[Note: This post is an excerpt from an email to the AFEE mailing list, April 10, 2014]
The period of time that my damning statement refers to is circa 1890 to 1926/27. Second it deals with a set of Oxford dons and tutors who were involved in teaching economics/political economy to Lit. Hum and History students mostly as an elective (except for those going into the civil service and then they had to study J. S. Mill). Teaching actual economics students per se did not start until 1904 with the introduction of the Diploma in Economics; and then in 1920 with the introduction of the Politics, Philosophy and Economics (PPE) undergraduate honors degree. It was these dons and tutors who pushed for economics at Oxford, not Edgeworth the Drummond Professor of Political Economy. These dons were mostly educated in Lit. Hum. (the classics) but under the influence of the philosopher T. H. Green and Toynbee, they become interested in the social question and hence economics. Given their background, they brought to economics a historical perspective much more in line with the historical school at the time and a concern with the social question (many of them were involved in the Christian socialist movement); and the economic theory they used in their lectures was a simple supply and demand approach—more like J. S. Mill than Marshall’s Principles. They were not interested in Marxism/syndicalism of the time or in Marxian economic theory. In any case, their view of Marshall’s approach to economics was that it in many ways really avoiding the social questions they were interested in and how to address them. They saw Marshall’s contribution in economics as overly dry, theoretical, apt to direct students to study economics in the absence of the burning social questions, and make students apolitical. Examples of this social-economic engagement that they promoted at Oxford which apparently hds no counter-part at Cambridge are the following:
Help established Ruskin College and got Ruskin students admitted to the Diploma of Economics where they were taught reasonable economics as opposed to Marxian economics which they were apt to get some of at Ruskin.
Were involved in the Workers Education Association, in the establishment of the Barnett House for social studies at Oxford (that is for the study of the major social issues of the time), and in the living wage movement in the 1920s.
Finally they established The Economic Review, the first economics journal in the UK before Marshall and the Economic Journal.
Coming from a Christian socialist perspective and interest in dealing with major social-economic issues of the day, they conceived of economics in a different manner than what was promoted by Marshall and was certainly coming out of Cambridge after Marshall retired. So their antipathy towards Marshall, Marshallian economics, and Cambridge has a real basis. Of course in the end Cambridge won and this opposition to Marshall/Cambridge way of doing economics was lost. This was in part due to the fact that the introduction of PPE and its growth in numbers required the hiring of young economists school in Marshall’s Principles who thought these dons which help create PPE (that is their jobs) were worse than useless as economists. And as soon as they has significant numbers and these old dons retired or died, they took over the economics component and fully implement neoclassical economics (this story is told in Young and Lee’s book onOxford Economics). The assumption that Marshall was universally liked and what came out of Cambridge was superior to anything else that existed anyplace else in the UK, like Oxford, is a whig understanding of history. If one knows the history, even if incompletely, then it will be realized that my statement is not extreme; rather it is unpopular because it questions the superiority and the right way of doing economics represented by Cambridge. It should be noted that the time period being dealt with is 1890-1926/27. It is not the 1930s—so one needs to get the time period correct before talking about Cambridge social-democratic or socialist. In any case, to fruitfully engage in this discussion, the following material is useful; I have also attached some relevant material*:
- Ball, Oona Howard. 1923. Sidney Ball: Memories and Impressions of ‘An Ideal Don’. Oxford: Basil Blackwell.
- Craik, William W. 1964. The Central Labour College 1909 ‑ 29. London: Lawrence & Wishart.
- Jones, Peter d’A. 1968. The Christian Socialist Revival, 1877 ‑ 1914. Princeton: Princeton University Press.
- Kadish, Alon. 1982. The Oxford Economists in the Late Nineteenth Century. Oxford: Clarendon Press. Kadish, Alon. 1989. Historians, Economists, and Economic History. London: Routledge.
- Kadish, A. 1989, Historians, Economists and Economic History
- Kadish, A. 1986. Apostle Arnold: the Life and Death of Arnold Toynbee, 19852-1883
- Koot, Gerard M. 1988. English Historical Economics, 1870 ‑ 1926: The Rise of Economic History and Neomercantilism. Cambridge: Cambridge University Press.
- Oxford and Working‑class Education. 1909. Oxford: University Press.
- Young, W. and Lee, F. S., Oxford Economics and Oxford Economists
- Lee, F. S. 2009. A History of Heterodox Economics. London: Routledge.
