Alfred Marshall and Cambridge circa 1890 – 1926/27

[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:

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  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.


Ronald Meek Papers

The following papers were obtained from Mrs. Meek circa 1998. The originals remain with Mrs. Meek. Ronald Meek was a professor at the University of Leicester when he died; and it appears that all of his papers were destroyed at this time. At least I could not find any. In any case, I was teaching at De Montfort University at this time and was beginning to work on the history of heterodox economics, which was eventually published in 2009. Because Meek was part of this history I contacted Mrs. Meek to see if she had any papers. She did, but not very much, and mostly from the 1970s. I hope you find what I obtained from Mrs. Meek of interest.

John F. Henry Celebration

25 April 2014

Linda Hall Library
5109 Cherry Street
Kanas City, Missouri 64110

University of Missouri-Kansas City

12.30               Doors Open and Refreshments available

12.50               Professor Randy Wray introduces the event

1.00 – 2.00      Professor Marc-Andre Gagnon (Carleton University, Canada), “Capital accumulation through institutional corruption; A Veblenian perspective on the ghost-management of the economy”

2.00 – 3.00      Professor Mario Seccareccia (University of Ottawa, Canada), “Economics and History: Why Economists and Policy Makers Need to Understand the Latter”

3.00 – 3.15      Refreshments

3.15 – 4.30      Professor John Henry’s “Property and the Limits to Democracy”

5.00                 Doors close

7.00 – 10.00    Dinner:  Grunauer, Freight House District, 101 West 22nd Street, Kansas City, Missouri  64108.

Marx, Veblen, and the Foundations of Heterodox Economics (2015)

Marx, Veblen, and the Foundations of Heterodox Economics: Essays in Honor of John F. Henry

Edited by
Tae-Hee Jo and Frederic S. Lee

Published by
Routledge (Series in Advances in Heterodox Economics) in May 2015


This book is a festschrift for John F. Henry who has been a critical thinker, prolific economist, eloquent writer, influential and congenial educator over 40 years of his professional career. These characteristics are weaved into his doing of economics, more specifically, history of economic thought as part of heterodox economics. Henry has been concerned about the linkages between theory and society in historical context. Why does a theory emerge and become dominant in a particular time and society? What role does a dominant theory play? Those fundamental questions require, in Henry’s terms, a “general theory of the development of general theory itself.” More importantly, the historical inquiry into theory led him to the critical analysis of the underlying values, institutions, and social relationships that legitimize the theory as if it is natural, normal, and universal.

Contributors of this volume share Henry’s concern. This festschrift is thus put together in order to (re)cast Henry’s (and also Karl Marx’s and Thorstein Veblen’s) questions so that contemporary heterodox economists make economics suitable for “a world that is more humane, more sensible, more amenable to the provisioning process.” With this goal at hand, the overarching theme of this book is “Marx, Veblen, and the Foundations of Heterodox Economics,” which is carefully selected on the ground that radical ideas of Marx and Veblen (Part I) are the essential theoretical  basis of heterodox economics (Part II) as well as of John Henry’s economics (Part III).

Table of Contents


Marx, Veblen, and Henry: Breaking up the Illusions of the Epoch / TAE-HEE JO and FREDERIC S. LEE

Part I Radical Ideas of Karl Marx and Thorstein Veblen

  • 1. The Marxian and Veblenesque Elements in the Way I do Economics / G.C. HARCOURT
  • 2. Karl Marx, Thorstein Veblen, and the Global Financial Crisis / JOHN E. KING
  • 3. The Contemporary Relevance of Karl Marx’s Political Economy / PHILLIP A. O’HARA
  • 4. Instincts and Exchange: A Veblenian Exploration / WILLIAM T. WALLER
  • 5. The “Barbarian Status of Women” Revisited in Times of Neoliberalism / ZDRAVKA TODOROVA
  • 6. Is Conspicuous Consumption a Weak Concept? / ANDREW B. TRIGG
  • 7. Veblen on Marx and Marginalism / GARY MONGIOVI

Part II Heterodox Economics: Alternative Critical Theory to the Status Quo

  • 8. Fraud and Neoclassical Economics in the Twentieth Century / FREDERIC S. LEE
  • 9. The “Illusion” or “Paradigm Blindness” of Economics: Ethical Challenges to Economic Thought from the Financial Crisis / ROBERT MCMASTER
  • 10. Re-establishing the Grounds for Free Trade: The (forgotten?) Assumption of Full Employment in Mainstream Economic Theory / STEPHANIE KELTON and JOHN F. HENRY
  • 11. Economics and History: Why Economists and Policy Makers Who Do Not Study History are Condemned to Repeat the Mistakes of the Past / MARIO SECCARECCIA
  • 12. Financial Capitalism Trapped in an ‘Impossible’ Profit Rate / WOLFRAM ELSNER
  • 13. Shaping the Social Determinants of Value through Lobbying and Corporate Capture: An Institutionalist Approach to Capital Accumulation / MARC-ANDRE GAGNON
  • 14. The Rise of Money and Class Society: The Contributions of John F. Henry / L. RANDALL WRAY and ALLA SEMENOVA

Part III The Heterodox Economics of John F. Henry

  • 15. Farewell Lecture: Property and the Limits to Democracy / JOHN F. HENRY
  • 16. A Conversation with John F. Henry
  • John F. Henry’s Publications

Heterodox Microeconomics Reading List

Compiled by Tae-Hee Jo (SUNY Buffalo State), Frederic S. Lee (University of Missouri-Kansas City), Nina Shapiro (St. Peter’s University), Zdravka Todorova (Wright State University).

