Arthur Cecil Pigou, Marshall’s successor in the chair of Political Economy and the executor of the Marshallian heritage, may with good reason be regarded as the paradigm of an “old”, pre-Keynesian Cambridge economist.
It is this Marshallian point of departure from which he progressed into new spheres of analysis, some of which still play an important role in present-day economics.
Pigou was born in 1877 on the Isle of Wight, he died in 1959 in Cambridge.
Personally, he has been characterized as eccentric and shy, especially towards women. After winning a scholarship to King’s his scientific career began as a lecturer at Cambridge University on general economic topics in 1904. In 1908 he was appointed as Marshall’s successor at the age of just 30 and against such an established contender as Herbert Foxwell. His work on industrial and labour economics turned into Wealth and Welfare (1912), the first edition of a work the themes of which determined the direction of Pigou’s research for the rest of his life. In this sense, not only The Economics of Welfare (1920) but also Industrial Fluctuations (1927a) and The Theory of Unemployment (1933) with their focus respectively on the business cycle and the labour market should be considered as elaborations and extensions of the concepts laid down in his welfare economics. Yet in the late 1920s his intellectual capacity and the energy to put it to full use slowly faded away, owing to ill health, disillusionment stemming from the horrible experiences of war - which he shared as a voluntary ambulance worker in World War I - and the comparative lack of success within the politics of the interwar period. Eventually he had to recognize that the kind of Pigovian economics that he had propagated as a consistent continuation of Marshall was abandoned for the neoclassical synthesis of Keynesian and Hicksian thought.In the following, three fields from Pigou’s work are selected for closer scrutiny. These are his all-encompassing treatment of welfare economics and as a kind of application his contributions to microeconomics, in particular to the controversy on the laws of returns, and to monetary theory, in particular as a foil against the Keynesian conquest of macroeconomics.