Alfred Marshall: Progress and Politics

507 Pages·1987·52.775 MB·English

by  David Reisman (auth.)

ALFRED MARSHALL: PROGRESS AND POLITICS
Also by David Reisman
ADAM SMITH'S SOCIOLOGICAL ECONOMICS
RICHARD TITMUSS: Welfare and Society
GALBRAITH AND MARKET CAPITALISM
STATE AND WELFARE
THE ECONOMICS OF ALFRED MARSHALL
ALFRED MARSHALL
Progress and Politics
David Reisman
Palgrave Macmillan
ISBN 978-1-349-09315-1 ISBN 978-1-349-09313-7 (eBook)
DOI 10.1007/978-1-349-09313-7
© David Reisman, 1987
Softcover reprint of the hardcover 1st edition 1987 978-0-333-43620-2
All rights reserved. For information, write:
Scholarly & Reference Division,
St. Martin's Press, Inc., 175 Fifth Avenue, New York, NY 10010
First published in the United States of America in 1987
ISBN 978-0-312-00773-7
Library of Congress Cataloging-in-Publication Data
Reisman, David A.
Alfred Marshall, progress and politics.
Bibliography: p.
Includes index.
1. Neoclassical school of economics. 2. Marshall,
Alfred, 1842-1924. I. Title.
HB98.2.R44 1987 330.15'5 87-4811
ISBN 978-0-312-00773-7
Contents
1 INTRODUCTION 1
2 HUMAN BETTERMENT 3
2.1 Want-Satisfaction 5
2.2 Conduct and Character 15
(i) Honesty 16
(ii) Respect for persons 18
(iii) The pursuit of excellence 25
(iv) Generosity 28
(v) Deliberateness 36
2.3 Change - The Negative Side 41
(i) Want- satisfaction 41
(ii) The family 47
(iii) Speculation 52
(iv) Competition 58
3 GROWTH AND BETTERMENT 67
3.1 From Growth to Betterment 68
(i) The constants 68
(ii) The infrastructure 73
(iii) The variables 81
3.2 From Betterment to Growth 97
(i) Want -satisfaction 97
(ii) Conduct and character 101
(iii) Change - the negative side 111
4 COLLECTIVE ACTION 118
4.1 Socialism 120
4.2 Market and State 129
4.3 State and Improvement 143
4.4 Co-operation 158
(i) Economic efficiency 160
(ii) Moral upgrading 162
v
vi Contents
5 MICROECONOMIC POLICY 167
5.1 The Nature of Taxation 169
(i) Taxes on income 170
(ii) Taxes on wealth 174
(iii) Taxes on expenditure 177
5.2 Collective Consumption 182
(i) Health and housing 183
(ii) Education 191
5.3 The Relief of Poverty 203
(i) The minimum wage 205
(ii) Income maintenance 207
5.4 Industry and Trade 222
(i) Control of monopoly 222
(ii) Public ownership 226
(iii) The provision of intelligence 234
(iv) Trade policy 237
6 MACROECONOMIC POLICY 244
6.1 The Quantity Theory of Money 245
(i) The quantity of money 246
(ii) The velocity of money 254
(iii) Money, velocity and prices 257
6.2 The Transmission Mechanism 260
(i) The rate of interest 261
(ii) The level of prices 266
6.3 Upswings and Downswings 272
(i) The boom 272
(ii) The slump 278
(iii) Say's law 285
6.4 Stabilisation Policy 288
(i) The tabular standard 291
(ii) Bimetallism 296
(iii) Reserves and exchanges 302
7 PROGRESS, POLITICS AND ECONOMICS 309
7.1 The Definition of Economics 310
7.2 Induction and Deduction 321
(i) Induction 322
(ii) Deduction 329
Contents vii
7.3 Organicism and Economics 338
(i) Natura non facit saltum 340
(ii) The many in the one, the one in the many 349
7.4 The Mission of the Economist 356
Notes and References 365
Index 489
1 Introduction
Marshall's great books on progress and politics were never written.
His fourth major work was to be Progress: Its Economic Conditions,
but he never found time in his crowded life to convert the notes into
the treatise. The third volume of his Principles, he announced in
1907, was to deal with 'the economic functions of Government',
thereby indicating his conviction that, alongside micro ('the modern
conditions of industry and trade') and macro ('credit and employ
ment') the student of economics should in some measure also be a
1
student of political economy. As, of course, Adam Smith and so
many of the English classicals had been. And Plato, who, as Keynes
reminds us, inevitably captured the imagination of the philosopher
missionary: 'One day in his eighty-second year he said that he was
going to look at Plato's Republic, for he would like to try and write
about the kind of Republic that Plato would wish for, had he lived
now.'2 But the great interdisciplinary account of Economy and Polity,
Ethics and Society, had in the event this in common with the path
breaking dynamical synthesis of Growth and Betterment, Upgrading
and Evolution, that it too never saw the light of day.
The books were never written but that does not mean that the ideas
were lost. On the contrary; and it is the thesis of the present volume
that a very great deal indeed is known about Marshall's views on
progress and politics precisely because he assigned so much
importance to these topics as to discuss them extensively even in
books and articles ostensibly concerned primarily with other themes.
This is entirely to be expected, for Marshall's maximand was human
well-being (as opposed to economic welfare) and his time-period
absolutely continuous (as opposed to the eternal stasis of the
stationary state). As we allocate, Marshall reasoned, so we grow; as
we grow, so we grow different; and what renders legitimate such
upheaval and such mutation is the fact that such change is not random
and kaleidoscopic but purposive and improving, a movement from
alcohol to tea and not tea to alcohol. Where, moreover, the invisible
hand is demonstrably inadequate for the task of uplifting and
1
2 Introduction
upgrading, then the visible hand must be enlisted in the service of
the tone of life, as if guided by a hectoring moral philosopher and an
ethically-informed political economist anxious to do good. Market
mechanism and State intervention, Marshall believed, are but
instruments, to be selected or rejected on grounds of expediency
rather than dogma. What matters most of all is attainment of the end.
And that end is the uplifting and upgrading of the tone of life.