Download the readiung list in pdf


1. History and Methodology of Heterodox Microeconomics
2. Critiques of Mainstream Microeconomics
3. Principles of Heterodox Microeconomic Theory
4. Theory of the Business Enterprise
5. Structure of Production and Costs of the Business Enterprise
6. Costing, Pricing, and Prices
7. Investment, Finance, and Employment
8. Households, Consumption, and Market Demand
9. Industry and Market
10. Competition
11. Corporate Governance, Market Governance, and Market Regulation
12. Social Welfare
13. Heterodox Microfoundations and Modeling the Economy

What if There Are No Conventional Price Mechanisms?

Originally appeared on the New Economic Perspectives Blog, Posted on November 26, 2013

Whether it be inflexible prices, wage rates that are too high and sticky, or interest rates that cannot become negative, they all have the common property of disrupting the smooth workings of the price mechanism, thereby causing recessions, preventing economic recovery, and creating unemployment. But what if there is no price mechanism that allocated scarce resources among competing ends? Then the ‘price problem’ would disappear and the causes of recessions and persistent unemployment would be quite different. Ignoring the issue whether scarce resources as defined in mainstream economics exist or not, I am going to interrogate the supposed existence of the price mechanism that lies at the theoretical core of all mainstream explanations of recessions and unemployment.

Clearly there can be momentary glitches in the working of the price mechanism; but I am not concerned with these correctable imperfections. Instead the issue is: when does the waywardness of prices, wage rates, and interest rates cease to be glitches in price mechanism and actually eliminate it altogether. Starting with prices, since the 1930s, it has been known that price stability dominate the industrial, wholesale, and retail areas of the American economy. The 40-50 studies in the past fifteen years by Alan Binder and others which cover developed countries around the world further support the existence of price stability. One basis for its existence is the administered cost-plus pricing mechanism (used by virtually all business enterprises to set the prices) which neutralizes the impact of changing sales on costs hence prices. So price stability and its underlying pricing mechanism are systemic features of developed economies such as the American economy resulting in a disjuncture between price and quantity.

Turning to wage rate stability, evidence of its existence goes to the 19th century. Moreover, from the 1980s, wage rate stickiness has been a major concern of mainstream economists; and since the early 1990s, numerous empirical studies have shown its widespread existence, thus, as in the case of price stability, making it an irrefutable economic fact. Other studies show that wage rates are of minor importance when enterprises make hiring decisions. On the other hand, studies in how wage rates are actually determined are few; but what can be gleaned from the human resource literature is that the marginal product of labor has no role in the determination process whatsoever. Altogether, the implication is that there is no connection between the wage rate and the demand for labor.

Finally there is the question of the interest rate and its connection to investment decisions in plant and equipment and research and development. Again, the empirical evidence on the investment decision process shows that enterprises take a great many variables into account, including the interest rate. But in the end, the significance of the interest rate in the final decision is almost reduced to nothing. This is in part due to the fact that enterprises finance their investment from retained earnings (thus avoiding the financial markets) and that going enterprises do not view financial assets as substitutes for ‘real investment’.

A working price mechanism requires price, wage rate, and interest flexibility and most importantly a direct and inverse law-like connection to outputs/sales, employment, and real investment. However, with price and wage rate stability, they are not connected to sales and employment; and interest rates (whether nominal or not) have little bearing on investment decisions. Mainstream economists have over the past 70 years come up with ad hoc explanations/theories why any one of these outcome may occur; but they have never come up with an explanation why all three occur at the same time and have been persistently occurring for at least the past 80 years (if not for the past two centuries). So instead of continually blaming some kind of temporary imperfections in the working of the price mechanism as the cause of a malfunctioning economy, perhaps it is time to drop the myth of the price mechanism and dismiss the fictitious ‘price problem’ and seriously consider that problems of economic recessions and unemployment are only heterodox/Post Keynesian effective demand problems.

State Funding of Research and the Narrowing of Economics in the United Kingdom

A column written by Frederic S. Lee. Published in Global Labour Column, October 2, 2013

In 1986, the United Kingdom instituted an exercise through which the allocation of state research funds to universities and their departments was based on the quality of the research they produced. While the official justification for the exercise was the need to be selective in the allocation of limited research funds, the non-talked about agenda behind the exercise was to reduce the number of research universities to a manageable number and to ensure that these elite universities conducted research and carried out teaching that was consistent with the interests of the economic and political elite which control the state. Consequently the ensuing research selectivity exercise known as the Research Assessment Exercise (RAE) was and is popular with the Tories, New Labour, and anybody else who believes that the State should have quasi-direct and complete control over the thinking and research activities of its citizens.

