Alfred Marshall on Economics and Dynamics

Alfred_Marshall

The Mecca of the economist lies in economic biology rather than in economic dynamics. But biological conceptions are more complex than those of mechanics; a volume on Foundations must therefore give a relatively large place to mechanical analogies; and frequent use is made of the term “equilibrium,” which suggests something of statical analogy. This fact, combined with the predominant attention paid in the present volume to the normal conditions of life in the modern age, has suggested the notion that its central idea is “statical,” rather than “dynamical.” But in fact it is concerned throughout with the forces that cause movement: and its key-note is that of dynamics, rather than statics.

The forces to be dealt with are however so numerous, that it is best to take a few at a time; and to work out a number of partial solutions as auxiliaries to our main study. Thus we begin by isolating the primary relations of supply, demand and price in regard to a particular commodity. We reduce to inaction all other forces by the phrase “other things being equal”: we do not suppose that they are inert, but for the time we ignore their activity. This scientific device is a great deal older than science: it is the method by which, consciously or unconsciously, sensible men have dealt from time immemorial with every difficult problem of ordinary life.

In the second stage more forces are released from the hypothetical slumber that had been imposed on them: changes in the conditions of demand for and supply of particular groups of commodities come into play; and their complex mutual interactions begin to be observed. Gradually the area of the dynamical problem becomes larger; the area covered by provisional statical assumptions becomes smaller; and at last is reached the great central problem of the Distribution of the National Dividend among a vast number of different agents of production. Meanwhile the dynamical principle of “Substitution” is seen ever at work, causing the demand for, and the supply of, any one set of agents of production to be influenced through indirect channels by the movements of demand and supply in relation to other agents, even though situated in far remote fields of industry.

The main concern of economics is thus with human beings who are impelled, for good and evil, to change and progress. Fragmentary statical hypotheses are used as temporary auxiliaries to dynamical—or rather biological—conceptions: but the central idea of economics, even when its Foundations alone are under discussion, must be that of living force and movement.

References:

  1. Preface to the 8th edition of Principles of Economics
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4 Comments

Filed under Economics, Notes on Economics

4 responses to “Alfred Marshall on Economics and Dynamics

  1. Blue Aurora

    Naturally, you’re not the first to invoke that statement by Alfred Marshall (about economics and biology), and you probably won’t be the last.

    From what I have read of Alfred Marshall, I find that there’s a certain quaint charm to the way he develops his exposition. Alfred Marshall carefully writes out qualifications to his theory and observations of the world around him (similarly to Adam Smith, without – at least in my opinion – being so cautious to the point that it might dissuade someone from reading further), and uses a sufficient amount of mathematics (differential calculus and integral calculus) to formally deliver his observations and findings.

    A lot of things that can be found in the Principles of Economics (and this probably does apply to other works by Alfred Marshall, although I can’t say to what extent and how exactly) was naturally, later incorporated by other people as future avenues for research. You can also find a lot of the concepts recurring in later economics textbooks.

    I hope that you shall enjoy reading Alfred Marshall’s work, Roussea, and that you can see how his two most famous pupils (Arthur Cecil Pigou and John Maynard Keynes) largely adopted a similar way of relaying the concepts and findings of economics. The resemblances between the presentation styles of all three men are so strong that one would have pretty daft not to notice it.

    One last thing – just for the record, I recently found out that Palgrave MacMillan is reissuing Alfred Marshall’s historically significant textbook as part of a “Palgrave Classics in Economics” series. It is due to come out in early 2014 (according to Amazon), and the reissued edition comes with an introduction by an Australian historian of economics (and specialist on Alfred Marshall) by the name of Peter Groenewegen. I don’t know if the edition being reissued is a reproduction of the very first edition of the Principles or the variorum edition (I doubt that the latter would be reissued for mass consumption on the market), but you might want to look into it.

    http://www.amazon.com/Principles-Economics-Palgrave-Classics/dp/0230249299/

    • I look forward to reading Marshall’s book. I only have a decent online copy (http://www.econlib.org/library/Marshall/marPCover.html), but I plan on getting an hard copy. I’m looking forward to see how this book influenced Keynes and other famous economists during the early 20th century. I’ll have to look extra close at the technical appendix for that though. Marshall’s writing so far seems very good, much better than most economists. As far as I know this book was also intended for a more general audience (as well as a teaching tool), so that’s probably why.

      • Blue Aurora

        I’m not sure if the Palgrave Classics in Economics reprint edition includes the mathematical appendix. Will you be getting that edition eventually, or will you try to acquire a copy of the 1961 Royal Economic Society variorum edition (which comes as a pair of dust-wrapped hardback books)? If you do want to get the RES variorum edition, it will be an expensive transaction.

        Of course, Alfred Marshall did write other things, like The Pure Theory of Foreign Trade, or the Pure Theory of Domestic Values, The Economcs of Industry, Industry and Trade, and Money, Credit and Commerce.

      • I’m not sure, I’ll just have to wait and see. Fortunately, the online version does have a copy of the mathematical appendix: http://www.econlib.org/library/Marshall/marPAppArt.html

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