marshall left his analysis on this topic. Third, it follows from our interpretation that for Marshall the representative firm was a structure of the mind, a tool of analysis, and not a real firm. To clarify his views, I reproduce certain passages from which it is clear that he is not guilty of logical inconsistency either in the case of actual firms, or in the case of the representative firm.

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

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.

On a Misinterpretation of the Law of Diminishing Returns in Marshall's Principles

On a Misinterpretation of the Law of Diminishing Returns in Marshall's <i>Principles</i>

The Evolution of Marshall's Principles of Economics

The Evolution of Marshall's Principles of Economics

The Place of Marshall's Principles in the Development of Economic Theory

The Place of Marshall's Principles in the Development of Economic Theory

Mill to Marshall: The Conversion of the Economists

In this paper I intend to confine myself to one aspect of the manysided changes which came over English political economy between the publication of John Stuart Mill's Principles of Political Economy (1848) and of Alfred Marshall's Principles of Economics (1890). During this period great theoretical advances were made by W. S. Jevons and Alfred Marshall, advances which were paralleled in Lausanne and Vienna, and pushed further on the American continent by Professors J. B. Clark and Irving Fisher. I shall not attempt to summarize these contributions to pure theory, nor to estimate how wide was the gulf between the theory of Mill and the theory of Marshall (but in parenthesis I cannot refrain from suggesting that the real change in the theory of value was relatively small, while the change in the theory of distribution which derived from it was revolutionary). It is more appropriate at this first annual meeting of the Economic History Association to discuss the change in the status of economic theory in the corpus of economics as a result, mainly, of the influence of the historical school. Emphasis will be placed on the terms of peace rather than on the war of the methods, for it is my purpose to emphasize the possibilities of cooperation rather than to revive old antagonisms. I want to discuss the influence of some economic historians on economics. I shall make frequent reference to William Ashley, first professor of political economy in the University of Toronto and first professor of economic history in Harvard University and, I think, on the American continent. If I give him undue prominence this can surely be forgiven a Toronto man on this occasion.

Diminishing Returns in View of Progress in Agricultural Production

Although the State of Iowa was fully settled by 1890, it has since then doubled its crop production, notwithstanding a 20 per cent decline in farm population.2 The increased productivity of the farm people of Iowa is, I believe, an instance of general significance for undoubtedly what has taken place in Iowa is to a degree characteristic of the development of much of the agriculture of the United States. In this paper I want to give the results of a study of Iowa crop production and as the subject indicates, to comment upon certain aspects of the phenomenon of diminishing Because of the nature of the study the discussion will be restricted to its secular interpretation which is, in the opinion of many economists, the most important phase of the law of diminishing returns. We might ask is it reasonable to look upon agriculture as being peculiarly subject to diminishing returns in view of the greater efficiency of farm people, the technical developments in farm production and the resultant food surpluses which have for some time depressed the agriculture of the world? When we consider the changes that time has wrought in farming methods and note the increase in the area of land that has become submarginal and observe the decline that has taken place in the purchasing power of land values, do we not have to conclude that these are prima facie evidences of increasing instead of diminishing returns? More specifically, however, I should like to raise the question whether or not the experience of agriculture, since the appearance of the first edition of Marshall's Principles, which is the period covered by the crop statistics of this study, tends to invalidate the admirable and well qualified interpretation which

Marshall's Principles of Economics

Marshall's Principles of Economics