Alfred Marshall as the Foremost Economist in England - Essay Example

Alfred Marshall: Biography of an Economist Table of Contents Executive Summary Problem Background Economics of the Problem Politics of the Problem Development of the Problem Conclusion Alfred Marshall: Biography of an Economist Executive Summary This text gives a glimpse of the life and times of Alfred Marshall, the economist. The text starts with an introduction of the person’s significance and moves on to describe his antecedents. His early days, his education, his academic work and his preparation for his scholarly works are discussed here. This is followed by the important part that describes his contributions to the field of economics. This is highlighted by a brief discussion through the books written by him. A critical evaluation of his works follows next. His circumstances and his reactions are also mentioned in the same section. Details and specifics of his line of thought are given in the following segment. The text is finally rounded off with conclusions and comments about the scholar that Marshall was. Problem Alfred Marshall was the foremost economist in England of his times. He was fussy at times, which distanced some of his contemporaries. However, the mantle of leading the newly emerging field of economics fell on none other than him. As Wood (2004, p. 220) states, Marshall saw Economics in the light of human behavior which was measurable in terms of money. This was a paradigm shift in the emphasis of the field away from market economics. He was of the opinion that people craved more for perfection and acknowledgement from others rather than for material gains. He gave importance to the standard of life than the standard of living. Towards this end, he felt that the government should guide whereas the employer should lead. Only then would there be an end to the deep-rooted poverty. He followed a deductive method of theorizing based on observation. It could be argued that he tried to boost the image of this discipline in the eyes of the common man by stretching too far the maturity and continuity of Economics. He established the Cambridge School which was succeeded by luminaries like Keynes and Pigou. He used illustrations to teach economic concepts, which was then taken forward worldwide. More than a teacher, he has been immortalized for his works that have enriched and broadened the horizons of Economics. Background Marshall hailed from London (born in 1824) and showed an inclination for Mathematics in his childhood. He started his higher education in philosophy but ended up in the newly formed discipline viz. Economics. His forte was Political Economy. He married one of his students Mary Paley, with whom he co-authored The Economics of Industry (1879). He was Principal and Professor of Political Economy at Bristol. He shifted to Oxford and later to Cambridge. The scope of teaching Economics widened much later giving it the place it deserved. He criticized the education system of those days which was male -oriented in nature. His Principles of Economics (1890) established him as a writer and brought him critical acclaim. From theoretical foundations, Marshall moved on to the practical aspects of the discipline. However, ill-health restricted his involvement with his area of study. His second masterpiece was Industry and Trade (1919). This time, the lack of theoretical rigor did not bring him the same accolades as before (Raffaelli & Nishizawa & Cook, 2011, p. 4). Being at the helm of affairs as the beacon of economic thought, he was burdened by the creation of formal works, when he was more capable as an essayist. He laid the foundation for future economists, which set the tone for the field during the latter part of the 20th century. He died in Cambridge at the age of 81 and had institutions (as well as his own home) named after him. Economics of the Problem Principles of Economics (1890) was his magnum opus that took almost a decade to complete. It analyzed various aspects in Economics, many of which belonged to Marshall, while a few belonged to others. He classified costs into fixed and variable on the one hand, and on the other, he showed the significance of time as a factor (Marshall, 1890, p. 261). He also made possible the pictorial representation of concepts which was hitherto done with the help of words. Next in line was Industry and Trade in 1919 which was an empirical work. This was followed by Money, Credit and Commerce in 1923, which unified several economic ideas dating back to half a century before. Keynes and Pigou were among his distinguished students. Marshall used price rather than value to explain demand and supply. He used the concept of surplus to explain the role played by taxes and price in welfare. He also hinted at social and cultural aspects in industrial districts in England, which laid the foundation for economic geography. He used offer curves to explain two-country trade as part of the theory for international trade. He put the overall demand for money in the light of personal choices in the context of monetary theory. He proposed rules for inelastic derived demand in the context of monopoly analysis as applicable to unions. Marshall found that markets were inter-dependent, which led to the distribution theory. He proposed that different factors have conflicting interests which need to be reconciled. He averred that interpersonal utility can be compared theoretically. As long as members in a group are similar in