Most academics initially thought the exercise would be a fair way of allocating state research funding when the state decided to reduce its commitment to higher education. However, in some disciplines, such as economics, it became evident by the mid-1990s that the exercise was also being used to cleanse economic departments of heterodox economic ideas that did not conform to mainstream (neoclassical) economic theory and with the neoliberal, pro-market policies based on the theory and which the state approved of. But the precise manner through which the cleansing process operated was not clearly understood. The rest of the article deals with the cleansing process, its consequences for UK economics, and what can be done about it.

The UK Research Assessment Exercise and the narrowing of UK economics

“The UK Research Assessment Exercise and the narrowing of UK economics,” by Frederic S. Lee; Xuan Pham; Gyun Gu. Cambridge Journal of Economics, 2013 37: 693-717

AbstractFull Text | PDF

Press Release, July 8, 2013

New paper warns that the Research Assessment Exercise is causing a homogenisation of UK economics

05 July 2013 Oxford University Press (OUP)

  • Under embargo until 07 July 2013 23:01 GMT


UK economics is becoming increasingly homogenised, and runs the risk of becoming “a purely quaint academic subject with no connection to the real world,” according to the authors of a new paper published in the Cambridge Journal of Economics today (Monday 8 July). Crucially, this homogenisation may mean that significant economic events that don’t conform to mainstream economic ideas may be missed.

Frederic S. Lee, Xuan Pham, and Gyun Gu examined how economics is researched and taught in English universities alongside the Research Assessment Exercise (RAE) and forthcoming Research Excellence Framework (REF) in 2014, which assess the amount of quality research (QR) generated by academics. They chose to focus on only English universities, rather than those in the rest of the UK because 80% of economics departments are in England, and therefore dominate UK economics. They say that the impact of the UK RAEs on economics is that universities are increasingly marginalising heterodox, or non-mainstream, economics (and by extension, economists) in their pursuit of high RAE scores and therefore more chance of research funding.

In their paper, ‘The UK Research Assessment Exercise and the narrowing of UK economics’, Professor Lee and colleagues developed an empirically grounded model of UK economics that, in the context of the RAE and local department decision making, shows there are three major on-going trends in the discipline:

  • the ostracising of heterodox economics – and economists
  • the concentration and homogenisation of UK economic research
  • the dominance of UK economics by a few elite and near-elite departments

They write: “The interactive process between research-publishing and hiring resulted in department staff compositional change over the past two decades being positively wilfully/casually correlated with the concentration of scholarly work in the core research areas and with the increase in Diamond List* journal submissions and negatively causally correlated with the decline of non-mainstream research areas and with heterodox submissions to the economics RAE panel.”

Further, they argue that due to the increased emphasis on international excellence when it comes to the RAE and the allocation of funding, university departments that are not considered elite, or near-elite, are losing out. Professor Lee says, “Over the past two decades, national excellence in research quality has gone from being quite important in terms of funding to being completely unimportant, while international excellence is now the only criterion relevant for research funding. This, in turn, has ensured that QR funding is becoming increasingly concentrated in and among fewer economics departments.

“Moreover, the composition of the universities submitting to the RAE economics panels has changed significantly in favour of departments from the ‘old universities’.”

The authors found that since the 1992 RAE the participation of the new universities in economics declined by 75%, and its allocation of QR funding declined “to virtually nothing”. Professor Lee argues that this restricts the upward migration of departments, with the majority of QR funding going to “perhaps about 13 elite and near-elite departments. The number of research rated economics departments has declined from 46 to 28 since 1996.

“The elite and near-elite departments have turned the assessment exercises into a self-promotion activity where those ‘other’ lower class departments are marginalised.”

As these departments continue to hire mainstream economists who publish and teach in a way that conforms to the idea of “good economics”, heterodox economists are increasingly marginalised, according to Professor Lee: “Mainstream economists hold quite punitive attitudes towards heterodox economists and their ideas – both are so unacceptable that they should not be part of just economics but all of academia. Mainstream economists do not believe that students should be introduced to heterodox economic ideas, but rather should only be taught their theory.

“The issue is not who is right or wrong with regards to economic theory; it is about the right to be wrong or possibly wrong without fear of punishment. The single mind-set of economists in many UK departments makes it more likely that significant economic events that do not conform to that mind-set will be missed – such as the 2008 financial crisis. Not only can Queen Elizabeth II ask why economists did not see it coming, so can everyone else.”

* The Diamond List is a list of 27 core economics journals drawn up by A. Diamond in 1989.

See also, REF ‘risks narrowing economics’, Times Higher Education, July 10: