Alfred Marshall

Alfred Marshall

Alfred Marshall (July 26, 1842 – July 13, 1924), was one of the most influential economists of his time, whose book Principles of Economics (1890), brings the theories of supply and demand, of marginal utility and of the costs of production into a coherent whole. His application of mathematical principles to economical theories made economics more scientific discipline.

Life

Alfred Marshall was born on July 26, 1842 in Bermondsey, London, England, the son of a cashier at the Bank of England. He was educated at the Merchant Taylor's School, Northwood and St John's College, University of Cambridge, where he demonstrated an aptitude in mathematics. He achieved the rank of "second wrangler" on the Cambridge Mathematical Tripos. Although early on, at the behest of his father, he hoped to become a clergyman, his success at Cambridge led him to take an academic career. He first studied ethics for a year in Germany, and then psychology and economics.

He became a professor in 1868, specializing in political economy. He desired to improve the mathematical rigor of economics and transform it into a more scientific profession. In the 1870s he wrote a small number of tracts on international trade and the problems of protectionism. In 1879, many of these works were compiled together into a work entitled The Pure Theory of Foreign Trade: The Pure Theory of Domestic Values.

In 1877, Alfred married Mary Paley, who was a student in his political economy class at Cambridge. This forced Marshall to leave his position at Cambridge, in order to comply with the university's rules. He became a principal at University College, Bristol, again lecturing on political economy. He perfected his Economics of Industry and published it widely in England as an economics curriculum. Its simple form stood upon sophisticated theoretical foundations. Marshall achieved a measure of fame from this work, and upon the death of William Stanley Jevons in 1881, Marshall became the leading British economist of the scientific school in his time.

Marshall returned to Cambridge to take the chair as professor of political economy in 1884, after the death of Henry Fawcett. At Cambridge he endeavored to create a new "tripos" for economics, which he would only achieve in 1903. Until that time, economics was taught under the Historical and Moral Sciences Triposes, which failed to provide Marshall the kind of energetic and specialized students he desired.

Marshall began his seminal work, the Principles of Economics, in 1881, and he spent much of the next decade at work on the treatise. His plan for the work gradually extended to a two-volume compilation on the whole of economic thought. The first volume was published in 1890, to worldwide acclaim, establishing him as one of the leading economists of his time. The second volume, which was to address foreign trade, money, trade fluctuations, taxation, and collectivism, was never published at all.

Over the next two decades he worked to complete his second volume of the Principles, but his unyielding attention to detail and ambition for completeness prevented him from mastering the work's breadth. The work was never finished and many other, lesser works he had begun work on—a memorandum on trade policy for the Chancellor of the Exchequer in the 1890s, for instance—were left incomplete for the same reasons.

Marshall’s health deteriorated in the 1880s, and in 1908 he retired from the university. He hoped to continue work on his Principles but his health got worse and the project had continued to grow with each further investigation. The outbreak of the World War I in 1914 prompted him to revise his examinations of the international economy, and in 1919 he published Industry and Trade at the age of 77. This work was a more empirical treatise than the largely theoretical Principles, and for that reason it failed to attract as much acclaim from theoretical economists. In 1923, he published Money, Credit, and Commerce, a broad amalgam of previous economic ideas, published and unpublished, stretching back a half-century.

Marshall died at his home, Balliol Croft, in Cambridge, England on July 13, 1924, at the age of 81.

Work

Alfred Marshall is considered to be one of the most influential economists of his time, largely shaping mainstream economic thought for fifty years.

Marshall's economics was advertised as extensions and refinements of the work of Adam Smith, David Ricardo, Thomas Robert Malthus, and John Stuart Mill. But he extended economics away from its classical focus on the market economy and instead popularized it as a study of human behavior. He downplayed the contributions of certain other economists to his work, such as Leon Walras and Vilfredo Pareto, and only grudgingly acknowledged the influence of William Stanley Jevons himself.

While Marshall took economics to a more mathematically rigorous level, he did not want mathematics to overshadow economics and thus make economics irrelevant to the layman. Accordingly, Marshall tailored the text of his books to laymen, and put the mathematical content in the footnotes and appendices for the professionals. In a letter to his protégée, Arthur Cecil Pigou, he laid out the following system:

(1) Use mathematics as shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you can’t succeed in 4, burn 3. This I do often. (New Ideas from Dead Economists p. 151)

Marshall's influence on codifying economic thought is difficult to deny. He popularized the use of supply and demand functions as tools of price determination (previously discovered independently by Antoine-Augustin Cournot); modern economists owe the linkage between price shifts and curve shifts to Marshall. Marshall was an important part of the "marginalist revolution;" contributing the idea that consumers attempt to equate prices to their marginal utility. The "price elasticity of demand" was presented by Marshall as an extension of these ideas. Economic welfare, divided into "producer surplus" and "consumer surplus," was contributed by Marshall, and indeed, the two are sometimes described eponymously as "Marshallian surplus." He used this idea of surplus to rigorously analyze the effect of taxes and price shifts on market welfare. Marshall also identified "quasi-rent."

Legacy

Marshall is often regarded as one of the respected fathers of modern economics. Under his guidance, the University of Cambridge grew into a world-renowned center for the study of economics. His students became leading figures in economics, including Herbert Foxwell, John Neville Keynes (father of John Maynard Keynes) and Arthur Cecil Pigou.

His most important legacy was creating a respected, academic, scientifically-founded profession for economists in the future that set the tone of the field for the remainder of the twentieth century. His economic theories involving supply and demand, the price-elasticity of demand, and even the concept of consumer surplus, are still live today. His work in combining mathematics and economics contributed to the development of econometrics.

Marshall turned to economics because "the study of the causes of poverty is the study of the causes of the degradation of a large part of mankind." (Principles of Economics)

Publications

• Marshall, Alfred. 1879. Economics of Industry. Macmillan
• Marshall, Alfred. 1881. Review of F.Y. Edgeworth's Mathematical Psychics. The Academy, June 18, p. 457
• Marshall, Alfred. 1885. Where to house the London poor. W. Metcalfe and Son
• Marshall, Alfred. 1887. Remedies for Fluctuations of General Prices. Contemporary Review
• Marshall, Alfred. 1891. Some Aspects of Competition. Report of British Association for Advancement of Science
• Marshall, Alfred. 1932 (original published in 1919). Industry and Trade. Macmillan & Co.
• Marshall, Alfred. 1987 (original published in 1879). The Pure Theory of Foreign Trade; The Pure Theory of Domestic Values. A. M. Kelley. ISBN 067801194X
• Marshall, Alfred. 1997 (original published in 1890). Principles of Economics. Prometheus Books. ISBN 1573921408
• Marshall, Alfred. 2003 (original published in 1923). Money, Credit, and Commerce. Prometheus Books. ISBN 1591020360
• Marshall, Alfred. 2003 (original published in 1892). Elements of Economics of Industry. Simon Publications. ISBN 1932512136

References

ISBN links support NWE through referral fees

• Blaug, Mark. 1992. Alfred Marshall (1842-1924). Edward Elgar Pub. ISBN 185278492X
• Buchholz, Todd G. 1990. New Ideas from Dead Economists. Plume Books. ISBN 0452265339
• Groenewegen, Peter. 2002. Classics and Moderns in Economics: Essays on Nineteenth and Twentieth Century Economic Thought (Vol. 1). Routledge. ISBN 0415301661
• Groenewegen, Peter. 1995. A Soaring Eagle: Alfred Marshall, 1842-1924. Edward Elgar Publishing. ISBN 1858981514
• McGregor, D. H. 1942. Marshall and his Book. Economica, 9, 313-24.
• Whitaker, J. K. 1990. Centenary Essays on Alfred Marshall. Cambridge University Press. ISBN 0521381339

External links

• Alfred Marshall - Biography
• Alfred Marshall (1842-1924) – Biography at BookRags.com
• Alfred Marshall and the Cambridge school – Biography
• Alfred Marshall – Biography in the Concise Encyclopedia of Economics
• Principles of Economics – Full text of Marshall’s work, at the Library of Economics and Liberty
• Some of Marshall's published works – A collection of full-text material
• Bibliography and resources – List of resources on Marshall and the bibliography of his works
• Alfred Marshall and the Framework of Neo-Classical Economics – On Marshall’s work, by William J. Barber

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