Conclusion
After a varied beginning to his career, Edgeworth begin working and writing in economics when in his mid-thirties. In common with the majority of neoclassical economists, he pursued an academic career as a professor of economics.
Indeed, in a period which saw the rapid and widespread profes- sionalisation of the subject, Edgeworth’s academic position in Oxford was regarded as second only to that of Alfred Marshall. In spite of his wide range of reading and sympathies, Edgeworth’s work was virtually all addressed to his fellow professional economists. He was uncompromising in his view that economics is a difficult subject offering only remote and nearly always negative policy advice. It may be said that his work was addressed to a small number of “fellow travellers” in the rarefied atmosphere of the “higher regions” of pure theory. However, Edgeworth imposed no geographical limitations and, with his considerable linguistic skills and international sympathies, was in contact with the majority of leading economists around the world.The distinguishing feature of the neoclassical “revolution” was its emphasis on exchange as the central economic problem. The success of this shift of focus from production and distribution to exchange was closely associated with the fact that it had as its foundation a model based on utility maximisation. This allowed for a deeper treatment of the gains from exchange and the wider considerations of economic welfare. Schumpeter summarised the point by stating that utility analysis must be understood in terms of exchange as the central ‘pivot’ and ‘the whole of the organism of pure economics thus finds itself unified in the light of a single principle’ (Schumpeter 1954: 913). This is indeed the context in which Edgeworth’s work in economics must be seen. Schumpeter’s remark is merely a more prosaic expression of Edgeworth’s view quoted above that ‘“Mechanique Sociale” may one day take her place along with '“Mechanique Celeste”, throned each upon the double-sided height of one maximum principle’.
The central theme of Edgeworth’s work is also clear in his revealing statement, taken from his Presidential Address to Section F of the Royal Society, that, ‘It may be said that in pure economics there is only one fundamental theorem, but that is a very difficult one: the theory of bargain in a wide sense’ (Edgeworth 1925, ii: 288).With this perspective, the thread running through all Edgeworth’s work in economics can be seen. His earlier mathematical analysis, of the implications of utilitarianism for optimal distribution, laid the foundation for his future research. The transition from New and Old Methods of Ethics to Mathematical Psychics was not a shift in major preoccupations but rather a change of emphasis. For Edgeworth, distribution was seen as an important concomitant of exchange, so that the analysis of contract became central. Edgeworth’s emphasis on the indeterminacy—the inability of utility maximisation alone to determine the rate of exchange, only a range of efficient exchanges—which results from the existence of a small number of traders, led to his path-breaking analysis of the role of numbers in competition, along with the efficiency properties of competitive equilibria.
The analysis of the utilitarian objective as an arbitration rule led Edgeworth directly to his social contract argument in explaining the acceptance of utilitarianism as a principle of social justice. It was the realisation of this justification of utilitarianism, using his newly developed analytical tools, which generated the excitement that is evident in his first work in economics. While Mathematical Psychics developed the techniques of indifference curves and the contract curve within the eponymous box diagram—tools which are now ubiquitous in economic analysis—Edgeworth himself was driven mainly by his ability to link the analysis of private contracts in markets to that of a social contract in which utilitarianism is the “sovereign principle”. The integration of his analysis of barter, and the effects of the introduction of additional traders into the market, with the demonstration that the utilitarian arrangement prescribes a point on the contract curve of efficient exchanges and is acceptable to risk-averse traders, was to Edgeworth nothing short of momentous.
The results are of course highly abstract. In discussing their ultimate value, he suggested that:
Considerations so abstract it would of course be ridiculous to fling upon the flood-tide of practical politics... It is at a height of abstraction in the rarefied atmosphere of speculation that the secret springs of action take their rise, and a direction is imparted to the pure foundation of youthful enthusiasm whose influence will ultimately affect the broad current of events (Edgeworth 1881: 128-129).
The intellectual pleasure derived from being able to draw together so many different subjects of analysis, and strands of Edgeworth’s enormous range of learning, is clearly evident. However, it is precisely this wide field of vision, combined with the technical level and idiosyncratic style of writing, which made Mathematical Psychics so difficult for his contemporaries, and which continue to make the book seem so strange to the modern reader. When discussing, in Mathematical Psychics, the results of barter among a large number of competitors in a market, Edgeworth borrowed (without attribution) a line from Alexander Pope’s Essay on Man, and described the market as, ‘A mighty maze! but not without a plan’. This could just as appropriately be applied to Edgeworth’s many contributions to economics.