physical, mental and social terms, utility functions will also be similar. He uses period analysis where elements are classified depending on the time required to do the work, and to hold elements that are less significant in relation to the time. Politics of the Problem In the beginning Alfred Marshall did not have much of published work. Before the mid-1870’s, he had written most of his theory in the form of essays. Though he had set out to write a book on international trade, it was Henry Sidgwick who had published his work as The Pure Theory of Foreign Trade: The Pure Theory of Domestic Values in 1879. He married Mary Paley in 1877, but had to give up his job at Cambridge due to violation of rules of celibacy. Being the principal at Bristol turned out to be an irritant for him as the college was not financially sound. A Kidney stone ailment was also a major setback to him during that time. He struggled at Cambridge, since Economics was taught as part of Historical Moral Sciences. Neither did he get the dedicated students for Economics nor could he do any advanced work. He had to fund two young lecturers out of his own pocket. Marshall had hardly any time for University affairs due to his involvement in his study. He was obsessive and tended to magnify details. Though he collected enough material for a second volume on his Principles of Economics, he abandoned the idea by 1807. Though he retired in 1908, he was beset with dyspepsia and hypertension, which forced him to have a strict routine. Marshall’s Money, Credit and Commerce (1923) appear to be an imitation of earlier material, some even fifty years older. After 1890, his works lacked stability and were beset with procrastination. As Hodgson (1993) points out, though Marshall had tried to connect Economics to Biology, he could only describe and not analyze it. This led to his insights being ignored by other scholars. Biology was pushed to the sidelines of economic thought for a long time to come (p. 413). Development of the Problem Marshall was of the opinion that motivation for material benefits was not the only drivers for success. The pursuit of excellence and social acceptance played a part. He also believed that social institutions were not a hindrance to the development of individual aspirations. Rather they molded themselves to the requirements of man. Though Marshall stressed the preeminent role of the state in reducing poverty, he was not in favor of government intervention. During WW I, most countries in the West were following a policy of protectionism which was also one of the triggers for the War. Marshall espoused free market policies and the non-intervention of the state. In the case of welfare economics, he pointed out that welfare can be increased by levying a tax on agricultural income to subsidize a manufacturing sector. In terms of markets, he suggested that a set of products is has a combined demand or supply if its constituents belong to a single activity. Conversely, as Whitaker (1987) points out, a product has composite demand or supply if several activities combine to form it. As related to international trade, the analysis of equilibrium in two-country was to investigate the role played by tariffs in global trade (pp. 350-363). Marshall put forth his views on the monetary system in a streamlined manner in Money, Credit and Commerce in 1923. However, by then, the interest in the subject had waned. Moreover, it lacked the vigor required for discussion. Conclusion Alfred Marshall comes across as a scholar who worked to define the emerging field of economics. From the above discussion, one can say that he was passionate about his subject and worked diligently towards the realization of his objective to give it its due place in the world of modern knowledge. His inclination for the subject made him make financial sacrifices as is evident in the financing of Economics scholars. That he was a brilliant teacher is proved by the presence of luminaries to be, among his students. His academic credentials come into view in that he was available for students to whom he gave advice and guidance. His eminence is pronounced in his contribution to economic thought. Though temperamental, there was no one to match him and take his exalted position among the economists of his time in England. His work will not be forgotten for a long time to come in the world in general and in England in particular. His early education also influenced him. Though he started off with philosophy, the utilitarian angle to philosophy could be called the defining moment for his entry to the world of economics. That he came from a different discipline made him put the subject in the proper perspective. His mathematical background helped him give the subject a different and scientific view that separates Economics from other social sciences. However, he took care to make the field intelligible to the common man. References Hodgson, G. M. (1993). The Mecca of Alfred Marshall. The Economic Journal, 103 (417): 406-415. Marshall, A. (1890). Principles of Economics. Retrieved from http://lib.thanglong.edu.vn/uploads/files/1320999406.pdf Raffaelli, T & Nishizawa, T & Cook, S. (eds). (2011). Marshall, Marshallians and Industrial Economics. London and New York: Routledge. Whitaker, J.K., “Marshall, Alfred,” The New Palgrave: A Dictionary of Economics, (K to P), John Eatwell et al., eds. (Macmillan Press, 1987), pp. 350–363. Wood, J. C. (2004). Alfred Marshall: Crit Assess. US: Taylor & Francis. Read More