Under Documents on my homepage: http://heterodoxnews.com/leefs
There is also another thread in this discussion concerning the reasonableness of Marshall’s economics as represented in his Principles of Economics. As far as economists in the UK (except for those deviants in Oxford) and the US were concerned in the period 1900 to 1920s, the Principles was economics; and they meant by this the supply and demand engine Marshall developed in the book. Of course some people did not like that engine and preferred his more descriptive analysis of how industry and enterprises worked—and there are insights in these discussions. However, these people emerged in the 1920s and after and were considered minor Marshallians, such as D. H. MacGregor. And of course, this recognition of this side of Marshall did not really occur until the 1980s. This is an important note, because the non-neoclassical side to Marshall was recognized by P. W. S. Andrews (through his association with MacGregor) in the 1940s [see The Economics of P. W. S. Andrews: A Collection (edited with Peter E. Earl), Oxford Economics and Oxford Economists, my Post Keynesian Price Theory, and “David H. MacGregor and Industrial Economics at Oxford, 1920 – 1945.” In Marshall and Marshallians on Industrial Economics, edited by T. Raffaelli, T. Nishizawa, and S. Cook], the question is why is not Andrews recognized like Marshall. Andrews certainly spent more time observing enterprises and what they do, not to mention how cartels worked, and even presented testimony on resale price maintenance for books (which was successful)—Andrews had a far superior understanding of industry than Marshall or any other economist circa 1950/55. The reason for his exclusion is that Andrews recognized that Marshall supply and demand engine was faulty to the core and refused to use it. It is because he rejected Marshall’s theoretical engine that he is ignored, since those who like the evolutionary Marshall and the enriched Marshall supply and demand stories do not reject the engine.
So this brings us back to that engine which Marshall developed in his Principles. One point to note is that it was this engine that was taught to students in their economic theory courses; all the descriptive material was taught in other courses. A second point to note is that I actually teach the Principles to my graduate students each year. I go through the first 5 books—I just do not have time to get to book 6 (which we know is rather theoretically incoherent). I am probably the only person who actually teaches Marshall in the US and even the UK on a yearly basis. So UMKC graduate/doctoral students are quite familiar with Marshall, which must be unique among all doctoral programs—my lecture notes on Marshall can be found at http://heterodoxnews.com/leefs/nc-micro/. In any case, as you go through thePrinciples you find the following things:
1. economics only deals with relatively scarce things.
2. to escape heterogeneous agents (consumers, enterprises) the average consumer/representative consumer is assumed and so is the representative firm—gee it looks like the representative agent approach found in mainstream economics
3. Concavity is assume, asserted, or even worked at: downward sloping demand curves, upward sloping supply curves (especially in the long period), the use of diminishing returns—see the attachment of a poem on concavity
4. wants are restricted to natural wants; and the law of diminishing marginal utility is a natural feature of the individual
5. production is linear as opposed to circular—it starts with limited non-produced inputs that is relative scarcity; and then there is the congealed efforts and sacrifice to represent inputs/production/output in the long period
6. incoherent long period market supply curve; incoherent short period analysis of markets, especially when the representative firm sets a price that is off the supply curve when the price is below minimum average total costs.
7. and finally Book 6 is incoherent (which has been known almost from the time it was written.
So this raises the real question of whether there is anything in Principles? After all the supply and demand engine is very neoclassical and also very theoretically incoherent—and this fact cannot be escaped. So somehow thinking that teaching Marshall in the period 1890-1920s-1930s was something great because it would be more interdisciplinary simply do not get it. The theory was incoherent and it was designed to support the status quo; and it was explicitly used to attack, reject, and inoculate students against Marxism (see my book on the History of Heterodox Economics)—students who wanted something different (that is Marxism) were treated badly just like students today who want something different. If you think that teaching in the period 1890-1920s-1930s was really great, I suggest that you actually look at what was taught and what a lecturer had to teach (they were highly controlled), and whether you could deviate (which you could not)—do not think that the past was rosy; my investigations such that this aspect of economics has not changed in the last 125 years. Do you teach something that is theoretically incoherent so that you can be more interdisciplinary? I teach Principles to give my students an idea of neoclassical microeconomic theory developed in the 20th century; and as long as this understanding is necessary to be a good economist, I will continue to teach it. However, I do not teach it to give students a good theoretical understanding of how the economy works—it does not; and nor do I teach it to be interdisciplinary. If you believe that Marshall’s supply and demand engine provides some good theoretical insights of how the economy works, then become a neoclassical economist. On the other hand, you can, like Andrews, completely drop Marshall’s supply and demand engine and try to build an alternation heterodox microeconomic theory. This is very hard to do; and you will be attacked (like Andrews) by the mainstream because you question their core set of beliefs/theory. Of course you will not be a respectable economist.